The president’s Twitter account sent the markets on a roller coaster, with a steep decline at Tuesday’s close, only to be followed by a tangible bump before market release. The Capitol Hill aides were also unsure where, exactly, the president is on the stimulus right now. But all agree that genuine substantive bipartite negotiations, which were already in a precarious situation, have been concluded for the moment.
Conclusion: The market, based on Wednesday morning, has no idea what it’s doing. The reality, unlike Trump’s return tweets, is that bipartisan stimulus talks are dead. There may be crises and the beginnings of efforts to pass piecemeal legislation in the coming weeks, but Democratic leaders have repeatedly rejected this path.
What it all means: For millions of unemployed or underemployed, for small business owners who barely care, for airlines shedding tens of thousands of jobs, for a decimated service sector, federal help is coming. not anytime soon.
Days before the election: 27.
Trump’s move was all the more baffling since it came on the same day that arguably the world’s most powerful economic official – the man who runs a central bank who alone is more responsible for the float of the US (and global) economy during the worst economic shock in a century – it was made clear that more fiscal stimulus was just necessary, but necessary.
“Insufficient support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Federal Reserve Chairman Jerome Powell said on Tuesday. “Over time, household bankruptcies and business bankruptcies would increase, hurting the economy’s productive capacity and slowing wage growth. On the other hand, the risks of doing too much seem, for the moment, to be less. ”
Important background here: Powell was actually summoned to an appeal between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin last week, according to someone with direct knowledge of the appeal. The real reason was to review potential changes to the Fed’s municipal lending facility, but this highlights that he has been closely involved in working with the Treasury on the economic response and has spoken to Pelosi on several occasions at the in recent months. Pelosi led negotiations for the Democrats, while Mnuchin was the administration’s main negotiator.
It wasn’t just the public calls for more budget support – which are a rarity for a Fed chairman – that made the comments so noteworthy, but also the fact that he has been deeply engaged with policymakers themselves. in the wings.
Pelosi and Mnuchin were still very separate in their ongoing discussions, and especially among Republicans in Congress, there was extreme skepticism that any agreement would never be reached.
The two sides were still about $ 400 billion apart on the top line, but perhaps far more importantly, the actual details in the weed, even on coins where there was broad agreement and understanding, were just not nailed down, according to several people were told of the discussions.
Senate Majority Leader Mitch McConnell in a conference call with Trump, Mnuchin and GOP House Leader Kevin McCarthy warned the President Pelosi could very well move on, according to people close to him of the call. He did not ask Trump to explicitly withdraw from the deal, but made it clear he had questions about his outlook.
That said, Tuesday was to be a big day for talks, with trade newspaper Mnuchin and Pelosi the day before and scheduled to speak in the afternoon to try and score more progress. Would it have worked? Again, the skepticism was wide and deep.
But that doesn’t explain why Trump took to Twitter to kill the talks, uninvited and unilaterally.
“We’ve gone from ‘pox on two houses’ where we had a lot of reasons to bring it to Pelosi, now it’s all the president’s fault,” a GOP aide told CNN. “This is insane.
Several GOP leaders have expressed their displeasure with the president’s decision to withdraw from the talks, including Senator Susan Collins of Maine.
“Waiting until after the elections to reach agreement on the next Covid-19 relief package is a huge mistake,” Collins said in a statement. “I have already been in contact with the Secretary of the Treasury, one of the main negotiators, and with several of my colleagues in the Senate. ”
And some Democrats, frankly speaking, admitted that Trump had given their camp a boost given that the talks were far from a final deal. ” It’s a gift. No question, ”a Democratic official told CNN.
The fragmentary proposal
Trump, in two separate tweets, called on Congress to send him a bill that included $ 25 billion in airline payroll support and $ 135 billion in small business assistance, and a separate bill that would drive a second series of stimulus checks to individuals.
Start with this reference: Pelosi and Senate Democratic Leader Chuck Schumer have repeatedly rejected splitting larger stimulus legislation into smaller pieces. This is strategic – they are keenly aware that this would put an end to hopes for a broader agreement, an agreement they have made clear is essential in dealing with the economic and public health ravages caused by the pandemic.
It hits the fundamental gap that hasn’t been bridged for months – the difference in how Democrats and Republicans see the breadth and scope of the response that is needed.
Switch to this reality: The House is probably out of session until the end of Election Day. The Senate has essentially been put on ice due to a Covid-19 outbreak, with a return slated for the sole purpose (primarily) of confirming Supreme Court candidate Amy Coney Barrett.
Leaders have made it clear that they can bring back members whenever they want, but if a deal goes through there would be significant objections from Republicans in both chambers.
It wasn’t in March, when the House and Senate almost unanimously passed the largest economic aid package in U.S. history. Processing a deal would take time – and McConnell made it clear to Trump in a conference call Tuesday that his members were very reluctant to go down the path of yet another major stimulus bill (which Republicans in the Senate have clearly stated publicly for months).
And this one: In fact, Republican Senate leadership considered moving stand-alone air aid two weeks ago by unanimous consent, two people familiar with the effort told CNN. Their own limbs clashed, sinking it before it could take off (no pun intended).
The Republican Conference is also generally skeptical of another round of stimulus checks. Not everyone – but more than half, according to senators and aides.
End here: The president ended the only high-level bipartisan discussions on Twitter. Mnuchin confirmed that they were completed shortly thereafter during a brief call to Pelosi. Most Republicans were suspicious of a big deal to begin with, and many wanted no deal at all. Most Democrats would only take one big deal and fear they strayed too far from the $ 2.2 trillion bill passed by the House last week. The election is less than a month away. All of these factors tell you everything you need to know about the outlook for any Stimulus Talks resuscitation, piecework, or whatever.
What shall we do now?
Given Trump’s tweet reversals, there will likely be some surface effort to give sketchy invoices a chance again, and one of the wild cards here is airline payroll support. Pelosi, in a statement last week, said that if a comprehensive deal collapsed, she would come up with a stand-alone bill. But Democrats attempted this last week and were blocked by Republicans, so the prospects for that engagement remain highly uncertain.
From this perspective, a good barometer on the general state of affairs is to listen to the two most powerful members of Congress.
“I think his opinion was that they weren’t going to produce a result and we have to focus on what is achievable,” McConnell told CNN’s Manu Raju on Tuesday afternoon of Trump’s decision to put end of negotiations. Trump has made it clear that the focus needs to be on confirming Barrett to the Supreme Court – and that just happens to align with McConnell’s top priority at the moment.
Pelosi, speaking at a 92nd Street Y event on Tuesday night, said Democrats must “focus our attention on winning the election” now that Trump has pulled out of coronavirus stimulus talks, said CNN’s Haley Byrd reported.
“Let’s look ahead,” she said, adding that “it’s very unfortunate” Trump unplugged the plug and found out through the tweet and not before.
“We will have a stimulus bill, and it will not win the elections,” she added, adding that clear action on the first should await the results of the second.