Nancy Pelosi and Donald Trump are putting down opposing wagers on where the economy is headed and who voters will blame if it goes south.
The two sides are at least $1 trillion apart on another package of relief the U.S. economy needs to overcome the ravages of a pandemic that continues to force companies, schools and other organizations to roll back plans to reopen for business.
Pelosi, the House speaker, on Wednesday rebuffed an overture from Treasury Secretary Steven Mnuchin to resume negotiations, saying the White House refused to budge on the size of the relief plan. Mnuchin said it was Pelosi who refused to compromise.
Trump Wednesday ridiculed the Democrats’ proposals as “ridiculous” and filled with radical provisions that “no one in their right mind would approve.”
One of the biggest sticking points is aid to state and local governments. Democrats offered to cut their original $3.5 trillion proposal by about a third but insisted on keeping almost $1 trillion for governments outside Washington. The Trump administration and congressional Republicans say state and local officials have been given enough help and offered to add $150 billion more for such aid than was in their original roughly $1 trillion proposal.
As much as the money, the argument is about how the country will fare in the months ahead, particularly in the 82 days until the election that will decide control of the White House and Congress.
“They don’t think the economy is going to open up, and we do,” Mnuchin said Wednesday on the Fox Business Network.
Pelosi and Senate Democratic Leader Chuck Schumer repeatedly point out that the House passed its rescue package in May, while Republicans held back on making their own proposal until the end of July as Covid-19 cases soared across the American South and West, forcing many businesses to retrench.
“We have again made clear to the administration that we are willing to resume negotiations once they start to take this process seriously,” the two Democratic leaders said in a statement Wednesday.
In his own statement, Mnuchin said that it was Pelosi who was unwilling to negotiate “unless we agreed in advance to her proposal, costing at least $2 trillion.”
Wall Street Optimism
Where Washington sees a stalemate, Wall Street apparently envisions an eventual deal. The S&P 500 on Wednesday briefly surpassed the record peak reached before the coronavirus outbreak, only stumbling briefly as Democrats suggested the negotiations were in jeopardy.
“We’ve got a market that’s focused on the good case outcome for the virus, we’ve got a market that has taken a great deal of comfort in that fiscal policy is going to be there to support an economy through tough times,” Kevin Caron, portfolio manager for Washington Crossing, said.
Trump, as he has since the country first started shutting down in March, continues to tout an “incredible” economic rebound, though economists and Federal Reserve officials warn that the country still needs a substantial fiscal infusion.