WASHINGTON – President Trump abruptly halted bipartisan coronavirus relief talks, saying he was suspending efforts to get more aid to struggling households and businesses until the end of Election Day, shaking Wall Street and surprising lawmakers from both parties.
“I asked my representatives to stop negotiating until the end of the elections, when, immediately after my victory, we pass a major stimulus bill,” Mr Trump said on Twitter on Tuesday as he rejected the Democrats’ current offer as a bailout of the Blue States.
The negotiations came to an end hours after Federal Reserve Chairman Jerome Powell warned of dire economic consequences if Congress and the White House do not provide additional support to households and businesses disrupted by the crisis. pandemic. The shares immediately fell on Mr. Trump’s tweets after trading higher earlier today. The S&P 500 ended the session down 1.4%.
“President Trump has shown his true colors: putting himself first at the expense of the country,” Pelosi said of her decision to end the talks. “Moving away from the coronavirus talks shows that President Trump is unwilling to crush the virus.”
The two sides had moved closer, after the House passed a $ 2.2 trillion bill last week, down from its first $ 3.5 trillion package. Mr Mnuchin had offered a $ 1.6 trillion offer last week in response. The two sides remained at odds over how much state and local aid to include in a deal, which was the source of disagreements for months, along with other issues, aides said.
Mr Trump said he has tasked Senate Majority Leader Mitch McConnell (R., Ky.) To focus his efforts on confirming his Supreme Court candidate Amy Coney Barrett, whose hearings in the judicial committee start Monday, rather than on the stimulus effort.
Mr McConnell said he agreed with Mr Trump’s decision.
“I think he was of the opinion that they weren’t going to produce a result and that we should focus on what is achievable,” he told reporters.
Recent economic data has shown that the pace of recovery is slowing without additional fiscal support. Monthly job gains and vacancies have cooled and more layoffs are becoming permanent. Household income fell at the end of the summer due to a cut in federal supplements to unemployment benefits, and consumer spending is also increasing more slowly.
It was not entirely clear what prompted Mr. Trump to call off the talks, or if he might be reversed later, as he has done in previous struggles over government funding and other issues. . People close to the president viewed the move as an attempt to build influence, but his decision to take direct responsibility for ending negotiations confused congressional aides on both sides as it would be more difficult for Republicans. to blame Ms. Pelosi for the stalemate.
Mr Trump had spoken to Mr McConnell, Mr Mnuchin and parliamentary minority leader Kevin McCarthy (R., Calif.) Earlier on Tuesday, assistants said. MM. McConnell and McCarthy did not urge him to end the talks, according to a person familiar with the discussion.
In his tweetsMr. Trump said the White House “made a very generous offer” and accused Ms. Pelosi of not negotiating in good faith.
Mr Trump’s announcement surprised Ms Pelosi, aides said. She was on appeal with House Democrats when Mr. Trump tweeted and then commented on the impact taking steroids can have on patients, according to those on call, a reference to Mr. Trump since his diagnosis of Covid-19. last week.
Ms Pelosi spoke to Mr Mnuchin earlier on Tuesday and the two were scheduled to speak again before Mr Trump’s tweet. In a brief call Tuesday afternoon, Mr Mnuchin confirmed that Mr Trump had called off the talks, and Ms Pelosi expressed her disappointment, her spokesperson said on Twitter.
Republicans have long faced deep divisions over the passage of another relief bill, with some GOP lawmakers opposing paying for a fifth package after Congress approved aid worth around $ 3 trillion. dollars this spring. Conservative groups recently called on lawmakers to reject any new deal.
But other Republicans, including senators facing competitive re-election races, had pushed for another aid package. Senate Republicans tried to bridge their internal divisions last month by putting together a package that included roughly $ 650 billion in spending, offset by $ 350 billion in reallocated funds. Democrats blocked this proposal in the Senate.
While Democrats are expected to retain control of the House this fall, the Republican-controlled Presidency and Senate are on the line. A recent Wall Street Journal / NBC News poll showed Democratic candidate Joe Biden leading Mr. Trump from 14 percentage points among registered voters. Republicans had previously accused Democrats of slow relief negotiations until the end of the election, and some GOP lawmakers facing tough re-election races had made additional coronavirus aid a plank of their campaigns.
“Waiting until after the election to reach agreement on the next Covid-19 relief package is a huge mistake,” said Senator Susan Collins of Maine, a Republican facing stiff competition this fall. Ms Collins said she and several Senate colleagues had previously been in contact with Mr Mnuchin.
Senator Bill Cassidy (R., La.), Who for months lobbied Congress to send more aid to states and local governments, said Republicans were already facing political headwinds this year .
“The Senate majority is obviously 50-50 at best,” Mr. Cassidy said. “Whether that’s the cause or not, I don’t know,” referring to the lack of a new aid program.
Mr Trump’s announcement also makes it less likely that airlines will quickly bring back the tens of thousands of workers they cut last week. Airlines, including United Airlines Holdings Inc.
et American Airlines Group Inc.
went ahead with more than 32,000 leaves as they planned, but said they would bring back workers if Congress quickly reached a deal that included an additional $ 25 billion to pay workers’ wages up to the end of March. An attempt to quickly pass legislation focusing only on airlines collapsed on Friday.
In his comments on Tuesday, Powell made his strongest remarks to date on the need for economic aid. “At this early stage, I would say the risks of political intervention are still asymmetric. Insufficient support would lead to a weak recovery, creating unnecessary hardship, ”he said Tuesday at a virtual conference of private sector economists.
Mr Powell, who is generally well regarded by lawmakers from both parties, has continuously urged Congress to approve additional spending measures since April.
“It has become a record broken,” said Diane Swonk, chief economist at the accounting firm Grant Thornton. “There is nothing new in the message, but the urgency is growing. ”
Mr Powell on Tuesday applauded the $ 3 trillion in spending and other measures approved by Congress earlier this year. This response was “truly extraordinary” and “the most innovative” since the Great Depression, Mr. Powell said. “The recovery will be stronger and faster if monetary policy and fiscal policy continue to work side by side to support the economy until it is clearly out of the woods.”
The Fed lowered its benchmark rate to near zero in March, bought unprecedented amounts of government securities, and offered to lend directly to businesses, cities and states to keep markets functioning.
Mr. Trump’s decision to end the talks “doesn’t mean the economy is crumbling,” said Julia Coronado, president and founder of research firm Macro Policy Perspectives. “The risk is that we have a crushing recovery.”
Even if Mr. Trump is re-elected, it is likely that Democrats will still retain control of the House, and Republicans will still have to work with Ms. Pelosi to reach another deal.
“It just seems unfathomable to me that you are literally ending the negotiations,” said William Hoagland, senior vice president of the Bipartisan Policy Center and former Congressional budget aide for Republicans. “There may be criticisms to be made from all sides, but I do not see how that benefits him politically,” he added.
—Kate Davidson, Rebecca Ballhaus, and Alison Sider contributed to this article.
Write to Kristina Peterson à [email protected], Andrew Duehren at [email protected] and Nick Timiraos at [email protected]
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