(Bloomberg) — President Donald Trump scrapped fiscal stimulus talks this week after failing to swing Senate Republicans behind a package Democrats could support. With negotiations back on, the obstacles are just as daunting, and House Speaker Nancy Pelosi termed Trump’s latest offer “insufficient.”
Pelosi and Treasury Secretary Steven Mnuchin head into weekend negotiations with the top-line number for relief fast approaching the $2 trillion level that many Senate Republicans say they cannot accept.
Before those talks, though, Pelosi on Saturday called the Trump administration’s latest offer “one step forward, two steps back.”
“We still have disagreement on many priorities,” Pelosi said in a letter to colleagues. “His proposal appears to mean that he wants more money at his discretion to grant or withhold.”
Funding for state and local government “remains sadly inadequate,” she added.
Senate Republicans, meanwhile, expressed concerns about both the proposed size and certain elements of Trump’s proposal on a call Saturday with Mnuchin and White House Chief of Staff Mark Meadows, the Washington Post reported, citing two people familiar with the matter.
Mnuchin has already alienated some in his party by moving toward policies in the House Democrats’ $2.2 trillion proposal that they oppose. His counteroffer contains language allowing taxpayer-funded abortions through Obamacare and stimulus checks to undocumented immigrants, according to a person familiar with the matter — measures anathema to many GOP lawmakers.
After a months-long deadlock, the stimulus talks took on a desperate appearance this week. Trump on Tuesday tried to blame Pelosi for refusing to compromise, and pulled out his negotiators. Hours later, he demanded separate bills for aid including stimulus checks for individuals and aid to airlines. By Thursday, comprehensive talks were back on.
Then came Friday. With his poll deficit to Joe Biden widening and the need to divert attention from his handling of the coronavirus escalating, Trump endorsed an even bigger stimulus proposal. Just how big a number he wants hasn’t been entirely clear.
Mnuchin made a $1.8 trillion offer to Pelosi Friday — an increase from the $1.6 trillion the White House had previously endorsed. Yet Trump undercut that by saying he wants an even bigger stimulus than what the Democrats advocate.
“I would like to see a bigger stimulus package, frankly, than either the Democrats or the Republicans are offering,” Trump said on Rush Limbaugh’s radio program, adding that he’s going in the “exact opposite” direction from his earlier stances.
Shortly after, the White House communications director, Alyssa Farah, told reporters the administration wants a package below $2 trillion, sowing further confusion.
Democrats’ $2.2 trillion plan, passed by the House earlier this month, is down from the $3.4 trillion package they approved in the chamber in May.
Senate Republicans backed a bill offering about $650 billion last month, showcasing the gulf with the House. But if Mnuchin and Trump can get Pelosi to sign off on an agreement for less than $2 trillion, it would be hard for Senate Majority Leader Mitch McConnell not to put it up for a vote, according to a Senate GOP aide.
Trouble is, the president’s suggestion he wants something bigger than the Democratic proposal could also harden Pelosi’s demands for larger-scale spending.
Then there’s the timeline. For Trump — and vulnerable moderates from both parties — unveiling a deal after Election Day would garner no campaign benefit. It took 19 days after enacting the last stimulus, in March, to send out stimulus payments to individuals, Goldman Sachs Group Inc. analysts pointed out. There are now 24 days left until the election.
Crafting a pre-election bill may prove a hurdle too high. McConnell said on Friday that there’s probably not enough time.
Barrett Is the Priority
“I believe that we do need another rescue package, but the proximity to the elections and the differences of opinion about what is needed are pretty vast,” McConnell said at an event in his home state of Kentucky.
The majority leader later told reporters that “even if an agreement” on stimulus is reached, his first priority is securing Senate confirmation of Trump’s nominee for the Supreme Court, Amy Coney Barrett. Hearings for her nomination are scheduled to begin Monday with a final Senate vote as soon as the week of Oct. 26.
If Pelosi and Mnuchin did reach an agreement, Congress would likely need two weeks or more to draft legislative text and approve it in the House and Senate. The Senate is on recess until Oct. 19 and the House until mid-November, but lawmakers have been told they can be called back with 24 hours notice to vote on any stimulus deal.
If it came to a vote, Republican lawmakers may be the key obstacle.
McConnell has said there are members of his majority who think the government has already provided enough stimulus. House Republican leader Kevin McCarthy of California has also said his caucus members are skeptical of a large package. “We’d have to see what’s in it, but I think it’s difficult,” he said last month.
The two sides are are divided on issues including how much money to provide state and local governments, language restricting Trump’s ability to divert anti-virus health care spending and the level and length of supplemental unemployment benefits. Dozens of smaller arguments, such as on funding for election security and the U.S. Postal Service, also remain.
Many of the policy issues are “at least as controversial as the top-line number,” Goldman analysts including Alec Phillips wrote in a note Friday.
“An appearance of additional progress seems likely over the next several days,” with Trump pushing for a deal, they wrote. But “we haven’t changed our view that substantial fiscal stimulus is unlikely to pass before the election,” the Goldman team concluded.
(Updates with GOP senators call in sixth paragraph)
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