Trump Ends Stimulus Talks—What Happens Next?

President Donald Trump cancelled talks for the next stimulus deal.

Here’s what you need to know—and what happens next.

Stimulus

Trump effectively ended stimulus talks today, and tweeted: “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.” Will there be a stimulus deal? Here are 3 possibilities for what happens next.

Option 1: Stimulus talks are cancelled until after the election

Option 1 is that stimulus talks are indeed finished until after the election on November 3. Trump tweeted that Republicans made a good faith offer of $1.6 trillion and Speaker of the House Nancy Pelosi, according to Trump, is “not negotiating in good faith” and focused on federal spending not directly related to Covid-19. So, if Trump’s tweet is interpreted literally, then Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows would put pencils down until after the election. Effectively, this means game off, and no second stimulus checks or enhanced unemployment benefits for now. Of course, that could mean November or December, or it could mean in 2021 after the start of the new congressional term. It’s also possible that a stimulus deal never happens.


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Option 2: Nancy Pelosi lowers her price tag for the next stimulus

Option 2 is that House Democrats further revise their $2.2 trillion Heroes Act stimulus bill to get a stimulus deal done before the election. If Pelosi chooses this option, Pelosi has several choices. First, Pelosi could cut proposed spending to bring the overall price tag closer to $1.6 trillion, which was the latest offer from Republicans, to finalize a stimulus deal. Second, Pelosi could re-engage directly with Mnuchin and Meadows without making an offer (and despite the president’s tweet) to gage interest in a potential stimulus deal before the election. It’s possible, however, that following the president’s tweet, Mnuchin and Meadows won’t reengage.


Option 3: Republicans pressure Trump to approve a stimulus deal

The third option is that Senate Republicans—potentially moderate senators up for re-election—could lobby Trump to restart stimulus talks, despite his tweet. However, this is low likelihood. While Congress, not the president, passes any potential stimulus legislation, the president has the power to veto the legislation or sign the bill into law. Therefore, the president and Senate Republicans must be aligned on any potential stimulus legislation. Most Senate Republicans don’t necessarily want more stimulus spending. Some support elements of a stimulus deal such as small business loans, unemployment benefits and school funding. However, few, if any, Senate Republicans would support a $2.2 trillion stimulus deal. Most Senate Republicans would rather secure the Supreme Court confirmation of Judge Amy Coney Barrett before the election than finalize a stimulus deal. While it’s possible to accomplish both, the likelihood of a deal before the election without Trump’s support is non-existent.


Next Steps

Anything can happen in an election year. If Congress and the president want a stimulus deal done before the election, it will get done. Simply put, Mnuchin and Pelosi can re-engage at any time. Otherwise, the next stimulus deal, if there is one, could be pushed to later this year or early next year. Remember, Trump still want a stimulus deal and supports second stimulus checks for the American people. The composition of Congress—specifically which party controls each chamber—will dictate the price tag and policy priorities of a potential stimulus package. Are these the only potential outcomes? No, there are other options. However, these three options represent potential next steps worthy of consideration. This is not the first start-stop combination of the stimulus dance, but the trend line has been leaning toward no stimulus deal before the election. For now, that trend line will continue—no deal.


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