Sep 22, 2020 - Politics & Policy

The price of Washington's stimulus failure

Illustration of person being crushed by Congress building

Illustration: Eniola Odetunde/Axios

America's elected representatives have failed America.

Why it matters: The bipartisan inability to deliver economic stimulus could impede economic growth for months to come. It will create widespread damage across America — from small businesses to large industries to schools and day cares — and leave many Americans without jobs or homes.

State of play: The initial economic stimulus, called the CARES Act, was only designed to last through the summer. Since then, congressional leaders have become too entrenched in their partisan positions to reach a deal on anything else.

  • The House passed a large package in May that went nowhere. Senate Republicans tried, but failed, to pass a skinnier bill earlier this month. A bipartisan effort by the Problem Solver Caucus seems unlikely to reach the floor.

Before Supreme Court Justice Ruth Bader Ginsburg's death Friday, most lawmakers and Hill staff believed there was little chance of passing a new stimulus package before the election. Now, they privately admit there’s virtually no shot.

  • We turned to Axios' subject matter experts to examine the damage created by Washington's inaction.

The unemployed

Under the CARES Act, unemployed Americans received an extra $600 per week in enhanced benefits. But those benefits expired at the end of July.

  • Democrats assert the extra money is necessary to keep working Americans afloat, while Republicans largely think it's a disincentive to work.

Last month, President Trump signed an executive order supplementing unemployment benefits at $400 per week. But it stated that the federal government would only pay $300, while cash-strapped states must pitch in the rest. Last week, Florida announced it was dropping the program due to the cost.

Why it matters: 30 million Americans are still receiving unemployment benefits.

Small businesses

Both Democrats and Republicans agree there's urgent need for a second round of stimulus loans for small businesses, which employ nearly half of all Americans. Yet there's been no movement to reauthorize the Paycheck Protection Program as a standalone, nor to pass a separate proposal aimed at restaurants and bars.

  • The National Federation of Independent Businesses reports that its "uncertainty index" in August hit its second-highest reading since 2017.
  • The original PPP lent over $500 billion to nearly 4.9 million small businesses, including independent contractors.
  • At this point, however, almost all of those PPP loans have been exhausted, even though many businesses remain closed.

What to watch: A renewed PPP, were it to happen, likely would be more targeted at even smaller businesses than was the initial effort.

  • The overall restaurant industry is on track to lose $240 billion in sales this year, with nearly one in six having already closed permanently or long-term, per the National Restaurant Association.
  • Nearly 3 million restaurant workers remain out of work, long after expanded unemployment benefits expired.
  • A group representing America's 500,000 independent restaurants estimates that more than 80% of them could go out of business without some sort of direct aid from Congress.


State election officials of both parties from across the country have begged Congress for stimulus funds to help ensure the November elections run efficiently and fairly, Stef Kight reports.

  • Some states have extra costs related to the pandemic, and many will need to manage unprecedented numbers of mail-in votes.
  • In the face of Congress' failure, charities have stepped in to donate hundreds of millions of dollars to state and local election officials, according to the AP.


The clock is ticking for tens of thousands of anxious airline employees, who face mass reductions when the government's current payroll support program expires on Sept. 30, Joann Mueller reports.

  • Airline CEOs met last Thursday with White House Chief of Staff Mark Meadows, who said President Trump would support $25 billion in new stimulus.
  • There isn't large congressional appetite for a standalone airline bailout. The last standalone stimulus bill, $25 billion for the U.S. Postal Service, passed the House but wasn't even brought up for a vote in the Senate.


Schools and day cares are bleeding out without much-needed federal dollars. A generation of kids could get left behind, particularly those in economically disadvantaged neighborhoods, and many parents will struggle to work.

  • Between hiring more staff to allow for socially distant classes, getting PPE for teachers, and adding tech tools for remote learning, schools face around $100 billion in additional costs this year, the American Federation of Teachers estimates. That’s close to $2,000 per public school students, Erica Pandey writes.
  • Economists say the child care industry needs around $10 billion a month to survive. Without the aid, some 50% of centers could shutter.

Health care

The hospital industry is pushing Congress for more relief, even though some health systems are reporting huge profits, Caitlin Owens reports.

  • Safety net hospitals, which provide services regardless of a patient's ability to pay, are struggling to stay afloat just when they’re needed most.
  • Consumer spending impacts health service providers, including hospitals. It is likely that more Americans would visit doctors if they had another $1,200 check in their pockets.
  • Others will forgo health care, or following public health recommendations, in favor of paying rent or grocery bills.
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