Meadows Predicts No Stimulus Deal Until End of September

(Bloomberg) -- White House Chief of Staff Mark Meadows predicted there will be no stimulus deal with Congress until the end of September, and sought to blame House Speaker Nancy Pelosi for the delay.

“If we got back in the room with some of their priorities, we could cut a deal -- the president wants to do that. But I’m not optimistic,” Meadows said in an interview with Politico on Wednesday. Pelosi spokesman Drew Hammill said by email that the speaker’s position remains that to restart talks the White House “must meet us halfway” between the top-line numbers on the package.

Meadows said he thought Pelosi would look to combine stimulus with the stopgap continuing resolution needed to prevent a Oct. 1 shutdown of federal agencies -- something she’s repeatedly argued against. Meadows said he’d favor such a combination, but would like to see it pass sooner rather than later.

“I think the speaker is going to hold out until the end of September and try to get what she wants in the funding for the government in the CR or whatever funding mechanism happens to come up at the end of September,” Meadows said.

Democrats continue to offer a $1 trillion reduction in their proposal if the White House bumps theirs by $1 trillion, Hammill said. Pelosi and Senate Minority Leader Chuck Schumer had initially sought $3.4 trillion in relief, with Republicans at $1 trillion.

Sticking Points

The two sides have been at impasse over the next virus relief bill since talks broke off on Aug. 7. Aid to state and local governments and the level of supplemental unemployment insurance have been the biggest sticking points -- with Democrats seeking $915 billion for regional authorities and a $600 per week added benefit, significantly beyond what Republicans favor.

President Donald Trump has since implemented a new temporary $300 per week federal unemployment benefit using a limited amount of disaster relief funds. The program is proving difficult to implement, however, and is expect to run out of funds in a little more than a month.

Meadows on Saturday tried to have an impromptu meeting with Pelosi while she was in the Capitol and went with his entourage to her suite, only to be told she was in a meeting. He said Wednesday that he had aides reach out to her staff on Tuesday.

The stimulus delays come as economists are increasingly warning that the U.S. risks a prolonged recession if Congress doesn’t provide $1 trillion to $2 trillion in relief funds this fall. That’s even with continued Federal Reserve monetary support.

Yellen Warning

“When unemployment is exceptionally high and inflation is historically low, as they both are now, the economy needs more fiscal spending to support hiring,” former Fed Chair Janet Yellen wrote with economist Jared Bernstein in the New York Times on Monday. Congress “cannot expect the Fed to keep everything together on its own,” they wrote.

Senate Republicans, meanwhile, are actively preparing for the possibility of combining talks on regular government funding with those on stimulus. Senate Majority Leader Mitch McConnell has circulated a discussion draft of a slimmed-down stimulus bill that would extend $300 per week in unemployment benefits through December.

One Republican lawmaker told reporters Tuesday that he’s participated in conference calls about the stimulus bill, and that there has been no movement in the drive for a relief package since the beginning of the August recess. Republicans, the lawmaker said, remain divided about the best approach, with the matter of how to handle the extra jobless benefits remaining a key issue for many. Democrats also appear to remain very dug in, the lawmaker said.

The Senate isn’t scheduled to return to Washington until Sept. 8, with the full House returning for votes the following week.

Before then, Treasury Secretary Steven Mnuchin is set to testify at Congress next Tuesday for the first time since negotiations stalled. That’s at a hearing of the House’s special Oversight subcommittee on the Coronavirus Crisis, the panel announced.

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