Pre-Election Stimulus Hopes Fade With Two Sides Trading Blame

(Bloomberg) -- President Donald Trump and his aides on Tuesday appeared resigned to waiting until after the election to get a coronavirus stimulus package and put blame on House Speaker Nancy Pelosi for the delay.

“After the election we’ll get the best stimulus package you’ve ever seen,” Trump told reporters. The speaker responded in a statement Tuesday afternoon that “the president’s words only have meaning if he can get Mitch McConnell to take his hand off the pause button,” referring to the Senate majority leader’s reluctance to embrace a larger-scale relief bill.

While Pelosi said that congressional committee chairs continue to work on stimulus legislation, White House spokeswoman Alyssa Farah said earlier Tuesday that the focus is now on something that can be assembled “within weeks.”

Lawmakers had increasingly predicted no deal between the Democrats and the administration would be done before Nov. 3. The departure of U.S. senators from the Capitol for a pre-election break on Monday then made the logistics for passing a bill by Election Day practically impossible.

After the latest call between Pelosi Treasury Secretary Steven Mnuchin on Monday, there was still no agreement on both the size -- the Trump administration was last at $1.9 trillion, with the Democrats at $2.4 trillion -- and language of a bill.

Blame Game

Trump on Tuesday repeated his accusation that Pelosi is holding out for funds to bail out what he said are poorly run Democratic state and local governments.

Pelosi, meantime, reiterated her charge, in a letter to House colleagues, that the administration wasn’t committed to a strategic plan to “crush the virus.”

The stalemate in the the months-long talks leaves the economy more vulnerable to damage from a resurgent coronavirus pandemic. The shape of any post-Nov. 3 package is also unclear and will likely be influenced by the results.

“We’ll come back in November. The question might be, will there be something then?” Senate Appropriations Chairman Richard Shelby, an Alabama Republican, said Monday.

Stocks Rattled

U.S. stocks slumped the most since early September on Monday, thanks in part to recognition that stimulus will await the election. The S&P 500 Index retreated a further 0.3% Tuesday.

The administration has stopped short of an outright declaration of an end to negotiations. Trump told reporters Tuesday, “I’ll always talk about it. Because our people should get it.”

Both sides have a motive to keep the discussions going, as walking away would only invite blame from voters for killing off hopes for relief.

Polls show that control of both the Senate and the White House are in play on Nov. 3, complicating the outlook for a post-election stimulus deal.

Election Scenarios

A Trump victory and continued Republican control of the Senate would likely result in a smaller package than Pelosi is seeking. Senate GOP leader McConnell has consistently criticized the Democrats for pushing what he considers an overly broad spending package that includes non-coronavirus related items. He attempted to advance a roughly $500 billion bill last week, which was blocked by Democrats.

Victory for Joe Biden and a flip of the Senate to the Democrats would clear the way for a bigger-scale stimulus, though that could also be delayed into 2021, should Republicans resist during their remaining weeks in control of the chamber.

A split outcome from the Nov. 3 election could bring a variety of further complications. But in the interim before the new Congress sits, Republicans would have to find 13 from their Senate ranks to join Democrats in approving any deal. GOP leadership has been skeptical whether 13 would indeed emerge.

Senator John Thune of South Dakota, the No. 2 Republican leader in that chamber, told reporters at the Capitol Sunday that if Democrats win on Nov. 3, they could opt to proceed with a smaller stimulus in the lame-duck session and come back with more early in the new year.

“If they don’t, and we are still in the majority, then I suspect there’s more interest in trying to get a deal,” Thune said. “There’s a whole range of things that we all agree on. And I don’t know why we can’t at least do that.”

Pelosi’s top deputy, Majority Leader Steny Hoyer, said Tuesday, “Hopefully, in the lame duck, we will pass a bill which will give very substantial relief to a broad number of the businesses and people, and hospitals and health care workers that need the help.”

“Hopefully we will get a comprehensive bill. It may not be as much as we want,” he told reporters.

©2020 Bloomberg L.P.