The coronavirus aid bill talks ended Tuesday and the finger-pointing began.
After President Donald Trump’s late day tweets announcing his decision to pull the plug on the bargaining until after the election, Capitol Hill leaders were quick to say who deserved the blame for the apparent end of widely supported efforts to give the economy a second big boost after the onset of the COVID-19 pandemic.
In a series of tweets a little more than an hour before U.S stock markets closed, Trump accused House Speaker Nancy Pelosi of not negotiating in good faith and Democrats of wanting too much money for the package.
“I am rejecting their … request, and looking to the future of our Country. 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,” he wrote.
Instead, Trump said he was instructing Senate Majority Leader Mitch McConnell to focus instead on getting Amy Coney Barrett, Trump’s pick to the U.S. Supreme Court, confirmed quickly.
Calling the move “an act of desperation,” Pelosi said Trump and his fellow Republicans were to blame.
“Today, once again, President Trump showed his true colors: putting himself first at the expense of the country, with the full complicity of the GOP Members of Congress,” she said in a letter to her fellow House Democrats.
The move hit Wall Street, where traders had held out hope for a deal, despite weeks of on-again, off-again talks in Washington. The Dow Jones Industrial Average fell to session lows before bouncing back slightly. It still ended the day off more than 375 points, or 1.34%
Pelosi accused Trump of backing out because he would not budge on tax provisions Democrats sought and didn’t want more direct payments to households unless his name was on the checks.
Pelosi’s counterpart in the Senate, Senate Majority Leader Mitch McConnell, said he supported Trump’s decision to end the talks.
“I think his view was that they were not going to produce a result and we needed to concentrate on what’s achievable,” McConnell told reporters at the U.S. Capitol.
The talks ended with a public difference of several hundred billion dollars but possibly more unresolvable disagreements over policy. House Democrats forced a $2.2 trillion bill through the chamber last week as their latest offer while Treasury Secretary Steven Mnuchin had said the administration was offering a deal worth “in the neighborhood” between $1.5 trillion and $2.2 trillion.
Whether a deal of that size could have made it through McConnell’s Republican Senate, though, was always unclear.
Liam Donovan, principal with Bracewell LLP’s Policy Resolution Group, said the White House’s lack of focus helped sink the talks.
“The apathy and ambivalence from the White House made for a leadership vacuum that sent GOP members scattering in every direction depending on their individual political calculations. Republicans didn’t exactly cover themselves in glory here, but in the end Donald Trump owns this failure because he had everything to gain, and nothing to lose, ideologically or otherwise. In that sense, the tweet was a fitting coda,” he said in an email.
There’s still a possibility something could cause the talks to restart, and there is broad public and financial markets support for major provisions of any new package, including more $1,200 direct payments and revivals of small business lending and unemployment benefit enhancements.
The bipartisan, evenly divided 50-member House Problem Solvers Caucus, which had put together a $1.5 trillion plan, called for more talks.
“Inaction is not an option,” the group said.
Even if talks remain dormant until after the election, it’s uncertain there could be a deal to be made even then, Donovan said, depending on the election outcome.
“A clean sweep [by Democrats] may convince Rs they should deal while they still have some leverage, but Democrats may prefer to wait for reinforcements; if Republicans hold serve in the Senate, they may not want to give a President Biden a running start,” he said.
“The only way to get a sizable lame duck package may be the big Trump victory his tweet envisions, or some external factors we’d hope to avoid–e.g. worsening economic or public health data.”
Earlier in the day, Federal Reserve Chairman Jerome Powell had again urged Congress to approve more stimulus money soon, warning the failure to do so could lead to “tragic” economic consequences.
“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Powell said in a speech to the National Association for Business Economics.
The last monthly jobs report out before the election showed disappointing jobs growth in September but an unemployment rate below 8% after shooting to almost 15% in April. The third quarter Gross Domestic Product report due out only a few days before the election is expected to show strong bounceback growth.