Stimulus update: Congress enters critical week to make a deal

For the latest information on the ongoing stimulus negotiations, please check out our coverage here.

Congress is now truly down to the wire with only one week left to put pen to paper on a relief package.

On Friday, Congress passed a one-week spending bill to avert a government shutdown and to give leaders another week to hash out a stimulus package before crucial programs expire at year’s end. Both sides have said they would prefer to come to an agreement this week for both an omnibus spending bill and another COVID-19 relief deal.

The stakes are high. Without action from Congress, a slew of pandemic benefits will expire this month—including some unemployment benefits and eviction moratoriums. That is something the already weakened economic recovery may struggle to absorb.

Of the more than 19 million Americans currently receiving jobless benefits, around 13 million would lose their benefits the week of Dec. 26 when Pandemic Unemployment Assistance (PUA) and Pandemic Emergency Unemployment Compensation (PEUC) expire. Passed as a part of the CARES Act back in March, PUA expands who is eligible for unemployment benefits—for instance, gig workers and self-employed Americans—while PEUC grants 13 weeks of additional unemployment benefits to qualified individuals.

“If we don’t get that help, [the recent unemployment] report suggests that the economy is going to start backtracking. We’re going to start losing jobs, and unemployment will start rising again,” Moody’s chief economist Mark Zandi recently told Fortune.

Where negotiations stand

Last week both sides of the aisle voiced their opinions and proposals for the next deal, but neither provided a drafted bill.

A $908 billion bipartisan proposal has been gaining traction in recent weeks, though it’s unclear if influential party members like Senate Majority Leader Mitch McConnell will get on board. The White House also released its own $916 billion proposal, though it included minimized benefits for unemployment but $600 stimulus checks. Democrats quickly shot down the White House proposal.

However Democratic Sen. Joe Manchin, one of the leaders of the bipartisan bill, still seems optimistic. The bipartisan bill “hasn’t fallen apart,” he said on Fox News Sunday. “We’ve been meeting day and night for the last month,” he said. “We’ll have a bill produced for the American people [on Monday], $908 billion, [unveiled] before the end of the day.”

Still, there remain several long-standing sticking points for the two sides, namely state and local funding, COVID-19 lawsuit protection for businesses, and another round of stimulus checks. McConnell earlier proposed dropping the two most hotly debated issues (state and local funding and business liability) in the interest of time, though some like Democratic Sen. Chuck Schumer didn’t initially react well to the proposal.

But the latest iteration of a deal may look a bit different. On Sunday, Politico and CNN reported that the $908 billion bipartisan bill may now come in two parts: one $748 billion piece for common ground items like funds for health care and jobless benefits, and the other, a $160 billion chunk, for the key sticking points of state and local funding along with temporary liability protection. Though it could be a compromise, it’s unclear if there will be sufficient support for this new deal to pass.

Meanwhile, House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin are set to speak again on Monday following a Sunday afternoon conversation about spending, Pelosi’s deputy chief of staff Drew Hammill wrote in a tweet. And according to Hammill, Pelosi is sticking to her guns: “The Speaker believes, at a time when the virus is surging, that the need for state and local funding is even more important, especially given the states’ responsibility for distributing and administering the vaccine.”

This week will be critical for both sides to compromise, especially on those contested issues, in order to pass a package and get relief to the millions still suffering during the holidays as a result of the pandemic.