President Trump has had enough of House Democrats dragging their feet when it comes to stimulus talks.
On Tuesday, Trump ended ongoing stimulus talks between his administration and House Democrats until after the election. He announced his decision via a late afternoon tweet. “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill,” said Trump.
The announcement sparked an immediate drop in the stock market, which was up for the day prior to the tweet. After the tweet, stocks swung to losses and ended up closing the day in the red. President Trump is notoriously sensitive to the equity market. Also, the sharp pivot may have led him to soften his stance later in the day.
The president released a series of tweets shortly after his initial announcement on Tuesday evening. He seemed to backtrack from his original position. He called on Congress to pass a skinnier relief bill to fund airlines and small business aid. Trump also wants to include another round of stimulus checks in the bill. “If I am sent a Stand-Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now,”
The Fed Chairman’s Warning
Prior to the president’s comments, Federal Reserve Chairman Jay Powell warned there could be substantial economic consequences if Congress doesn’t pass support for American homes during a virtual appearance at the National Association of Business Economics’ annual meeting.
“The expansion is still far from complete,” Powell said. “At this early stage, I would argue that the risks of policy intervention are still asymmetric. Too little support would lead to a weak recovery, creating unnecessary hardship … Even if policy actions ultimately prove to be greater than needed, they will not go to waste.”
Powell has been pushing for additional federal stimulus for months, but yesterday’s statement was perhaps his most urgent yet. His comments may have motivated President Trump to turn up the heat on negotiations with House Democrats.
President Trump and Congressional Republicans have offered to pass a stimulus bill as large as $1.6 trillion. However, House Democrats won’t budge. Democrats, the controlling majority in the House, want more money; hundreds of billions of dollars more.
The Democrats’ Demands
House Speaker Nancy Pelosi (D-CA) wants a multi-billion-dollar bailout for poorly-managed liberal governments who let unfettered rioters run rampant in their cities. Now, these same cities want federal dollars to cover the cost of damage that they could’ve easily avoided if they had used their available law enforcement resources. She also wants to include extended unemployment benefits that will pay people more money to stay at home than they ever made at work.
Both of Pelosi’s demands seem to be frivolous uses of taxpayer dollars, but we haven’t head any complaints from the Fake News media. As usual, they’re attempting to pin the stimulus stand-still on the president and Republicans.
It seems unlikely that Pelosi and the Democrats will give the White House a win so close to Election Day, but Trump is doing his best to keep the negotiations alive. Trump’s initial tweet calling off the stimulus talks may have been more of a negotiating tactic than anything else. However, the turmoil in markets indicates that investors are eager for more stimulus. Powell’s comments also paint a bleak economic picture for the U.S. if additional stimulus measures don’t get passed.
The election is less than 30 days away and approaching fast. Getting a bill passed beforehand will be a difficult task. However, there’s a good chance that we will get another round of stimulus after the election, but the size and scope of the bill will vary greatly depending on which party comes out on top on November 3.