Standoff on US Virus Relief Package Leaves Damage All Around
There were plenty of casualties left in the rubble of failed negotiations on another trillion-dollar-plus rescue package for a U.S. economy mired in a historic, pandemic-induced recession.
Worst hit are the families, businesses, and state and local governments that have had a safety net pulled out from under them at a time some data suggest that recent gains in employment may be transitory as the continuing spread of COVID-19 infections forces a retrenchment.
In Washington, the political damage is widespread. But the biggest impact may be on President Donald Trump.
The president on Saturday took some modest steps to try to mitigate the economic impact — diverting disaster money to boost unemployment insurance, and suspending collection of payroll taxes for some workers.
Trump said his actions “will take care of, pretty much, this entire situation.” But many economist disagree, and even his own top aides have admitted they’re no substitute for a legislative deal.
One thing Trump’s response didn’t do was spark an immediate return to the bargaining table. Treasury Secretary Steven Mnuchin said Sunday the administration would listen to any proposal put up by Democrats. House Speaker Nancy Pelosi, asked on CNN whether talks would resume after two weeks of fruitless negotiations with the White House, offered only, “I hope so.”
Trump said Sunday night that Democrats have contacted the administration “and want to get together” and may be more inclined now to negotiate. Two Democratic congressional aides said Pelosi and Senate Democratic leader Chuck Schumer have had no contact with the White House since Friday. No new talks have been scheduled.
The biggest driver for a deal may be the reaction of financial markets and the business community in the coming days. Stocks in Asia markets opened mixed as investors weighed uncertainty over more stimulus.
Despite a report showing the U.S. added 1.76 million jobs in July, the economic situation remains more dire than the depths of the last recession — when unemployment reached a peak of 10%. Further job gains look increasingly difficult with large parts of the economy hobbled.
High-frequency indicators show that economic and payroll activity slowed or declined in the weeks following the survey period for the government’s July jobs report. More than a million workers are filing new unemployment insurance claims every week, and more than half of unemployed Americans have now been without a job for more than 16 weeks, according to the Labor Department.
Meanwhile, almost 30 million Americans said they didn’t have enough to eat in the week ended July 21, the U.S. Census reported.
Voters historically pin the state of the economy on the president. Trump, who campaigned as the consummate dealmaker, has repeatedly forecast a quick rebound from the COVID-19 pandemic. Now, by taking a unilateral action and touting its benefit, he’s tied himself more closely to the state of the economy come November.
Some voters may see Trump as taking charge while Congress bickers. Any benefit may be short-lived if the economy remains staggered in the weeks leading up to the election.
Between the government’s pandemic response and the faltering economy, Trump trails Democrat Joe Biden in every recent poll nationally and in electoral battleground states. At a time when fewer Americans are splitting their ballot between political parties, that also presents a danger to congressional Republicans, who are at serious risk of losing their Senate majority.
An extended standoff risks pushing the stimulus negotiations into September when Congress will be wrangling over keeping the government funded and running when the new fiscal year starts Oct. 1
The failure to get a deal has dented the reputations of some of Washington’s other would-be deal makers.
White House Chief of Staff Mark Meadows, the architect of multiple fruitless government shutdown fights when he headed the House Freedom Caucus, underestimated Democrats’ resolve early on, and pushed for a small-ball deal few in either party liked. Mnuchin, meanwhile, has had to defend himself to Republican senators who suspect him of folding too quickly in negotiations on the last stimulus bill.
Pelosi and Senate Democratic leader Chuck Schumer made miscalculations of their own.
“We have to come to an agreement. We have to meet half-way,” Pelosi said on “Fox News Sunday.”
But the top Democrats clung to their $3.4 trillion package until late in the talks, when they offered to cut the topline number closer to $2 trillion. They never forswore some of the portions of their plan disliked by Republicans, including restoring the state and local tax deduction especially valuable to wealthier taxpayers in high-tax states like Schumer’s New York and Pelosi’s California. Their massive plan gave Republicans a political opening to argue they overreached, a theme Mnuchin repeated on Sunday.
That might be cold comfort to Senate Majority Leader Mitch McConnell, the GOP’s most seasoned and accomplished deal maker. While Democrats passed another stimulus bill in the House in May, McConnell hit the “pause button” for months in hopes the pandemic would fade and the economy would revive over the summer.
That slow-walk turned into a fast sprint in late July as extra unemployment aid, a small business loan program, and other provisions of the March virus relief plan were set to run out. After cobbling together a $1 trillion package in tortured negotiations with the White House and his own party, McConnell has largely left the playing field. His leverage was undercut after he acknowledged that 20 or so Senate Republicans didn’t want to spend any more money.
That puts seven Republican incumbent senators most in danger in November in a pinch. Maine’s Susan Collins and Colorado’s Cory Gardner, two of the most vulnerable, had been touting the bipartisan rescue bill passed in March, taking credit for popular and expensive bailouts like the Paycheck Protection Program for small businesses. They’d publicly backed a $500 billion package of state and local aid so far opposed by Trump and McConnell.
This time, they’re head back to their states to campaign empty handed, having to explain to voters why their leadership refused to back their requests and sent them home for the summer instead.
©2020 Bloomberg News
Distributed by Tribune Content Agency, LLC.
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