Written by Norman Isaac Mwambazi

Lawmakers unveil $908b bipartisan COVID-19 stimulus package

On Tuesday, December 1, 2020, a group of Republican and Democratic US lawmakers unveiled the long-awaited COVID-19 stimulus package, and …

On Tuesday, December 1, 2020, a group of Republican and Democratic US lawmakers unveiled the long-awaited COVID-19 stimulus package, and it is worth $908 billion. This stimulus plan comes after months of failed negotiations between the two major political parties.

As COVID-19 cases and deaths continue to rise across the United States, the pressure is mounting on Congress and the White House to pass the second stimulus package, having passed the first one back in March 2020 that was worth $2 trillion.

To combat the spread of the deadly virus that has claimed the lives of over 274,000 lives in the US, States and cities are putting in place more restrictions as existing relief programs will soon expire.

Democratic Senator Joe Manchin representing West Virginia said in a press conference on Tuesday that this is no time for “political brinkmanship.”

The bipartisan group of lawmakers that unveiled this package include Mark Warner (D., Virg.), Joe Manchin (D., W.V), Susan Collins (R., Me.), Bill Cassidy (R., La.), and Mitt Romney (R., Utah) among others.

These said that the purpose of this plan is to find a common ground on some of the most pressing issues of the people of the US, and it could act as a point of reference for the next stimulus package.

The proposed stimulus plan. IAMGE COURTESY OF YAHOO FINANCE.

In this proposed plan that aims at providing relief for the first quarter of 2021, $160 billion is proposed to fund state, local, and tribal governments that the Democrats take as a top priority but opposed by the Republicans.

In return, Democrats have also rejected the provision for short-term protections from coronavirus lawsuits, a “red line” for Republican Majority Leader Mitch McConnell. Mitt Romney supports this provision, saying that the short-term protections give states time to put their own protections in place.

“Any state that doesn’t put in place protections hasn’t been thinking this through very carefully — because if I were a CEO I would never think of putting a new business in a state that didn’t have liability protection for COVID,” said Romney.

The proposal also includes $288 billion for small businesses through the Paycheck Protection Program, Economic Injury and Disaster Loans and other provisions.

For those that lost their jobs due to the pandemic, this plan includes $180 billion for additional unemployment insurance, which would provide a $300 weekly boost to jobless benefits.

As the coronavirus continues to ravage the country, this proposed plan has included funding for the development of a vaccine, its distribution, as well as testing of victims and contact tracing.

Furthermore, the proposal calls for funding for education, assisting students with their student loan, child care, rental assistance, transportation and more. However, unlike the first package, this plan does not include another round of stimulus checks.

Bill Cassidy, the Republican Lawmaker representing Louisiana said that neither Republicans nor Democrats got everything they want in the proposed stimulus plan, but got something good for the American people.

“Republicans and Democrats, neither of us got everything we wanted. Both of us got much of what we wanted. I think that combination reflects what Congress is supposed to do — Reconciling different priorities but ultimately doing something good for the American people,” said Cassidy.

The second stimulus package, which has been under negotiation between Democratic lawmakers and their Republican counterparts, as well as the White House, is urgently needed, and Democratic Party’s Mark Warner from Virginia says “It would be stupidity on steroids if Congress left for Christmas without doing an interim package as a bridge.”

What does the stimulus package mean to the stock market?

A stimulus package is simply a package of economic measures put together by the government to boost spending and increase the employment rate. The more people are employed, the more they will spend because they clearly now have something to spend.

Concerning the stock market, some people decide to spend their money by investing in stocks hoping for a return on their investment. This increased activity of buying and selling stocks boosts the stock market and the news of stimulus package usually causes a rise in the overall stock market performance.

Dan Ives, the Managing Director of Equity Research and Analyst at Wedbush Securities predicted that stimulus package would boost the stock market by 5% in the coming months. The same rate would be felt in reverse if a deal for the package falls flat.