Breaking down the proposed U.S. stimulus package amid COVID-19
House leaders postponed a vote on a Democrat-only stimulus bill to give Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi one more day to negotiate a compromise pandemic relief package.
Mnuchin and Pelosi met for about 90 minutes Wednesday without striking a deal. But both said afterward they made progress and planned to continue discussions. Time is running short for a new stimulus measure to get through the House and Senate before the Nov. 3 election.
“We still have more work to do,” Mnuchin told reporters, adding, “We’ve made progress in a lot of areas.”
Pelosi, in a statement, said she and Mnuchin were seeking some “further clarification” on each others’ positions and that “our conversations will continue.”
While Pelosi said Wednesday afternoon that the House would vote that night on the US$2.2 trillion Democratic proposal -- which she called a “proffer” for negotiations -- an aide said later that it would be delayed until Thursday to give the talks another shot.
The legislation is less than the US$3.4 trillion bill Democrats passed in May, but still more than Republicans have said they could accept. Senate Majority Leader Mitch McConnell said earlier that it was rife with “poison pills” that have nothing to do with pandemic relief.
Some House Democrats campaigning for re-election in swing districts had been pressing Pelosi to hold the vote, giving them a chance to tell voters that they attempted to ease some of the economic pain caused by pandemic-induced shutdowns. That can still be done if talks with the White House ultimately fail.
The House is scheduled to leave Washington at the end of this week, staying out until mid-November, though members will be on call to return if there is a stimulus vote. Most senators are also likely to leave town, with the exception of a late-October vote on the nomination of Amy Coney Barrett to the U.S. Supreme Court. They also could be called back if a deal is reached.
Mnuchin suggested Wednesday morning he’d offer Democrats a proposal for roughly US$1.5 trillion in pandemic assistance. He said on CNBC the administration’s counter-offer to Pelosi is similar to a plan put forward by a bipartisan group of House members -- which included an escalation in spending up to US$2 trillion if the coronavirus pandemic persists.
President Donald Trump has previously indicated he could accept the bipartisan proposal from the Problem Solvers group. Trump’s firm and public support will be necessary to get any agreement with Democrats on a stimulus through the Republican-controlled Senate.
Officials in both parties have privately questioned whether the differences could be bridged. The lack of progress in Wednesday’s talks dimmed optimism in financial markets about a stimulus deal, as stocks closed well off their highs of the session.
Private economists have increasingly abandoned predictions for a deal before the election. JPMorgan Chase & Co. and Goldman Sachs Group Inc. recently cut their forecasts for growth next quarter as a consequence.
Although Trump and his aides have continued to express confidence that the economy is recovering, the pandemic continues to reverberate for companies and workers. In one of the biggest layoff announcements since COVID-19 caused widespread business shutdowns, Walt Disney Co. said Tuesday it’s slashing 28,000 workers in its slumping U.S. resort business. American Airlines Group Inc. has warned it could furlough 19,000 employees, while United Airlines Holdings Inc. is planning to cut about 12,000.
Weekly data due Thursday are estimated to show filings for U.S. unemployment benefits in regular state programs remain far above pre-virus levels, and Friday’s jobs report -- the last before the Nov. 3 election for the White House and Congress -- is expected to reveal that employers added roughly a half-million fewer workers in September than in August.
White House Chief of Staff Mark Meadows said before Mnuchin met with Pelosi that there was still time to find a compromise, even with the election getting closer.
“I don’t know that today has to be the drop-dead deadline,” he said, adding that he’d seen “substantial movement” in the talks.
Mnuchin said earlier on Wednesday that he hopes to have an “understanding” worked out by Thursday.
A key point of disagreement has been the Democrats’ push for large-scale aid to state and local governments. The plan released Monday has US$436 billion for one year of assistance -- less than a previous demand for US$915 billion, which triggered scorn from Trump administration officials who called it a bailout for poorly run states.
“While there is a chance a deal could be reached in the next day or so, the odds still seem stacked against additional pre-election fiscal stimulus,” Goldman analysts including Alec Phillips wrote in a note Wednesday. “The soft deadline for a pre-election deal is tomorrow.”
The Democratic plan includes new aid for airlines, restaurants and small businesses that wasn’t in the original House package but which both sides want as part of any package. It also has more than double the amount they originally proposed for schools.
The bill would provide another round of US$1,200 direct relief payments to individuals and US$500 per dependent -- less than the US$1,200 for dependents Democrats originally proposed. It also has US$600 per week in extra unemployment benefits through January, the same amount that expired in July and helped disposable incomes surge even as the economy tipped into recession.