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Illustration: Aïda Amer/Axios

A host of alarming new signs suggest that the U.S. economy is on track to deteriorate even faster than had been forecast. A huge reason: A year-end COVID rescue package now looks unlikely.

Why it matters: One of the biggest failures of the current administration and Congress will be a Day One problem for President-elect Joe Biden — and an urgent test of his theory that Republicans will be more willing to work with him once President Trump is gone.

State of play: Republican and Democratic lawmakers have agreed for months that the economy would suffer without stimulus, but things may soon deteriorate faster than they forecast.

  • COVID-19 cases, hospitalizations, and deaths are up throughout the country, in the absence of any national containment strategy.
  • Some state and local governments are reinstituting, or talking about reinstituting, lockdowns. Including for schools.
  • Many restaurants that survived via outdoor eating will soon be forced to take down their tents as cold weather arrives.
  • It wouldn't quite be like March, when scientists knew much less about how the virus was transmitted, but it could cause many businesses to yearn for the halcyon days of summer 2020.

Reality check: Biden spoke to House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer on Thursday about the need to pass a stimulus bill during the lame-duck session of Congress. But the reality is that the Republican Senate and the Democratic House remain very far apart on priorities.

  • The Senate Republican conference is pushing for a highly-targeted bill, while House Speaker Nancy Pelosi maintains she won't compromise on anything smaller than $2.2 trillion.
  • “That snag that hung us up for months is still there,” Senate Majority Leader Mitch McConnell said earlier this week.
  • Meanwhile, January's two Senate runoff races in Georgia will pull more attention from stimulus talks, and also could cause each side to hold out longer — hoping for post-election leverage, even though Americans will suffer in the meantime.
  • There's been a change in top negotiators, with the more conciliatory Treasury Secretary Steven Mnuchin replaced by McConnell.

The bottom line: Many Republicans have indicated that they plan to return to their traditional orthodoxy of fiscal responsibility, despite driving up the national debt by trillions of dollars under Trump. This could make Biden's job much harder.

  • But one massive plus for Biden is that lawmakers will no longer be held hostage by the politics of an upcoming election, and members may be more willing to concede with a new leader in the White House.

Go deeper

The Mischief Makers

Illustration: Sarah Grillo/Axios

Several Republican and Democratic lawmakers are emerging as troublemakers within their parties and political thorns for their leadership.

Why it matters: We're calling this group "The Mischief Makers" — members who threaten to upend party unity — the theme eclipsing Washington at the moment — and potentially jeopardize the Democrats' or Republicans' position heading into the 2022 midterms.

Updated 23 mins ago - World

North Korea fires short-range missile to sea, slams "hostile" U.S. policy

North Korean leader Kim Jong-un. Photo: API/Gamma-Rapho via Getty Images

South Korea's Joint Chiefs of Staff said Tuesday that North Korea's military had fired a short-range missile toward its eastern sea, per AP.

Why it matters: North Korea's ambassador to the United Nations defended the latest launch in remarks to the UN General Assembly, demanding the U.S. and South Korea end their "hostile policy" against the country.

Arizona Judge: Adding mask mandates ban to budget bill is unconstitutional

Arizona Gov. Doug Ducey (R) Photo: Michael Brochstein/SOPA Images/LightRocket via Getty Images

An Arizona judge ruled Monday that the state's ban on mask mandates in schools, and other measures put into the state budget by Republicans, are unconstitutional, the Arizona Republic reports.

Why it matters: The sweeping ruling voids a ban on vaccine requirements for public universities, community colleges and local governments, and strikes down some non-COVID-related measures like a ban on teaching critical race theory in classrooms and anti-fraud measures for ballots.