Joe Wall of Goldman Sachs’ Office of Government Affairs explains what’s included -- and what’s not – in the US’ second stimulus package of 2020. Wall also talks about other policy priorities that investors are watching for in the new year. This podcast was recorded on the morning of December 21, 2020.
This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
This is extra Goldman Sachs when we discuss developments, curly shaping markets, industries in the global economy and Jake Seaward Global, had of corporate communication to the firm today were joined by one of our top public policies? it's your wall who works out of our office of government fares in Washington DC, we'll talk to you by the latest with you a stimulus package where it stands today, Monday December, twenty first, what's clearing, what's not in others! policies that investors are watching as we move into the new year and the new administration Joe Welcome back to the programme your morning, thanks. So here, Monday morning December, twenty first we're just chatting there's a stimulus package. They'd congresses ban scrambling to pass patently there's an agreement, but we haven't seen the language. Yet, what are we not so yeah, last night Sunday night it about five very p m. The deal was, you know,
officially announced by both parties, it is in a roughly nine hundred billion and in his hitching a ride. The stimulus, in other words, is hitching a ride on the end of year, government funding package, which about one point, four trillion, which you now is separate, but is the sort of action forcing events that course If the negotiations forward So what we do know is that this auntie culminates six months of negotiations between the two parties that basically began and artists in July, and we had an August recess that prompted nothing. We then had, obviously the pre election period then promptly nothing and now we're here in the lame duck section which finally has resulted in a package to put in perspective, it's been two hundred and sixty nine days since the Cares ACT was passed. We hope that we'll tax will be coming out soon and I think the house will likely bout this afternoon the evening an assent will follow suit, either late tonight or perhaps even tomorrow, depending on, if there
would lead to skip over some procedure. All emotion that I couldn't lengthen the debate, but hopefully they wrap it up by tomorrow at last Well, there are motivated to get home for the holidays, so hopefully that will help talk a loop, but the size of the deal any other time. This would have been a monster deal, but we live in unusual times. How does a compare to the cares act? The first corona virus rescue package that we saw back in March so we forget. Sometimes the cares acts which was actually referred to as phase three of the stimulus we had to smaller phased packages. That passed in the early Marge so phase. One was about eight billion for vaccine research. Development phase two was about a hundred and four billion, which was just tailored around paid sick leave and unemployment benefits, and then we had the Cares ACT which totalled two points. Two trillion, unless of course, since nine hundred billion, which I guess we were fortunate space for now so Have you taken totality? You know
this year alone between those four phases were in a just north of three point: two trillion, which is quite remarkable considering the size and the scope of that the latest nine hundred billion delves into a lot of areas just in terms of replenishing what the Cares ACT did but also includes some new components as well. We'll talk, eleven the composition. What's in it in? What's not your democratic pushed really hard for some provisions and Republicans had held out at the Burma's shape up and where's the money going yeah. So in terms of the remain pockets that the funds are distributed to, the biggest component is released. for small businesses, which totals about three Gordon twenty five billion about a third of the package is devoted to small business relieved two hundred and eighty four billion of that dawn in other some reason. News reports today will go ppp, so there'll be a second offering of PPP learns to businesses that have suffered
in the north of a twenty five percent decline in revenue, there is about twenty billion for idle grants and then also have fifteen billion dollar set aside for live, then news, but obviously it very very hard by the pandemic. The second largest component is direct payments to individuals. This was something that added it sort of late in the process. It was actually a bipartisan compromised, forced by Bernie Sanders on the progressive end of the spectrum in jars folly conservative end of the spectrum, but you senators that you would not necessarily pair together with a ones advocating for direct payments that individual. So these will go to individuals making the seventy five thousand dollars a year will get a six hundred dollar check and then its phased out above that income level couples making up to one hundred, and fifty thousand will receive twelve hundred and then each child dependent if you qualify under those income thresholds
would receive an additional six hundred dollars so for a family of the war, whom Those in parameter is just an example that would be twenty four hundred dollar direct payments are those individuals, the other components. Work on it, So I M an insurance in the it was on. Unemployment will receive an additional three hundred dollars per week through March fourteen What does expire in MID March schools? we obviously have been also very hard hit, received. Eighty two billion in funding the transportation industry credibly hard hit receive forty five billion, including fifteen billion, that sort of specifically earmarked for airline payroll support, there's also twenty five billion for rental assistance and then, of course, one of the other big components that I left out there's about
sixty nine billion allocated for funding to accelerate vaccine distribution, testing and tracing. So those are kind of the big buckets of funding that were incorporated nurse others that there are definitely included, then I'm leaving out, but the other items. I would say, however, that were included that are a little bit on the outside of the spectrum. There was a deal cuts last weekend rise, medical billing, which is an issue that has been debated in Congress, the last few months, while the eighteen months? What is included in these restarted The two issues that largely held up negotiations over the last several once more. Liability protection for businesses, which was a priority for Senate Republicans and House Republicans, and then Arguably the number one priority for our House and Senate Democrats, which was state local funding, so there two issues have basically been punted and were not dealt with in this package. So I think you know Congress.
to come back for another round of stimulus negotiation in the springtime and those commission well enough for sure, be on the table again. Where I will lose a lot of focus right now on the to Georgia Senate seats, though be run off election early January, oversee Democrats would like to go back. and see more state in municipal spending and support what impact do things the outcome, those Georgia Senate races will have on additional fiscal stimulus in a bind administration. while their very consequential. You know not only the near its firm in terms of stimulus, but also in the medium to long term, in terms of just the broader legislative agenda of Democrats, whirlwind both of those run off elections and the near turn That means is that, with these fifty fifty Senate and a narrow majority in the House Democrats, would you belies the budget reconciliation process which, if your call back, did you in seventeen that republic in Congress,
the Trump administration, try to use the reconciliation process twice, twenty seventeen postwar appealing, affordable care act, and then it says gently. They use that I was in the end of the year and seventeen to pass actual form. So we would expect if democrats do can all both chambers, the daily try to use the reconciliation process in the early part of the year call it you know late large early April to try to pass another round of this. Will stimulus now Reconciliation process there's a little monkey and it comes with a lot of guard rails. What you are and what you are not allowed to use it for We can also see the reconciliation process reform to allow them to do more so would give them sort of another a lever to try to get stimulus done if they do not. And a warning bells. That means course we're gonna have to strike a bipartisan deal between Senate Republicans control the upper chamber and
some brats and abiding and we'd observed one thing over the last six or seven months is that it was not easy to come up with this deal and that one You know there's a lot of adding impetus for another round of stimulus. Then part of next year again, as in late March, early April, probably the timeframe they went in for by no means going to be an easy negotiation process, so I would say that is the sort of bearing of the door to run off. Is that of Democrats do when both could accelerate their ability to get something done so beyond unless what some of the other economic power see issues that investors watching as President Biden is inaugurated. Yes, I think the big domestic issue, yon stimulus that you know that often gets about- and it's probably long overdue in terms of being addressed, its infrastructure. Setting that
something that there's a lot of interest on both sides of the Isle. In terms of confronting the challenge, of course, anytime you talk about infrastructure. Is they comes in fast and given you know how much money has been set this year? Is in terms of stimulus, just north of three point: two trillion be challenge that law makers will naturally confront. Is how do you pay for it a divided Congress. That debate is gonna, be a lot more contentious and difficult to come to a resolution on Y know me impossible, but not easy. If Denmark, again waterway both of those Georgia run ass, they could. He is arguably a second reconciliation bill. Much like Republicans, didn't you at the end of twenty seventeen. You could see them essentially use reconciliation at the end of June we need twenty one as mechanism to help pay for an infrastructure package that would mean, as they would use modifications in it, that's the reason. The corporate rate
potentially raising the top rate for individuals. Tinkering with other components of attacks codes generate revenue to help pay for an infrastructure. citing that would be sort of the mean two components of tax and infrastructure that a lot of people that we speak with our watching carefully? And then I would say the other big domestic issue. Is healthcare fall back to them? I'm a chronic find areas. Pre covered the you know, the number one issue womanly was healthcare and it was for all around the cost of health care. So you know France. lights. Biden has made adding a public optionally, affordable, Terracina, a cornerstone of this campaign, so that something You can also try to incorporate into a reconciliation package if they wore away again. Both of those seeds enjoyed origin, Well, thanks for joining us today for the very timely we update on the stimulus packages. Hope they get that done so this podcast is not obsolete tomorrow, but thanks for joining us again. That concludes this item.
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Transcript generated on 2021-07-01.