Months of stimulus talks among the White House, Senate Republicans, and the Democratic-controlled House of Representatives have yet to produce a deal.
The cure for the stalled stimulus negotiations? Good old American democracy. The outcome of the Tuesday presidential election will be what ultimately determines how much stimulus passes and when it will come.
While both parties support items like a second round of $1,200 stimulus checks, enhanced unemployment benefits, and more aid for small businesses, each side has held back from making a deal in hopes of getting a package more to their liking. Democrats want more money for state and local government funding, and Republicans would like to see the overall size of the package under $2 trillion. But once voters determine control of the White House and Senate, it’s expected the scope and timing of the next deal will become much clearer.
With the clock ticking on more stimulus after the election, Fortune examined what a stimulus deal might look like under the three most likely election scenarios.
A ‘Blue Wave’
If Democrats win back the White House and Senate, they’ll likely pass a massive stimulus package soon after the inauguration, which Biden said is his plan. The polls are pointing to that outcome: FiveThirtyEight gives Biden a 89% chance of winning, and gives the Democratic party a 75% chance of taking the Senate chamber. Control of the latter might not be decided until January if one or both of the Georgia Senate seats goes into a runoff—which happens if none of the candidates reach 50%.
In that Blue Wave scenario, Mark Zandi from Moody’s Analytics believes another deal will be passed “soon after” Biden’s inauguration in January. Zandi thinks “lawmakers will quickly agree to spend close to another $2 trillion to shore up the economy,” he wrote in a note Monday, bigger than the White House’s recent $1.8 trillion offer but moderately below the Democrats’ previous $2.2 trillion price tag. It would likely include money for items like state and local governments, enhanced unemployment benefits, and a national comprehensive testing plan.
What’s more, Zandi believes there may be a second stimulus deal passed by next summer in the event of a Democratic sweep: He sees that deal also costing around $2 trillion, focused on getting the U.S. back to full employment with support for government spending projects like infrastructure.
Regardless of the specifics, UBS Global Wealth Management senior economist Brian Rose recently told Fortune, “If the Democrats win, they’ll get stimulus through, and not only that, they’ll get a big package.” Democrats may have to pass the bill through reconciliation, he says, or by getting rid of the filibuster if remaining Republicans “play hardball,” pushing the deal into next year (provided they have the seats).
Biden win, GOP Senate
But if Biden wins and Republicans retain the Senate, the stimulus package deal they strike would likely be smaller than the $1.8 trillion the White House is offering.
Moody’s Zandi believes in a Biden White House and divided Congress scenario, “there will be enough political will, given the struggling economy, for lawmakers to pass a $1.5 trillion deficit-financed rescue package by February,” he wrote. However, he argues, Senate Republicans will “forestall a larger package or any additional fiscal support after that.”
UBS’s Rose also believes that even if Biden has to deal with a red Senate, there is a scenario where “they can find enough votes to at least not have the stimulus package filibustered,” he recently told Fortune. For any deal to get done this year, regardless of who wins the election, the legislation would have to be passed during a lame duck session, which occurs after a November election but before the new Congress sits in the new year.
Trump win, GOP Senate
If Biden wins, a broad stimulus deal is unlikely to pass in the Republican-controlled Senate between the election and Jan. 20 inauguration. But if Trump wins, his allies in the Senate are likely to pass an economic aid package before the start of his second term.
However, Trump might not be able to get Senate Republicans to agree to the $1.8 trillion the White House offered House Democrats. And if Senate Republicans—who are uneasy with going above $1 trillion—don’t pony up more, House Speaker Nancy Pelosi might not be on board. (FiveThirtyEight gives the Democratic party a 97% chance of retaining the House).
In Zandi’s view, lawmakers would “likely agree to a deficit-financed support package next February, with Senate Republicans being the brake on a larger deal.” There is a chance for additional fiscal legislation next summer, even if Trump wins, though Trump would likely trade more tax cuts for an increase in infrastructure spending, Zandi wrote.