© Bloomberg. Nancy Pelosi walks upstairs to the home at the United States Capitol in Washington, D.C. on October 6.
(Bloomberg) – President Donald Trump has stunned campaign advisers and congressional allies by single-handedly torpedoing any chance of a new coronavirus stimulus, taking the blame for further layoffs and market losses over the years. last weeks before the elections.
With the president already lagging far behind in the polls as he recovers from Covid-19, his decision to publicly scuttle talks in favor of a more than $ 1 trillion bill has baffled allies, who had accused House Speaker Nancy Pelosi and the Democrats of going too long in negotiations.
Unless he backs down, Trump’s decision ensures Americans won’t receive stimulus checks until election day or an extension of at least $ 400 a week in enhanced unemployment benefits. Any stimulus would also have included billions for coronavirus testing and contact tracing, vaccine distribution and financial assistance for the U.S. Postal Service ahead of Election Day.
Lawmakers intended to provide aid to specific industries, including restaurants, live entertainment venues, and airlines, as well as rental, mortgage and food aid to ordinary Americans affected by the virus. .
Late Tuesday night, Trump made a separate call for Congress to immediately approve $ 25 billion to help airlines and an additional $ 135 billion for small businesses, but a piecemeal approach was widely rejected by Democrats. His plea is part of a frenzy of late-night tweets where Trump has targeted Democrats and accused them of trying to sabotage his presidency.
Trump ended stimulus talks less than 24 hours after returning home after three nights at Walter Reed National Military Medical Center with still swirling questions about his condition. People close to his thought have said Trump was eager to return to the Oval Office, even though several other close associates tested positive for Covid on Tuesday.
The president’s relaunch decision was probably motivated by harsh political reality. In double digits from former Vice President Joe Biden, he doesn’t have the political capital to bridge the gap between Democrats’ demands for a bill over $ 2 trillion and Senate Republicans who don’t want to not even spend half.
The president alluded to the dilemma, saying he would return to negotiations “immediately after winning” the election.
But it risks serious economic damage before polling stations close, airlines and other industries hit by a pandemic threatening to imminently lay off thousands, with small businesses mass closing and schools struggling to bring back students in the classroom safely.
Corporate America condemns Trump’s decision to end stimulus talks
Trump called off the talks hours after Federal Reserve Chairman Jerome Powell at a virtual conference urged additional budget support to prevent what he said could turn into a “tragic” fallout for the government. American economy. Fed chairmen typically don’t comment on fiscal policy, but Powell has repeatedly urged Congress to ignore the burgeoning federal deficit and pump more money into the economy.
Senator Susan Collins of Maine, one of the most vulnerable incumbent Republicans, said in a statement that it was “a huge mistake” to wait until the election is over.
Biden unloaded on Trump. “Make no mistake: if you are out of work, if your business is closed, if your child’s school is closed, if you see layoffs in your community, Donald Trump has decided today that none of this – none of that – doesn’t matter to him, ”he said in a statement.
A Republican congressional official said it was not clear what Trump was seeking to achieve. Another expressed hope that this was a negotiating ploy, noting that there were still three weeks until the elections for a deal to be reached.
“He sees it as a position of strength, but I think many would argue that it could be a miscalculation,” said Matt Gorman, a former spokesperson for the House Republican campaign operation.
Trump has long expressed frustration with the insistence of House Democrats that an aid bill include billions of dollars for financially troubled states, many of which are Democrat-led. The withdrawal from talks has also allowed him to present himself as a mover of business in the capital after his coronavirus diagnosis – and at least for a time, may distract from questions about his health and the spreading epidemic coronavirus disease at the White House.
Take the blame
But by ending the talks himself, Trump has lost the ability to blame the failure on someone else.
“Trump is certainly not the type to be subtle and he leaves no doubt as to who owns it, for better or for worse,” Gorman said.
The decision recalled the president’s reaction to pressure from the main Democrats on legislation to prevent the government shutdown in 2019 during a televised meeting in the Oval Office. During the discussion, Trump said he would be “proud” to shut down the government over its request for money to build a border wall and “take the mantle” of blame.
Trump’s posting on Tuesday immediately undermined Republican influence, with polls showing voters blamed the president and GOP lawmakers for the shutdown.
Pelosi said Trump’s withdrawal from the talks shows the White House “in disarray.”
“He shows his contempt for science, his contempt for our heroes – in healthcare, first responders, sanitation, transportation, food workers, teachers, teachers, teachers and others – and he refuses to put money in the pockets of workers, unless his name is printed on the check, ”Pelosi said.
During a phone call with other Democrats, the California lawmaker suggested that the steroid regimen the president is taking to fight the coronavirus may explain his behavior.
One of the president’s favorite barometers for political success – the stock markets – has highlighted the risk of his strategy. The benchmark S&P 500 fell 1.4% after Trump tweeted his comments at the end of the trading session, erasing a gain of up to 0.7%. The indices and have also turned negative.
US economic recovery deepens as Trump halt aid talks
And the break comes as the president shows new vulnerability over economic issues. In a CNN poll of likely voters released earlier Tuesday, Biden led Trump from 50% to 48% on who would run the economy best, marking significant erosion for the president on what had been his signature problem.
In May, the CNN poll found that 54% of registered voters gave Trump the upper hand on the issue, compared to just 42% for Biden.
Some of the president’s conservative allies – including Heritage Foundation researcher Stephen Moore, who consulted Trump on the talks – have applauded the news.
“It’s crazy that they’re going to spend all this money on all of these programs that will have very little stimulating effect on the economy,” Moore said.
Many economists agree that the more than $ 2 trillion relief bill that Trump enacted in the spring has helped ease economic pain across the country significantly. Powell warned earlier Tuesday that “too little support” from the government “would lead to a weak recovery, creating unnecessary hardship for households and businesses.”
The political impact for vulnerable Republican lawmakers most likely to support a deal – not to mention the president himself – can be swift and tangible.
Just days ago, American Airlines (NASDAQ 🙂 Group Inc. and United Airlines Holdings (NASDAQ 🙂 Inc. announced that they would start laying off 32,000 workers, blaming government aid expiry, latest in a series of massive job cuts. Walt Disney (NYSE 🙂 Co. cuts its workforce by 28,000 workers while Allstate Corp (NYSE :)., The fourth largest auto insurer in the United States, has announced that it will cut 3,800 jobs, or about 8% of its workforce. ‘artwork.
Despite efforts by the Trump administration and Republican allies to promote a rebound after the economic collapse the coronavirus precipitated in April, weekly layoffs still remain well above pre-Covid records. In September, the United States was still down 10.7 million jobs from February, a loss in payrolls bigger than the deficit of 8.7 million when employment hit its lowest level for the 2008-2009 recession.
Americans’ incomes fell 2.7% in August, the biggest drop in three months, as supplementary insurance benefits from Covid’s first round of stimulus expired, threatening to undermine consumer spending.
“The economy has been moving more or less sideways since mid-summer,” Mark Zandi, chief economist at Moody’s Analytics, said in a recent note to clients. As the prospects for federal relief fade, “the chances that the recovery will be reversed increase.”
Historically, voters have strongly blamed incumbent presidents and their party allies for a poor economy. The last two incumbents to lose re-election, Jimmy Carter in 1980 and George H.W. Bush in 1992, both were ousted following recessions. The unemployment rate of 7.9% in September is higher than at the time of either of their losses.
© 2020 Bloomberg L.P.