Markets nervous as U.S. stimulus talks 'near collapse'
Treasury Secretary Steven Mnuchin said he’ll recommend President Donald Trump move ahead with executive actions to halt evictions and possibly restore some unemployment aid after another round of negotiations with Democrats on a virus relief plan ended without any agreement.
“The president would like to make a deal. Unfortunately, we did not make any progress today,” Mnuchin said after leaving a meeting Friday with House Speaker Nancy Pelosi and Senate Democratic leader Chuck Schumer.
Because of the lack of progress, Mnuchin said the president should follow through with plan to restore a few of the provisions of the last stimulus bill that have expired.
Trump said Thursday he is considering acting to extend enhanced unemployment benefits, suspend payroll-tax collections and restore a moratorium on evictions and forbearance on student loans if Republicans and Democrats can’t come to terms on a new stimulus bill. White House Chief of Staff Mark Meadows said Trump was likely to take action “over the weekend.”
“This is not a perfect answer -- we’ll be the first ones to say that,” Meadows said. “But it is all that we can do, and all the president can do, within the confines of his executive power.”
Two people familiar with matter said Trump would extend the supplemental unemployment insurance at a US$400-per-week level, a reduction from the US$600 in the last stimulus bill. It wasn’t clear what mechanism he would use to fund the extension or how long it would be in place.
Mnuchin and Meadows again rejected an offer from Pelosi to roughly split the difference in the price tags of the Democratic and Republican coronavirus relief plans. Heading into Friday’s meeting, Mnuchin called the idea “a non-starter.”
Pelosi and Schumer said Mnuchin and Meadows wouldn’t budge during the discussion. Schumer characterized the meeting as “disappointing.”
“I told them to come back when they are ready to give us a higher number,” Pelosi said.
It was another day of negotiations with no progress made on bridging differences on major parts of stimulus plan, leaving the negotiations on the brink of collapse. It was unclear whether there will be additional discussions, though Mnuchin said the administration wasn’t abandoning the talks.
Pelosi and Schumer said they again offered to cut US$1 trillion from the Democrats’ US$3.5 trillion proposal if Republicans would raise the top-line number of their plan by US$1 trillion.
“We are willing to make compromises,” Schumer said at a news conference before going into the Friday session. “The speaker made a very fair offer.”
Meadows and Mnuchin had said they were striving to get agreement on the broad outlines of a package by Friday, which would give time for legislation to be drawn up and voted on as soon as next week. But they left the meeting with Pelosi and Schumer having drawn no closer on the biggest issues.
That includes, especially, the overall size of the package. Schumer said a majority of Democrats won’t vote for a package of less than US$2 trillion. The party controls the House and their votes would be needed to get any legislation through the Republican-led Senate, given internal GOP divisions.
Shifts in timing for specific spending initiatives can affect the top number, Pelosi said. The House passed a US$3.5 trillion bill back in May. Meadows indicated to reporters Friday that such timing shifts shouldn’t count as real offers to reduce proposed spending levels.
Senate Republicans wouldn’t be able to back any deal of US$2 trillion or more, given that as much as US$1 trillion of the March stimulus package remains unspent, according to a GOP aide in that chamber. Schumer pointed out that some of Republican senators would be unlikely to support a bill regardless of size.
Source of Tension
Aid for state and local governments was a major source of antagonism Thursday. Pelosi said Friday Democrats still demand US$915 billion while Republicans are only offering US$150 billion. Mnuchin said Trump won’t agree to a “bailout” for budget difficulties unrelated to the pandemic, though he’s open to some aid related to Covid-19 and to help firefighters and police.
There also are differences on the Democrats’ demand to extend the US$600 a week supplemental unemployment bonus that has expired, and Senate Majority Leader Mitch McConnell’s insistence on a temporary liability shield for companies, schools and other organizations.
Friday’s talks took place after Labor Department reported a 1.76 million jump in payrolls in July, beating most estimates. The unemployment rate fell to 10.2 per cent, though that’s still higher than at the peak of the Great Recession in 2009. And higher-frequency data are turning more negative, as businesses use up the last of their federal loans and reduced jobless benefits pressure consumer spending.
Both parties continued to send brickbats each other’s way all week, and that continued Thursday night with both sides assigning blame for the failure to make progress.
“They were unwilling to meet in the middle, they said it mostly has to be their way and they admitted that,” said Schumer.
Meadows said Trump may go through with taking executive action after “coming to the realization that perhaps some of our Democrats both in the House and Senate are not serious about compromise and are not serious about trying to meet the needs of the American people.”
The rest of Congress is in a period of suspended animation waiting for a resolution. Senators jetted home Thursday afternoon, joining House members who departed Washington last week.
McConnell is leaving the negotiating to the White House and Democrats, who control the House. He said senators would subject to recall for any votes.
House leaders have also said members would return with 24 hours notice once there’s a deal to vote on.