Less than a week after Senate Republicans united behind a slimmed-down fiscal stimulus package, President Donald Trump renewed divisions in the party over how much Covid-19 relief the U.S. economy needs.

Trump urged the GOP in a tweet Wednesday to “Go for the much higher numbers” in new coronavirus stimulus. He followed up at a White House news conference by saying he liked “the larger numbers” in a compromise $1.5 trillion stimulus plan from a bipartisan group of House lawmakers.

“I agree with a lot of it,” Trump said of that proposal.

It’s well above the $1.1 trillion the White House previously backed and much higher than the $650 billion Senate Republicans more recently proposed. White House Chief of Staff Mark Meadows said the $1.5 trillion figure wasn’t a “show-stopper,” but it appeared that way to some Republicans.

Senator John Thune of South Dakota, the party’s No. 2 in the chamber, said that $1.5 trillion would cause “a lot of heartburn” for GOP members. His colleague Ron Johnson of Wisconsin underlined that last Thursday’s $650 billion bill, was the right size. That legislation was blocked by Democrats who called it insufficient.

The Republican rifts drew focus away from infighting on the Democratic side, with Speaker Nancy Pelosi rejecting moves within her caucus to vote on something smaller than the $3.4 trillion initiative the House backed in May. She and Senate Democratic leader Chuck Schumer, who now favor $2.2 trillion in relief, quickly applauded Trump’s new flexibility on the top-line number, issuing a joint statement expressing encouragement.

While the parties struggle to keep a united front, the impasse between the main negotiators remains. While Pelosi and Treasury Secretary Steven Mnuchin conferred on Wednesday on a vital stopgap spending bill to keep the government open past the Oct. 1 start of a new fiscal year, they didn’t discuss stimulus.

Powell’s View
At the same time, evidence is emerging about the danger of fiscal-stimulus withdrawal. U.S. retail sales growth slowed much more than expected in August, after supplementary unemployment benefits enacted in March ran out.

“My sense is that more fiscal support is likely to be needed,” Federal Reserve Chair Jerome Powell said in a Wednesday briefing after the central bank reinforced expectations to keep interest rates near zero for years to come. He cited the 11 million Americans still out of work because of the coronavirus, struggling small businesses and declining revenue among state and local authorities.

With the short timeline for action before the Nov. 3 election, the coming days will prove critical in determining whether the White House’s fresh call for a bigger package breaks the deadlock.

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