Bloomberg is reporting this week that work on the next coronavirus subsidy bill has intensified – but that White House and Democratic negotiators driving toward a deal on a final package still must overcome a raw mix of election-year pressures, internal GOP splits and a profound lack of trust between the parties.
The report said that the president's sinking poll ratings amid the virus's resurgence have Democrats sensing they have leverage—and are boosting internal Republican tensions over additional aid spending on top of the almost $3 trillion previously approved.
Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., have recently been playing “hardball,” dismissing out of hand smaller-scale proposals floated by the president's chief of staff, Mark Meadows, as well as a $1 trillion plan cobbled together by Senate Majority Leader Mitch McConnell, R-Ky.
Both sides declared they were making progress on Tuesday as they started to exchange detailed offers and agreed on a goal of reaching a deal by the end of the week, teeing up possible votes next week.
The negotiations on new subsidies are expected to continue after Pelosi and Schumer meet with the postmaster general later in the week in an effort to provide aid for the Postal Service and state governments. This is an effort to support for vote-by-mail operations, a top Democratic priority opposed by the president who has blasted the use of mail-in ballots for weeks.
Instead of McConnell or Treasury Secretary Steven Mnuchin, who has previously cut several deals with Democrats, the administration's lead negotiator for this round is Meadows, the former House Freedom Caucus chairman. Senate Appropriations Chairman Richard Shelby, R-Ala., praised Meadows for being engaged with lawmakers but noted his inexperience in such talks. “This is his first deal,” Shelby said.
Meadows initially proposed a stripped-down plan tying unemployment and school aid while negotiations continued, but Democrats are insisting on a bigger plan that they say “meets the moment.” In turn, he has floated potential executive actions Trump could take on his own if the talks break down.
In an indication of the seriousness of the current debate, The Hill said, is the fact that Senate Republicans expect to remain in session next week if the negotiations over the "impasse" continue. A new schedule, described by GOP senators on Tuesday, means the Senate would be in Washington for at least the first week of a previously scheduled four-week break that had been expected to start on Friday.
The House left town last week. House Majority Leader Steny Hoyer, D-Md., has said he will call House members back to Washington with a 24-hour heads-up once there is an agreement ready for a vote.
McConnell hasn't announced a change to the Senate's schedule. Asked about being in session next week, a spokesman for the GOP leader said, "the Leader will let everyone know when we have an update and/or guidance."
Negotiators continue to assert that they are making progress in the most recent talks but that “they still remain far apart on significant sticking points like unemployment insurance, state and local aid and McConnell's red line of liability protections for businesses.”
In the meantime, pressure on Congress to complete the new package was boosted by comments by Fed officials this week who said the U.S. economy needs more support than originally thought and that “it's becoming quite clear that the virus will be with us longer and more vigorously than anyone had hoped for,” Mary Daly, president of the Federal Reserve Bank of San Francisco said. The level of support that the economy is going to need just has to be higher, she said.
“As we get more information about how the virus will affect the economy, we will be thinking about how can we use forward guidance to telegraph to people, to signal to markets, households and businesses what our intentions are in terms of supporting the economy going forward,” she said.
During the last expansion, the Fed saw joblessness fall well below what it had estimated to be full employment. At the same time, inflation never consistently reached the central bank's 2% goal. This lesson can guide policy makers in the recovery from the coronavirus crisis, Daly said.
She also noted that we have room to let the economy go well beyond what people think is its maximum level of employment and we can then involve many, many individuals who people have traditionally thought were structurally unemployed, unable to get jobs, she said.
“The long tail of the pandemic will be that we have many, many people who remain on the sidelines unless we take this opportunity to educate these people, get them the training they need.”
So, we will see. The increasingly toxic politics ahead of the election clearly add uncertainty to measures to offset virus impacts, as well as debates on trade and economic policy -- fights that producers should watch closely as they intensify, Washington Insider believes.
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