Congress now divided over need for more pandemic spending

WASHINGTON (AP) — The unparalleled speed of the collapse of the U.S. economy, forcing more than 36 million Americans out of work, has left an all-too-common political divide, with many Republicans seeing reasons to believe the worst is over while Democrats call for more aid to stave off a possible depression.

After approving nearly $3 trillion to help stem staggering losses for businesses and workers, Republicans say they want to see if that aid is sufficient as unemployment claims slow and shelter-in-place orders are eased. But House Democrats argue that another $3 trillion rescue package is urgently needed or the crisis will worsen and workers could suffer permanent dislocation, a view shared generally by Federal Reserve Chairman Jerome Powell.

The political gridlock baffles many economists who see the need for action on multiple fronts.

“It’s crazy,” said Timothy Bartik, a senior economist at the Upjohn Institute in Michigan. “It makes no sense to me."

One reason for their concern is the many uncertainties that lie ahead. Will the coronavirus start to fade as a threat? Will customers return to stores? Will colleges and schools reopen? Will smaller companies still have enough cash to operate as the lockdown eases?

What is clear are the risks of atrophy if the U.S. economy spends too much time shuttered, the risks of further job losses because of slashed state and city budgets and the risks for incumbents seeking reelection with the worst economic numbers since the Great Depression.

Bartik estimates that cutbacks by state and local governments due to lost tax revenues would cause the overall U.S. economy to shrink by 4% annually, unless the governments receive roughly $1 trillion in federal help over two years. His numbers align with the proposal by House Speaker Nancy Pelosi, though he would prefer if...