Trump halts COVID-19 relief talks until after election
WASHINGTON
(AP) — President Donald Trump on Tuesday called an abrupt end to
negotiations with Democrats over additional COVID-19 relief, delaying
action until after the election despite ominous warnings from his own
Federal Reserve chairman about the deteriorating conditions in the
economy.
Trump tweeted that House Speaker Nancy Pelosi was “not
negotiating in good faith” and said he’s asked Senate Majority Leader
Mitch McConnell to direct all his focus before the election into
confirming his U.S. Supreme Court nominee, Amy Coney Barrett.
“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,” Trump
tweeted.
The unexpected turn could be a blow to Trump’s reelection
prospects and comes as his administration and campaign are in turmoil.
Trump is quarantining in the White House with a case of COVID, and the
latest batch of opinion polls shows him significantly behind former Vice
President Joe Biden with the election four weeks away.
The
collapse means that Trump and down-ballot Republicans will face
reelection without delivering aid to voters — such as a pre-election
batch of $1,200 direct payments, or “Trump checks,” to most individuals —
even as the national jobless rate is about 8% with millions facing the
threat of eviction. One endangered Republican, Maine Sen. Susan Collins,
said “waiting until after the election to reach an agreement on the
next Covid-19 relief package is a huge mistake.”
Former Vice President Joe Biden slammed Trump’s move.
“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.
Trump’s
move came immediately after he spoke with the top GOP leaders in
Congress, who had been warily watching talks between Treasury Secretary
Steven Mnuchin and Pelosi. Many Senate Republicans had signaled they
would not be willing to go along with any stimulus legislation that
topped $1 trillion, and GOP aides had been privately dismissive of the
prospects for a deal.
Just on Saturday, tweeting from Walter Reed
National Military Medical Center, Trump said, “OUR GREAT USA WANTS
& NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE.” But any
Pelosi-sponsored agreement of close to $2 trillion raised the potential
of a GOP revolt if it came to a vote.
Last week, the White House
said it was backing a $400 per week pandemic jobless benefit and dangled
the possibility of a COVID-19 relief bill of $1.6 trillion. But that
offer was rejected by Pelosi, who continued to take a hard line in the
talks, including insisting on repeal of a $254 billion GOP business tax
break passed in the March package as a way to finance additional relief.
Pelosi
had spoken with Mnuchin earlier Tuesday. After Trump’s tweets spiking
the negotiations, Pelosi said Trump was “unwilling to crush the virus”
and “refuses to give real help to poor children, the unemployed, and
America’s hard working families.”
Trump broke off talks after
Federal Reserve Chairman Jerome Powell warned earlier Tuesday that the
economic recovery remains fragile seven months into coronavirus pandemic
without further economic stimulus.
Stocks dropped suddenly on
Wall Street after Trump ordered a stop to negotiations. The Dow Jones
Industrial Average swung instantly from a gain of about 200 points to a
loss of about 300 points.
Powell, in remarks before the National
Association for Business Economics, made clear that too little support
“would lead to a weak recovery, creating unnecessary hardship for
households and businesses.”
Trump cited Pelosi’s demands for state
and local governments as a key reason for pulling out of the talks.
Pelosi and Mnuchin were far apart on that issue — with Trump offering
$250 billion while Pelosi was holding out for more than $400 billion.
And Pelosi was asking for a higher weekly jobless benefit and refundable
tax credits for the working poor, among other provisions.
Early
rounds of COVID relief passed by overwhelming margins as the economy
went into lockdown in March. After that, Trump and many of his GOP
allies focused more on loosening social and economic restrictions as the
key to recovery instead of more taxpayer-funded aid.
Still, the
decision to halt negotiations could be politically risky with just four
weeks to go before Election Day. While the stock market has clawed much
of its way back after cratering in the early weeks of the crisis,
unemployment stands at 7.9%, and the nearly 10 million jobs that remain
lost since the start of the pandemic exceed the number that the nation
shed during the entire 2008-09 Great Recession.
White House
officials did not immediately respond to a request for further
explanation of the timing of the president’s decision to halt
negotiations.
Tim Murtaugh, a Trump campaign spokesman, pushed
back against the notion that breaking off negotiations could hurt the
president at the ballot box.
“Nancy Pelosi, Chuck Schumer, and
Congressional Democrats have not been honest brokers,” Murtaugh said.
“They would rather have a political issue to help Joe Biden than act to
help Americans. It’s despicable.”
McConnell told reporters on Capitol Hill he supported Trump’s decision.
While
Trump said he’ll immediately restart talks in November if he wins
reelection, a Biden victory could mean the economy would go without
further stimulus until February.
The economy has recovered more
quickly than most economists had expected, so far, largely because of
the stimulus Congress approved in a $2 trillion package in March. The
$1,200 stimulus checks, supplemental $600 unemployment benefits each
week, and aid to small businesses boosted household incomes and enabled
many low-income Americans to pay bills and rent and maintain their
overall spending, according to data from Opportunity Insights.
But
the recovery has slowed and certain sectors such as restaurants,
hotels, theaters and airlines remain in bad shape, shedding jobs and
risking permanent realignment. Without more stimulus, economists expect
growth will slow significantly in the final three months of the year.
“You’re going to see quite a significant drag on growth,” said Gregory Daco, chief U.S. economist at Oxford Economics, a consulting firm. It “would really risk a double-dip recession.”
AP Economics Writer Christopher Rugaber contributed.