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Advocacy & Policy Update - August 8, 2020



Coronavirus Stimulus Bill/Appropriations

On Thursday, September 3, Treasury Secretary Steven Mnuchin and Speaker of the House Nancy Pelosi (CA) informally agreed to pursue a short-term measure to avert a government shutdown when the fiscal year ends on September 30th – which means the stopgap keeping the government open would be free of controversial policy riders. This agreement significantly lowers the odds of a shutdown before the November 3 elections and ensures that the government funding bill and a final coronavirus relief package will remain separate.

On Sunday, September 6, Mnuchin said both he and President Trump think more stimulus funding is necessary to help businesses and workers during the pandemic but are stalled on topline negotiations with Pelosi, who wants the Republicans to agree to a $2.5 trillion deal in advance of talks. The Republicans' smaller proposal includes $300 in additional weekly unemployment benefits until December 27, another round of money for the Paycheck Protection Programs, an additional $10 billion for the U.S. Postal Service and liability protections to businesses. 

Senator Ted Cruz (TX) has created a potential new hurdle to passage with his push to include a controversial school choice plan that has divided Senate Republicans.  The plan would include billions in tax credits to expand school choice. Cruz believes the pandemic has shown vast weaknesses in the public school system and wants more Republicans to support the idea, while critics say it would simply hurt public school systems.

On Thursday, September 3, Senate Democratic Leader Chuck Schumer sent a Dear Colleague letter ahead of the upcoming Senate session describing “divided” Senate Republicans who have failed to act on another COVID relief bill, while the House passed the Heroes Act more than three months ago. Senator Schumer also says that by all accounts, what Senate Republicans have proposed in their new offer is even more “emaciated” than their previous proposals by leaving out additional money for rental assistance, nutrition assistance for hungry families, and for essential state and local services, the census, and safe elections.

Click here to access the Dear Colleague letter.

CBO Budget Outlook

On Wednesday, September 2, the Congressional Budget Office (CBO) released its updated budget outlook, which is the first to include the effects of the coronavirus pandemic and economic crisis. Its baseline is based on the CBO July economic forecast and shows that the current crisis has substantially worsened an already unsustainable budget outlook. The September 2020 outlook estimates that under current law, budget deficits will more than triple, rising from $984 billion (4.6 percent of GDP) in 2019 to $3.3 trillion (16 percent of GDP) this year.

The analysis also projects deficits to fall to $1.8 trillion (8.6 percent of GDP) in 2021, falling just below $1.1 trillion (4 percent of GDP) in 2027, before rising again to $1.6 trillion (5.3 percent of GDP) in 2030. Deficits will total $16.3 trillion (5.9 percent of GDP) between 2020 and 2030, $2.1 trillion (1.1 percent of GDP) higher than CBO's pre-pandemic estimates. While today’s borrowing is necessary in order to relieve economic pain caused by the pandemic, the outlook shows it is not sustainable in the long-term. Once the crisis subsides, lawmakers need to turn their attention to long-term deficit reduction and put the country on solid fiscal ground.

Click here to access the September 2020 outlook. 

Unemployment Rate

On Friday, September 4, the Department of Labor (DOL) Bureau of Labor Statistics (BLS) released the August jobs report, which shows the U.S. added 1.4 million jobs last month and the unemployment rate ticked down to 8.4% - the first time since March the unemployment rate has been below 10%.  The drop brings the rate below the peak of the last recession a decade ago, when unemployment briefly hit 10 percent, but joblessness is still higher than the peak of many past recessions. Payrolls are still more than 11 million jobs below their pre-pandemic level. Even as people return to work, more are finding that layoffs are permanent. In August, less than half of unemployed workers reported being on temporary layoff or furlough. Back in April, that figure was nearly 80 percent. That development is the result of a combination of good news and bad.

Click here to read the full report.

Click here to read the entire September 8 weekly legislative update.

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