Markets may have to wait to 2021 for more U.S. stimulus
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin on Monday failed again to close major differences on a fresh stimulus for a U.S. economy facing a renewed surge in COVID-19 cases.
In their first call since last Wednesday, the two main negotiators still had not resolved language for a national testing and tracing program for the coronavirus, according to Pelosi’s spokesman Drew Hammill.
“We continue to eagerly await the Administration’s acceptance of our health language,” including the testing strategy, Hammill tweeted Monday. He said Pelosi and Mnuchin spoke for 52 minutes.
Pelosi remains “optimistic” about reaching a deal before Election Day, Hammill said. But with eight days to go until then and the Senate scheduled to leave town later Monday, the lack of an imminent agreement largely extinguished prospects of any legislation being written, voted on, and signed into law by President Donald Trump by Nov. 3.
The three-month impasse has increased concerns about the U.S. recovery faltering, with the impact of a March stimulus package having long since faded and the COVID-19 case count soaring again. Investor concern sent stocks tumbling, with the S&P 500 Index headed to its biggest drop since early September.
Differences between the two sides “have narrowed,” but “the more it narrows, the more conditions come up on the other side,” White House economic adviser Larry Kudlow told reporters earlier on Monday.
Pelosi accused the Trump administration of “official malfeasance” in dealing with the pandemic.
“Today, we are waiting for an important response on several concerns, including on action to crush the virus,” Pelosi said in a letter to House Democrats on Monday. “Ten days after Secretary Mnuchin went on CNBC to declare that he was accepting our testing plan, the Administration still refuses to do so.”
Much of the weekend was devoted to work by congressional committees with the goal of writing legislation, but aides in both parties said little progress was made despite the pledges from both sides that they want to quickly deliver US$1,200 stimulus payments to most Americans along with aid to struggling businesses.
The Senate is set to leave after voting on the confirmation of Supreme Court nominee Amy Coney Barrett, and the House is already out. Both chambers could be called back for a vote with 24 hours notice, though that scenario is unlikely in the last week of campaigning before the national election.
Republicans in the Senate remain an obstacle. Meadows said the administration can’t say whether 13 Republican senators -- the minimum necessary to get a bill to the Senate floor -- would support a deal until one is reached.
“Obviously we’ve identified those Senate Republicans most likely to vote for it,” White House Chief of Staff Mark Meadows said on Sunday on CNN. “I do have a commitment from Leader McConnell that if we have an agreement, he’s willing to bring it to the floor and get it passed,” he said, referring to Senate Majority Leader Mitch McConnell.
Both sides have political incentives to at least appear to be talking since walking away from the table only invites blame before the election. After Trump in early October called a halt to stimulus talks on Twitter, he promptly reversed himself after feeling political heat and seeing a drop in U.S. equity markets.
The White House has increased its stimulus proposal from roughly US$1 trillion to nearly US$1.9 trillion in the last month, closer to the US$2.4 trillion bill passed by House Democrats. The major sticking points continue to be Democratic demands for nearly US$500 billion in aid to cash-strapped state and local governments, and a Republican drive to protect companies from lawsuits related to the pandemic.
Pelosi has hinted at a compromise on liability whereby companies following strong government COVID recommendations could claim compliance as a defense in civil lawsuits by employees. And Meadows has suggested the differences on state and local aid could be resolved by directly earmarking funds for transportation or private-sector job creation.
The slow pace of the talks has lawmakers looking at the lame duck session of the legislature in November and December. Congress is already facing a Dec. 11 deadline for an agreement to fund the government and avoid a shutdown before the holidays.
Senator John Thune of South Dakota, the No. 2 Republican leader, told reporters in the Capitol Sunday that he has some confidence an economic relief bill can be agreed to after the election, which will decide control of the White House and both houses of Congress.
“The prospects will improve after the election once we get past the current unpleasantness that we go through every even numbered year,” said Thune. “There’s a whole range of things that we all agree on. And I don’t know why we can’t at least do that. And then if they get the majority, they can come back later. If they don’t, and we are still in the majority, then I suspect there’s more interest in trying to get a deal.”
--With assistance from Misyrlena Egkolfopoulou.