House Democrats propose new $2.4T stimulus plan

Yahoo Finance's Akiko Fujita and Rick Newman discuss House Democrats' new $2.4T stimulus plan.

Video Transcript

AKIKO FUJITA: Democrats are preparing to craft a new $2.4 trillion stimulus bill, a starting point, perhaps, to resume talks-- on those stalled talks, we should say, of the CARES Act. That $2.4 trillion number about a trillion less than the measure the House approved back in May.

Let's bring in Rick Newman for the very latest on that front. Rick, I guess the question is, will Republicans come on board with this? And it seems like anything north of $2 trillion, they think that's just too much.

RICK NEWMAN: I don't think the Republicans will remotely come on board with this. I mean, based-- just based on the numbers alone, their number is around $500 billion in additional stimulus. So the Democrats started with around 3.4 trillion as their opening bid. As you pointed out, that was the Heroes Act that they passed all the way back in May.

We should point out, Republicans in the Senate have never even passed their version of a bill. They've kind of argued about what should be in the bill. So they can't even really get their act together to agree on a single bill they can support. So even though the Democrats look like they're trying a little bit more than they were before, I think they're-- I think the most likely outcome is no stimulus before election day on November 3.

AKIKO FUJITA: No stimulus before election day. And yet, when you look at the economic data that's come in recently, I mean, that seems to suggest that things are slowing down, because there are-- those enhanced unemployment benefits have run out. The stimulus bill has run out, as well.

I mean, how do you think both sides are looking at this in the context of the election? You know, we were talking about this a month ago, saying this has got to be a no-brainer with the election coming up in November. And yet, there doesn't seem to be any sense of urgency, despite what's actually happening on Main Street.

RICK NEWMAN: You know, Akiko, I thought they would have a-- they would have a bill done by the beginning of August before they left for their August recess. And I think the fact that they haven't indicates that this is all about politics at this point. I mean, it is notoriously difficult to pass any kind of legislation in the so-called silly season. That's the three or four months leading up to any November election, whether it's a midterm or presidential. And this is proving to be the same case this year.

So there is a strong economic case that we should have more stimulus. As you pointed-- pointed out, you know, people are now-- people who've been without work for a long time, I mean, their incomes are plunging. We're seeing that show up in consumer spending data. We're probably going to have a lot of smaller businesses just going bust. We're going to start to see a lot of mortgage defaults and other defaults on loans, foreclosures, and things like that. People can't pay their rent.

So these problems are real, and they're piling up. However, I think maybe the best scenario at this point is-- is to look for some help from Congress after the election. So maybe when there are no longer political considerations, in terms of how it plays, whether it plays for the Democrats or against the Republicans or vise versa, if we can get that off the table, maybe that's what it will take for Congress to get something done. But you know what, they're only in session for a few more days. And then, they're all going back to their districts, either to campaign or just rest.

AKIKO FUJITA: The report-- really quickly, I mean, what about the election results? I mean, you talk about this expectation of this discussion continuing after the election. You know, what if there is a huge blue sweep? I mean, how is that likely to change the dynamic of the discussions?

RICK NEWMAN: If there's a blue sweep, I think it makes legislation much more likely, and it leads to a higher number rather than a lower number. But it probably wouldn't be during the lame duck. It would probably have to wait until the new president, which in that scenario would be Joe Biden until he became president next January.

The more complicated question is, what if there is some kind of split decision in November? Or even if it remains as it is, and Trump gets a second term, but Congress remains split, how does that shake out? I don't know. But what's going on right now is each party in Congress doesn't think they have that much to lose politically by holding off. And of course, guess who does have a lot to lose? It's people who can't pay their rent and are running out of money.

AKIKO FUJITA: Yeah, and we're seeing that reflected in Congress with these talks continuing to be stalled. Thanks so much for that, Rick.