Trump: Stimulus talks over until after election

WASHINGTON — Coronavirus stimulus talks screeched to a halt Tuesday as President Donald Trump ordered Treasury Secretary Steven Mnuchin to stop negotiating with House Speaker Nancy Pelosi until after the election.

In a series of tweets posted less than 24 hours after he was released from the hospital, Trump accused Pelosi, D-Calif., of not negotiating in good faith after she rejected an opening bid from Mnuchin in their latest round of talks.

“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 hard-working Americans and Small Business,” Trump wrote.

Trump’s announcement contrasted recommendations from Federal Reserve Chairman Jerome Powell, who had said in a speech hours earlier that more economic stimulus was needed to sustain the economic recovery.

Trump’s tweets sent the stock market lower as many businesses, households and investors had been hoping for

a boost of fiscal stimulus amid signs that the economy had lost momentum. The Dow Jones Industrial Average ended down 376 points, or by 1.3%. The Nasdaq and S&P 500 also fell.

Trump is dealing with his recent covid-19 diagnosis, but he has tried to dismiss the illness’s impact on him in the past two days.

Barring another unexpected development, Trump’s declaration kills any near-term chance of new aid for millions of Americans who remain out work and at risk of eviction. Pelosi and Mnuchin spoke shortly after Trump’s tweets, and Mnuchin informed Pelosi that the negotiations were over, according to Pelosi’s spokesman.

Trump said he had asked Senate Majority Leader Mitch McConnell, R-Ky., “not to delay, but to instead focus full time on approving my outstanding nominee to the United States Supreme Court, Amy Coney Barrett.”

McConnell, who spoke with Trump shortly before the president’s announcement, said he agreed with the decision.

“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 Capitol.

The White House’s focus now appears to have shifted from the economic talks to solely pushing for the Supreme Court confirmation. Although several Republican senators have tested positive for the coronavirus, which causes the illness covid-19, McConnell is moving forward with Barrett’s nomination to get her confirmed before the election.

The U.S. economy is struggling. It contracted sharply earlier this year because of the pandemic, leading to large numbers of layoffs and business closures.

The economy showed signs of partial recovery in May and June, but businesses and households have continued to struggle as the virus continues to infect thousands of Americans each day. Trump has sought to play up the economy’s recovery, often touting partial or incomplete information. That continued Tuesday when he misstated the health of the U.S. economy during his string of tweets.

Trump wrote that “Our economy is doing very well. The stock market is at record levels. JOBS and unemployment … also coming back in record numbers.”

Even some of Trump’s top advisers have said the economy is not doing well and that more assistance is needed. The stock market is not at record levels, and it does not reflect the broader health of the economy.

The unemployment rate has come down from its April peak of about 15%, but it is still at 7.9%, and millions of Americans are struggling to pay their bills, afford food and find jobs. The U.S. economy has barely recovered half the jobs lost in March and April.

Trump’s new shift is different from the position he took three days ago, which followed his first night in the hospital.

That’s when he wrote on Twitter “OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE. Thank you!”

GOP CONFERENCES

It was unclear what changed in his calculus in the intervening days, but shortly before sending Tuesday’s tweets, Trump and Mnuchin conferred with McConnell and House Minority Leader Kevin McCarthy, R-Calif. The call was hastily arranged. McConnell and McCarthy have expressed skepticism about Republicans approving a large new spending bill.

Pelosi and Mnuchin had been working on assembling a new relief bill somewhere between $1.6 trillion — which was Mnuchin’s opening offer — and $2.2 trillion, which was the size of a stimulus bill passed last week by House Democrats. Talks had been moving slowly but appeared to be progressing. Pelosi last week expressed optimism about reaching a deal, although many Republicans had been skeptical.

The Trump tweets landed while House Democrats were in a conference call. Pelosi was updating them on the status of her talks with Mnuchin. She had been telling them that they remained divided on issues, including state and local funding, and coronavirus testing.

A few minutes after Trump tweeted that the talks were over, Pelosi told lawmakers on the call what the president had said, made a comment about a potential link with steroids, and then quickly got off the call, according to people listening in.

Pelosi speculated to Democratic colleagues on the conference call that the president’s sudden change in position might be connected to the steroids he’s taking as he battles coronavirus.

“Believe me, there are people who thought, who think that steroids have an impact on your thinking,” she told her Democratic colleagues, according to someone on the call. “So, I don’t know.”

“Clearly, the White House is in complete disarray,” Pelosi said in a statement she issued shortly thereafter.

She said that because of the White House’s move, “over time, household insolvencies and business bankruptcies will rise, harming the productive capacity of the economy and holding back wage growth.”

BIDEN REACTION

Former Vice President Joe Biden slammed Trump’s move as members of both parties bemoaned the abrupt halt of negotiations.

“Make no mistake: if you are out of work, if your business is closed, if your child’s school is shut down, if you are seeing layoffs in your community, Donald Trump decided today that none of that — none of it — matters to him,” Biden said in a statement released by his campaign.

Sen. Susan Collins, R-Maine, running behind in polls in her reelection campaign, said, “waiting until after the election to reach an agreement on the next covid-19 relief package is a huge mistake.”

Collins said urged both parties to work together, as they did in the previous round of fiscal stimulus, “to continue to provide support for the health and safety of all Americans and the safe, responsible opening of our communities.”

Rep. Elissa Slotkin, D-Mich., said Trump placed “himself above the needs of the country.”

“I cannot understand why the president would halt negotiations until after the election except in a cynical move to secure votes,” Slotkin said.

Additionally, the Trump administration has been divided internally, with Mnuchin pushing hardest for a deal despite skepticism about it from other senior Trump officials.

Larry Kudlow, the president’s top economic adviser, has for months said an additional stimulus deal would help bolster the economy but was not necessary for the recovery.

Shortly after Trump’s tweets, White House adviser Peter Navarro got into an argument with a host on Fox Business who pressed him on why the administration would let a deal fall through. Navarro pointed to executive actions Trump took in August, including on unemployment and evictions, that provided a measure of relief — but nowhere near what an actual piece of legislation could accomplish.

Despite the push from some within the White House and lawmakers from both parties to reach a deal, some conservative voices had urged Trump to reject a new spending package.

Art Laffer, an economist generally regarded as outside the economic mainstream, said he visited the White House about one week ago and expressed the view that Trump should not take a stimulus package. Stephen Moore, another outside economic adviser to the White House, has told White House officials that a stimulus package would do little to boost Trump’s political fortunes since it would not take effect until after the election.

NO $1,200 CHECKS

The spending package was supposed to send another round of $1,200 stimulus checks to millions of Americans, provide new unemployment benefits for the jobless, direct a new round of small-business aid, aid for the airline industry and a range of other measures.

Congress has not acted to pass economic or health care relief legislation since the spring, when lawmakers came together around four bipartisan bills totaling some $3 trillion in total spending, an unprecedented sum.

But many of the programs approved at that time, such as small-business relief and enhanced unemployment benefits, have since expired, in some cases months ago. In the past week, numerous companies announced plans for big layoffs.

The airline industry last week began furloughing more than 30,000 employees because government aid expired, and some surveys have found as many as 40% of restaurants will close within six months without additional aid.

Tens of millions of Americans who have lost their jobs will receive no federal unemployment supplement absent an additional package with Congress, draining the U.S. consumer market and a key source of stimulus. Personal incomes already dropped in August as coronavirus relief approved this spring expired.

Powell issued a dire warning Tuesday about the potential consequences of Congress and the White House failing to pass an additional stimulus deal. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Powell said.

Pelosi last week urged airlines to hold off on layoffs pending a deal, saying that an airline payroll support program would be extended either as part of an overall deal or a stand-alone bill. It’s unclear now whether there will be an attempt to move forward on that.