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Politics Trump’s Hurdles to Stimulus Climb After Abrupt Tactical Shift

14:30  10 october  2020
14:30  10 october  2020 Source:   bloomberg.com

Democrat Joe Biden tests negative for coronavirus after President Trump reports positive test

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President Donald Trump said he wants an even bigger stimulus than what Democrats have offered so far, yet another Stocks had climbed to session highs on Friday on the first reports of the White House upping its offer on coronavirus relief, but failed to gain further steam from Trump ’ s later twist.

Stocks tumbled after Trump ’ s posting called an end to months of hard-fought negotiations between the administration and Congress. Democrats had most recently pushed a .2 trillion package that failed to garner Republican support in the House, while the White House had endorsed .6 trillion.

(Bloomberg) -- President Donald Trump scrapped fiscal stimulus talks this week after failing to swing Senate Republicans behind a package Democrats could support. With negotiations back on, the obstacles are just as daunting.

Treasury Secretary Steven Mnuchin heads into weekend negotiations with House Speaker Nancy Pelosi with the top-line number for relief fast approaching the $2 trillion level that many Senate Republicans say they cannot accept.

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After Mr. Trump ’ s posts withdrawing from negotiations, the S&P 500 dropped. On Wednesday morning, it rose again, on what analysts speculated was hope that Mr. Trump ’ s latest Twitter posts might revive the stimulus talks. Carl Hulse and Luke Broadwater contributed reporting.

Trump later added more confusion to a chaotic week of discussions over aid. "I would like to see a bigger stimulus package frankly than either the Democrats or After Pelosi and Mnuchin renewed talks toward a deal early in the week, Trump abruptly told his administration to back out of discussions.

Mnuchin has already alienated some in his party by moving toward policies in the House Democrats’ $2.2 trillion proposal that they oppose. His counteroffer contains language allowing taxpayer-funded abortions through Obamacare and stimulus checks to undocumented immigrants, according to a person familiar with the matter -- measures anathema to many GOP lawmakers.

a group of people standing next to a person in a suit and tie: Pelosi Awaits Mnuchin's Stimulus Counter-Offer and Prepares Vote © Photographer: Bloomberg/Bloomberg Pelosi Awaits Mnuchin's Stimulus Counter-Offer and Prepares Vote

Steven Mnuchin on Capitol Hill in Washington, D.C., U.S.

Photographer: Oliver Contreras/Bloomberg

After a months-long deadlock, the stimulus talks took on a desperate appearance this week. Trump on Tuesday tried to blame Pelosi for refusing to compromise, and pulled out his negotiators. Hours later, he demanded separate bills for aid including stimulus checks for individuals and aid to airlines. By Thursday, comprehensive talks were back on.

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Trump on Tuesday announced on Twitter that he had directed White House negotiators to abandon talks with Democratic leaders to strike a new Covid-19 stimulus deal. "I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass

Trump ’ s position on stimulus negotiations has been all over the map in recent days, restarting talks just three days after ending them. In another contradictory message on stimulus spending, President Trump claimed Friday that he wants a bigger package than Democrats after his

Then came Friday. With his poll deficit to Joe Biden widening and the need to divert attention from his handling of the coronavirus escalating, Trump endorsed an even bigger stimulus proposal. Just how big a number he wants hasn’t been entirely clear.

Negotiators Undercut

Mnuchin made a $1.8 trillion offer to Pelosi Friday -- an increase from the $1.6 trillion the White House had previously endorsed. Yet Trump undercut that by saying he wants an even bigger stimulus than what the Democrats advocate.

Earlier: Trump Allies Stumped by Unilateral Move to Scrap Stimulus Talks

“I would like to see a bigger stimulus package, frankly, than either the Democrats or the Republicans are offering,” Trump said on Rush Limbaugh’s radio program, adding that he’s going in the “exact opposite” direction from his earlier stances.

Shortly after, the White House communications director, Alyssa Farah, told reporters the administration wants a package below $2 trillion, sowing further confusion.

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Corporate America Condemns Trump Move to Halt Stimulus Talks. Trump called off the talks hours after Federal Reserve Chair Jerome Powell during a virtual conference urged additional fiscal support to avoid what he said could become a “tragic” fallout for the U. S . economy. Fed chairs typically don’t

' Abrupt shift ' from Trump . Stimulus hopes have been dimming for some time. Late last month, Goldman Sachs cut its economic growth outlook for the fourth quarter, citing failed negotiations on a stimulus package. And yet Goldman Sachs economists expressed surprise at Trump ' s sudden

Democrats’ $2.2 trillion plan, passed by the House earlier this month, is down from the $3.4 trillion package they approved in the chamber in May.

Senate Vote

Senate Republicans backed a bill offering about $650 billion last month, showcasing the gulf with the House. But if Mnuchin and Trump can get Pelosi to sign off on an agreement for less than $2 trillion, it would be hard for Senate Majority Leader Mitch McConnell not to put it up for a vote, according to a Senate GOP aide.

Read More: White House Open to Bigger Stimulus Bill as Mnuchin, Pelosi Talk

Trouble is, the president’s suggestion he wants something bigger than the Democratic proposal could also harden Pelosi’s demands for larger-scale spending.

Then there’s the timeline. For Trump -- and vulnerable moderates from both parties -- unveiling a deal after Election Day would garner no campaign benefit. It took 19 days after enacting the last stimulus, in March, to send out stimulus payments to individuals, Goldman Sachs Group Inc. analysts pointed out. There are now 24 days left until the election.

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Trump offers to approve a fresh round of stimulus checks after Pelosi accuses him of ‘putting himself first at the expense of the country’. Some media commentators described Trump ’ s abrupt move as a goal scored against his own team – making it a lot harder for him to blame Democrats for any lack of a

Donald Trump ' s decision to kill Covid-19 relief negotiations may be a brave stand on principle, ultimately siding with conservatives who are against more massive deficit-financed spending, but it is also a very risky political move. A multi-trillion-dollar deal would have pumped stimulus into the

Crafting a pre-election bill may prove a hurdle too high. McConnell said on Friday that there’s probably not enough time.

Barrett Is the Priority

“I believe that we do need another rescue package, but the proximity to the elections and the differences of opinion about what is needed are pretty vast,” McConnell said at an event in his home state of Kentucky.

The majority leader later told reporters that “even if an agreement” on stimulus is reached, his first priority is securing Senate confirmation of Trump’s nominee for the Supreme Court, Amy Coney Barrett. Hearings for her nomination are scheduled to begin Monday with a final Senate vote as soon as the week of Oct. 26.

If Pelosi and Mnuchin did reach an agreement, Congress would likely need two weeks or more to draft legislative text and approve it in the House and Senate. The Senate is on recess until Oct. 19 and the House until mid-November, but lawmakers have been told they can be called back with 24 hours notice to vote on any stimulus deal.

If it came to a vote, Republican lawmakers may be the key obstacle.

Further Disputes

McConnell has said there are members of his majority who think the government has already provided enough stimulus. House Republican leader Kevin McCarthy of California has also said his caucus members are skeptical of a large package. “We’d have to see what’s in it, but I think it’s difficult,” he said last month.

The two sides are are divided on issues including how much money to provide state and local governments, language restricting Trump’s ability to divert anti-virus health care spending and the level and length of supplemental unemployment benefits. Dozens of smaller arguments, such as on funding for election security and the U.S. Postal Service, also remain.

Many of the policy issues are “at least as controversial as the top-line number,” Goldman analysts including Alec Phillips wrote in a note Friday.

“An appearance of additional progress seems likely over the next several days,” with Trump pushing for a deal, they wrote. But “we haven’t changed our view that substantial fiscal stimulus is unlikely to pass before the election,” the Goldman team concluded.

For more articles like this, please visit us at bloomberg.com

©2020 Bloomberg L.P.

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usr: 3
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