Democrats Lose Leverage on Stimulus, With Smaller Bill Likely By Bloomberg

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© Bloomberg. WASHINGTON, DC – OCTOBER 22: Speaker of the House Nancy Pelosi (D-CA) speaks during a news conference at the U.S. Capitol on October 22, 2020 in Washington, DC. Speaker Pelosi spoke about the latest coronavirus stimulus bill that did not pass in the Senate yesterday. (Photo by Sarah Silbiger/Getty Images)

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(Bloomberg) — Democrats face a loss of leverage in negotiations over a new U.S. stimulus package after a disappointing showing on Election Day that left Senator Mitch McConnell potentially with a renewed mandate as majority leader.

The results so far — with Democrats facing a trimmed majority in the House and long odds for taking the Senate — point to a smaller Covid-19 relief bill than the roughly $2 trillion that had been discussed by the Trump administration and congressional Democrats before the Nov. 3 election.

“Hopefully the partisan passions that prevented us from getting a rescue package have subsided,” McConnell, a Kentucky Republican who had advocated a much smaller package, said on Wednesday. “That’s job-one when we get back.”

Pressure has increased on lawmakers to move forward, with the U.S. economic recovery losing momentum amid a spike in coronavirus cases that could leave the nation’s health care system stressed.

Democrats have said they will continue to push for a multi-trillion dollar stimulus bill in the post-election lame-duck session, no matter who wins the White House. House Speaker Nancy Pelosi said late last month she wants to complete a deal with President Donald Trump’s administration even if Joe Biden wins in order to give him a “clean slate” before Inauguration Day in January.

Republican Resistance

But that task is more difficult given the rough election night for Pelosi and Senate Democratic leader Chuck Schumer.

The Senate GOP has been the main obstacle to enactment of a $2 trillion or greater package, and Republicans are increasingly likely to hold onto their majority in the Senate. That is sure to embolden spending hawks who have pushed for a smaller stimulus package of $500 billion or less, without direct stimulus checks or large-scale aid to state and local governments.

Republicans also will face pressure from conservative activists not to deliver Biden a major legislative victory — especially one that would add to an already record budget deficit.

“My advice toward Senate Republicans is to take the approach to a Biden presidency that they did toward Clinton and Obama, which was don’t give them any votes for truly bad pieces of legislation,” said anti-tax activist Grover Norquist. “Why would you put your fingerprints on something that is just a massive bailout for corrupt mayors and incompetent governors?”

Pelosi, who had pushed the White House into backing a bigger stimulus package, faces reduced influence after Democrats lost some of their seats to the GOP, and appeared to fall notably short of the pick-up of five to 10 seats the party expected. With a narrower majority in the new Congress, it may be difficult for Pelosi to find the consensus to pass a relief bill.

If Pelosi continues to insist on a package greater than the $1.9 trillion offered by the White House, she will face pressure to compromise quickly from the remaining moderates in her party that are vital to the party’s majority in the House.

©2020 Bloomberg L.P.

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