U.S. fiscal package 'extraordinarily important' with significant need for support: Manulife's Donald
President Donald Trump ended talks with Democratic leaders on a new stimulus package, hours after Federal Reserve Chair Jerome Powell's strongest call yet for greater spending to avoid damaging the economic recovery.
“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Trump said Tuesday in a tweet.
Stocks tumbled after Trump’s posting called an end to months of hard-fought negotiations between the administration and Congress. Democrats had most recently pushed a US$2.2 trillion package that failed to garner Republican support in the House, while the White House had endorsed US$1.6 trillion.
The S&P 500 Index closed down about 1.4 per cent, after having risen earlier in the day in the wake of Powell’s mounting pressure on policy makers to act.
House Speaker Nancy Pelosi continued to insist on US$2 trillion or more in stimulus, according to a Republican familiar with the negotiations, while the GOP lacked votes for such a large package.
The legislation that the House passed last week with only Democratic support also had measures opposed by Republicans, including government-funded health coverage for abortions and stimulus checks for undocumented immigrants.
Pelosi repeatedly invoked the Fed chair in her calls for Republicans to move toward the Democrats’ more comprehensive bill. Some recent economic data, along with a resurgence in coronavirus counts in some states, also suggested to many analysts that government assistance was becoming more pressing.
“Even if policy actions ultimately prove to be greater than needed, they will not go to waste,” Powell told a virtual conference hosted by the National Association for Business Economics Tuesday morning. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses.”
Pelosi said in a statement, “Clearly, the White House is in complete disarray.” The speaker said, “Walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus, as is required by the Heroes Act.”
The speaker and Treasury Secretary Steven Mnuchin, who had sat down in person for negotiations last week for the first time since August, spoke at 3:30 p.m. Tuesday and the secretary confirmed that the talks had been halted, according to Drew Hammill, Pelosi’s spokesman.
Nancy Pelosi is asking for US$2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19. We made a very generous offer of US$1.6 Trillion Dollars and, as usual, she is not negotiating in good faith. I am rejecting their...
Pelosi remarked to Democratic lawmakers on a call that Trump’s thinking might be affected by steroids he’s taken to treat his coronavirus infection.
A day after returning to the White House from Walter Reed National Military Medical Center, Trump conferred by telephone with Senate Majority Leader Mitch McConnell and House Republican leader Kevin McCarthy, along with Mnuchin, before his tweets put an end to talks for now.
Pelosi earlier told her Democratic colleagues that she and Mnuchin disagreed on assistance to state and local authorities, spending to address the coronavirus and getting aid to ordinary Americans remain, according to a House official.
Trump has disparaged Democrats’ push for almost US$1 trillion in assistance to state and local authorities as a hand-out to poorly run, mainly Democratic states. The Democrats cut that amount in half in their latest offer.
But on Saturday he said that the country “wants and needs” another round of relief. “Work together and get it done,” he tweeted from Walter Reed.
Even so, the Fed chief in his remarks Tuesday highlighted that analysis after the Great Recession a decade ago showed that tight budgets at the state and local level had held back the economic recovery.
“Nancy Pelosi is asking for US$2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19,” Trump said in his tweets Tuesday. “We made a very generous offer of US$1.6 Trillion Dollars and, as usual, she is not negotiating in good faith.”
McConnell has been clear publicly that Senate Republicans weren’t interested in a bill with a US$2.2 trillion price tag, and also opposed a bailout for state and local governments. His caucus favored a bill offering US$650 billion in aid last month that was blocked by Democrats as insufficient.
The consequences of the withdrawal of federal fiscal support are tangible and immediate. American Airlines Group Inc. and United Airlines Holdings Inc. said they would start laying off 32,000 workers, blaming expiring government aid. Walt Disney Co. is slashing 28,000 jobs while Allstate Corp., the fourth-largest U.S. car insurer, is cutting 3,800, roughly 8 per cent of its workforce.
Americans’ incomes fell by 2.7 per cent in August as supplemental insurance benefits from the first round of stimulus expired, threatening to sap consumer spending.
“The economy has been moving more or less sideways since mid-summer,” Mark Zandi, chief economist for Moody’s Analytics, said in a recent note to clients. With prospects fading for more federal relief, “odds that the recovery will come undone are rising.”