After many months of on-again, off-again negotiations between the White House and congressional Democrats on a COVID-19 relief and stimulus bill, there was renewed optimism in the last few days that a deal would get done, in part because of growing signs the pandemic was rebuilding strength and the economy needed stimulus. As recently as Saturday, the president was tweeting encouragement for stimulus negotiations between Steven Mnuchin and Nancy Pelosi from his hospital room at Walter Reed medical center. The main problem seemed to be getting a COVID-stricken Senate back to approve a deal.
On Tuesday, Trump abruptly shut it all down:
There are a couple of funny things about that rationale for killing stimulus talks. First, the stock market dropped like a stone at this very news. And second, Trump’s decision came the same day that Federal Reserve chairman Jerome Powell called again for more stimulus, as CBS News reported:
Strong financial support from the government and the Federal Reserve have helped the economy bounce back from the pandemic recession, but the rebound may falter without further aid, Fed Chair Jerome Powell warned Tuesday.
“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Powell said in a speech delivered to an economic conference. A too-slow recovery would also exacerbate existing inequalities, Powell said, which would be “tragic.”
The Fed chairman has consistently urged Congress to put more money into the recovery, but the remarks on Tuesday are some of his bluntest to date.
Unless Trump reverses himself again, he’s obviously postponing the possibility of a stimulus deal until after November 3 (or whenever the election results are clear), and quite possibly until after January 20 if he loses all his leverage and his incentive to do anything by losing the election to Joe Biden. It’s going to come as a shock to the airline industry and its laid-off employees who expected imminent help, and to the long-term unemployed waiting for renewal of federal subsidies that expired in August. And it will be a bitter disappointment to the many millions of Americans hoping to receive another $1,200 stimulus check.
As someone who has been following these negotiations all along, I cannot personally fathom Trump’s action. He could have at least shared the blame with Pelosi for the talks collapsing by publicly and very visibly proposing a bill that she could not support. Or he could have lowered expectations by refusing to send Mnuchin over to reopen negotiations after Democrats began backing down from their earlier take-it-or-leave-it posture. His stated rationale for rejecting talks is ridiculous; Pelosi was not proposing $2.4 trillion in state and local assistance, but $436 billion for Republican as well as “Democrat” states, not that far from what Mnuchin had already agreed to.
What caused Trump’s apparently self-destructive action? Was it just a temper tantrum, perhaps partly attributable to the medications he is taking, as Pelosi herself suggested?
The only real clue we have is that Trump’s announcement came immediately after a phone call with congressional Republican leaders, as CNBC reported:
President Donald Trump joined top GOP lawmakers on a phone call earlier Tuesday to discuss the next round of Covid-19 stimulus before ultimately announcing that he’s directed his top negotiators to postpone talks until after the election.
The president, who thus far has relied on White House chief of staff Mark Meadows and Treasury Secretary Steven Mnuchin to lead the negotiations, participated in the call during his first full day back from the hospital, an administration official confirmed to CNBC.
Other GOP leaders on the phone call included Senate Majority Leader Mitch McConnell, House Minority Leader Kevin McCarthy and the Treasury secretary.
McConnell has noted that a lot of his senators don’t want any further stimulus, which is why he wound up developing a “skinny stimulus” bill that all but a few of the suddenly reborn cheapskates in his Conference could back. And McCarthy has no reason to support giving Pelosi and House Democrats a win.
But Donald Trump does need a win and has clearly never bought the fiscal-hawk arguments against stimulus. He has particularly backed getting a second stimulus check out to hungry voters just as Election Day approaches. House Republicans were irrelevant to the whole process, and McConnell wasn’t really going to block a deal Trump had endorsed (if push came to shove, the votes of 47 Senate Democrats would have gone a long way toward easing passage).
Is the president perhaps trying to hold further stimulus hostage to an electoral victory? If so, he’ll need to explain why reelecting him over a presidential candidate and a party committed to larger and more immediate stimulus is the way to get it.
If Trump does win and his party does hang onto the Senate, then we’ll be right back to where we are today, since the odds of Nancy Pelosi losing her gavel are somewhere between minuscule and nil. But a lot of time and momentum will have been lost, along with more terrible and avoidable damage to millions of people in need.