Covid-19: US House set to vote on trillion-dollar package amid dire economic forecasts

The US House of Representatives is preparing to vote on a third trillion-dollar stimulus package as early as this week, as the economic toll from coronavirus continues to devastate the US economy.

Democratic House speaker Nancy Pelosi has indicated that a vote may take place on Friday on a new $3 trillion stimulus package, in addition to the record-breaking $3 trillion in emergency support already sanctioned by Congress since the Covid-19 pandemic began.

But Republicans in the Senate have already signalled their opposition to the plan, setting up what is likely to be a lengthy battle about the size and scope of any rescue package.

The need for further measures to shore up the world's largest economy was illustrated on Wednesday by comments from Federal Reserve chairman Jay Powell, who indicated that policymakers should do more to help the economy.

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Warning that the US risks an “extended period of low productivity growth and stagnant incomes”, Mr Powell said that additional fiscal support “could be costly, but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery”.

“This trade-off is one for our elected representatives, who wield powers of taxation and spending,” he added.

Mr Powell’s downbeat assessment of the medium- and long-term outlook for the economy weighed on US stock markets on Wednesday. They had staged a rally last month after historic losses in March.

The Federal Reserve has already deployed unprecedented measures to help the economy, including corporate bond purchases, which began this week.

But Mr Powell said that he was not considering negative interest rates as a stimulus measure, despite president Donald Trump urging the bank to cut interest rates further on Twitter this week.

Fall-off in cases

The number of coronavirus cases is continuing to rise in the US, though there has been a fall-off in cases in the worst-affected areas of the country, such as New York.

Almost 85,000 people in the US have now died from Covid-19, while there have been almost 1.4 million cases.

However, top immunologist Anthony Fauci warned during a Senate hearing on Tuesday that he believes the number of actual deaths is much higher, though he declined to give a figure.

Dr Fauci also cautioned against a premature reopening of businesses and schools, warning of “serious” consequences. “There is a real risk that you will trigger an outbreak you might not be able to control”, if states do not follow federal guidelines about reopening, he said.

A former White House medical official, Rick Bright, is due to testify before a House committee on Thursday. The top vaccine expert, who was removed from his post at the Biomedical Advanced Research and Development Authority last month, is expected to warn that a more co-ordinated approach is needed across the US to avoid a worsening of the pandemic.

Several states have begun lifting pandemic restrictions, but others are maintaining current lockdown rules. In Washington, DC, mayor Muriel Bowser said that stay-at-home rules would continue until June 8th, even while neighbouring Virginia and Maryland are beginning to ease restrictions.

Manafort release

Meanwhile, Paul Manafort, the former chairman of Mr Trump’s 2016 election campaign, was freed on house release from prison on Wednesday amid fears of a coronavirus outbreak in the facility.

Mr Manafort had been sentenced to 47 months in prison over financial fraud charges related to his work in Ukraine. Though the charges did not directly relate to the Mueller investigation into Russian interference in the 2016 presidential election, Manafort's work in Ukraine emerged during the course of the special counsel inquiry.

Mr Manafort is the second high-profile former member of Mr Trump's circle to be released from prison due to the pandemic. The president's former lawyer Michael Cohen was also freed on home release last month.