Second Stimulus Negotiations Appear To Be At A Standstill, Here’s What Could Happen Next

TOPLINE

Experts agree that Trump’s executive actions over the weekend—large portions of which haven’t been set in motion yet—won’t be nearly as effective in propping up the ailing economy as would legislation from Congress, but negotiations between Democratic lawmakers and the White House over the next stimulus bill have come to an apparent standstill, leaving the fate of many key benefits—including that second $1,200 stimulus check—up in the air. 

KEY FACTS

PIMCO head of public policy Libby Cantrill told Bloomberg on Wednesday that while a deal is not likely to come this week, the “framework for a deal is there,” meaning that despite some major disagreements between top Democrats and the White House, there have also been some points of consensus. Secretary Steven Mnuchin echoed that sentiment on Wednesday on FOX Business Network’s Mornings With Maria, saying that negotiators had agreed “on money for schools, money for child care, money for small businesses, [and] second payments on the PPP for businesses that have been particularly hard-hit.”

But House Speaker Nancy Pelosi (D-Calif.) is quick to point out the major gulf that remains between the two parties (a $1 trillion dollar ask by the Democrats for more state and local aid) and said the negotiators remain “miles apart” in an interview on MSNBC.

In a joint statement with Speaker Pelosi on Wednesday, Senate Minority Leader Chuck Schumer (D-N.Y.) said that Democrats have been willing to compromise while the White House has refused to adjust its position on the size and scope of the bill.

In the long run, Trump’s executive actions—on unemployment insurance, eviction protections, payroll taxes, and student loans—are “limited in terms of what they can actually do for the economy,” Cantrill noted—that’s because the president does not have the power to authorize new federal spending— only Congress can do that.

Any additional significant relief measures (like state and local aid, or stimulus checks), which could be critical ahead of November’s election both for Trump and for vulnerable Republican Senators, would have to be passed by Congress. 

Plus, not all of those executive actions will have an immediate impact: unemployment systems will take time to adjust, if states decide to participate, and it could be complicated for employers to readjust their tax withholding systems in order to accommodate the new payroll tax deferment. 

What to watch for

One potential watershed moment to look out for is coming up at the end of next month, when the government’s fiscal year ends. Congress has yet to appropriate money for large portions of the federal government for next year, and it’s possible that some stimulus priorities will resurface again ahead of the deadline if no deal can be reached before then. 

Crucial quote 

It’s also possible that the executive action from President Trump on Saturday was more reflective of Trump’s political priorities during his reelection campaign than it was of his policy goals. “The White House felt that if it issued executive orders that did some of the things that were needed, or that responded to some of the most pressing problems, then it would be off the hook politically,” says Michael Graetz, a professor at Columbia Law School and co-author of The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It. “That’s all the White House cared about.”

Key background

Top officials from the Trump Administration—White House chief of staff Mark Meadows and Treasury Secretary Steven Mnuchin—met with top Democrats—House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Chuck Schumer (D-N.Y.)—for days in an attempt to reach common ground on what the next round of federal coronavirus relief should look like, but a self-imposed deadline came and went on Friday without any deal. The biggest issue that couldn’t be resolved was the price tag: Republicans have been adamant that the new bill should not exceed $1 trillion, while Democrats have asked for (and passed in the House) a package that is three times that size. Democrats say they offered to meet in the middle, but no agreement was reached. The following day, President Trump signed the four executive actions (one order and three memoranda). By Monday morning, he had sent out a tweet indicating that Democrats suddenly “want[ed] to meet to make a deal…they know my phone number!” Despite the tweet, however, there have been no meetings yet between Democrats and the White House this week. 

Further reading

Mnuchin Says White House Is Willing To Put ‘More Money On The Table’ For Next Stimulus Bill (Forbes)

Here’s Why That $400 Unemployment Check From Trump’s Executive Order May Not Happen (Forbes)

Not A Single State Has Said It Will Pay Another $100 Per Week In Unemployment Under Trump’s Plan (Forbes)

Comments are closed.