Senate Republicans are planning to vote as early as this week on an economic stimulus package worth about $500bn, even though Democrats have already dismissed it as insufficient to address the US’s slowing recovery.

Mitch McConnell, the Kentucky Republican and Senate majority leader, announced that the legislation would be introduced on Tuesday, as lawmakers in the upper chamber returned to Washington after their summer recess.

“Republicans believe the many serious differences between our two parties should not stand in the way of agreeing where we can agree and making law that helps our nation,” said Mr McConnell.

The proposal, which has the Trump administration’s support, is expected to include new money for federal unemployment benefits, replacing the $600-per-week payment that expired in late July with cheques worth half that — $300 per week. It is also expected to include additional funds for small business relief and liability protections for businesses as they reopen in the face of the coronavirus pandemic.

It will not, however, include a new round of direct payments to individuals, after up to $1,200 was sent to many American adults in April and May — nor will it offer any federal aid to cash-strapped state and local governments.

Democratic leaders on Capitol Hill have proposed a much larger package worth $3tn. They have argued that the Republican plan would do very little to help an economy that is still 11m jobs short of pre-pandemic employment levels, with millions of Americans struggling to pay for essential needs including housing and food.

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In a joint statement, Nancy Pelosi and Chuck Schumer, the top Democrats in Congress, said the Republican plan “doesn’t come close to addressing the problems and is headed nowhere”.

“This emaciated bill is only intended to help vulnerable Republican senators by giving them a ‘check the box’ vote to maintain the appearance that they’re not held hostage by their extreme rightwing that doesn’t want to spend a nickel to help people,” they added.

Republicans’ unwillingness to offer any significant funding for state and local governments has also generated anger among Democrats.

“Our cities and states are being bled into bankruptcy fighting this virus. Republicans’ gleeful blocking of all aid to them will lead to savage cuts to schools, firefighters, and road-building and set our nation back years. It’s vintage GOP governance by nihilism,” Bill Pascrell Jr, a Democratic congressman from New Jersey, wrote on Twitter on Tuesday.

Amid big differences over the size and details of a new stimulus package, hopes that a compromise can be reached by the November election, which most economists have been counting on to support the US recovery, have gradually faded.

Policy analysts have also noted that the August jobs report, which showed an unexpected drop in the US unemployment rate from 10.2 per cent to 8.4 per cent, has removed some pressure on Republicans and the White House to consider a bigger stimulus package.

In a note to clients on Tuesday, Chris Krueger, an analyst at Cowen Washington Research Group, wrote that the stimulus talks were on “life support”.

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On Monday, Donald Trump, the US president, said he was taking the “high road” by not meeting congressional Democrats to hash out a deal.

“I don’t need to meet with them to be turned down,” Mr Trump said.

But Mark Meadows, the White House chief of staff, told Fox Business Network on Tuesday that he was more hopeful about reaching an agreement, saying that Democrats would eventually bow to pressure from the public and embrace a smaller package.

“I do believe that we’ll see that only because I — I’ve had a number of conversations, probably a dozen sometimes a day with different rank-and-file members and when you listen to them, they’re listening to their constituents,” Mr Meadows said. “I’m more optimistic perhaps today than I’ve been in a long time.”

Via Financial Times