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Trump Allies Stumped by Unilateral Move to Scrap Stimulus Talks

Published 10/07/2020, 04:00 AM
Updated 10/07/2020, 05:09 AM
© Bloomberg. Nancy Pelosi walks to the House Floor at the U.S. Capitol in Washington, D.C., on Oct. 6.

© Bloomberg. Nancy Pelosi walks to the House Floor at the U.S. Capitol in Washington, D.C., on Oct. 6.

(Bloomberg) -- President Donald Trump stunned campaign advisers and allies in Congress by single-handedly torpedoing any chance of a fresh coronavirus stimulus, saddling himself with the blame for any more layoffs and market losses in the final weeks before the election.

With the president already trailing badly in polls as he recovers from Covid-19, his decision to publicly scuttle talks toward a bill in excess of $1 trillion puzzled allies, who had accused House Speaker Nancy Pelosi and Democrats for overreaching in negotiations.

Unless he backtracks, Trump’s decision ensures that Americans won’t receive stimulus checks before Election Day or an extension of at least $400 a week in enhanced unemployment benefits. Any stimulus measure would have also included billions for coronavirus testing and contact tracing, vaccine distribution, and financial assistance for the U.S. Postal Service ahead of Election Day.

Lawmakers had intended to provide aid for specific industries including restaurants, live entertainment venues and airlines, as well as rental, mortgage, and food assistance for ordinary Americans impacted by the virus.

Late Tuesday night, Trump issued a separate call for Congress to immediately approve $25 billion to help the airlines and another $135 billion for small businesses, but a piecemeal approach has been largely rejected by Democrats. His plea came as part of a late-night frenzy of tweets where Trump took aim at Democrats and accused them of trying to sabotage his presidency.

Trump terminated stimulus talks less than 24 hours after he returned home after three nights at Walter Reed National Military Medical Center with questions still swirling about his condition. People familiar with his thinking said Trump has been eager to return to the Oval Office, even while several more close aides tested positive for Covid on Tuesday.

The president’s stimulus decision was likely driven by a hard political reality. Down by double digits to former Vice President Joe Biden, he lacks the political capital to bridge the gap between Democrats’ demands for a bill in excess of $2 trillion and Senate Republicans who don’t want to spend even half as much.

‘After I Win’

The president hinted at the dilemma, saying he would return to negotiations “immediately after I win” the election.

But he risks deep economic damage before the polls close, with airlines and other pandemic-stricken industries threatening to imminently lay off thousands of people, small businesses closing in droves and schools struggling to safely return students to classrooms.

Corporate America Condemns Trump Move to Halt Stimulus Talks

Trump called off the talks hours after Federal Reserve Chair Jerome Powell during a virtual conference urged additional fiscal support to avoid what he said could become a “tragic” fallout for the U.S. economy. Fed chairs typically don’t comment on fiscal policy but Powell has repeatedly urged Congress to ignore the ballooning federal deficit and inject 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 after the election.

Biden unloaded on Trump. “Make no mistake: if you are out of work, if your business is closed, if your child’s school is shut down, if you are seeing layoffs in your community, Donald Trump decided today that none of that — none of it — matters to him,” he said in a statement.

One Republican congressional official said it was unclear what Trump sought to achieve. Another one expressed hope the move was a negotiating ploy, noting there’s still three weeks before the election for a deal to come together.

“He perceives it as a position of strength but I think many would argue it could be a miscalculation,” said Matt Gorman, a former spokesman for the House Republican campaign operation.

Trump has long expressed frustration with House Democrats’ insistence that an aid bill include billions of dollars for financially beleaguered states, many of them with Democratic leadership. Pulling out of talks also allowed him to portray himself as driving business in the capital following his coronavirus diagnosis -- and at least for a time, may distract from questions about his health and the widening coronavirus outbreak within the White House.

Taking the Blame

But by ending the talks himself, Trump forfeited the chance to cast blame for the failure on anybody else.

“Trump is certainly not one for subtlety and he’s left no doubt about who owns this, for better or worse,” Gorman said.

The decision was reminiscent of how the president reacted when pressured by top Democrats over legislation to avert a government shutdown in 2019 during a televised meeting in the Oval Office. During the discussion, Trump said he would be “proud” to shut the government down over his demand for money to build a border wall and that he would “take the mantle” of blame.

Trump’s’ display on Tuesday immediately undercut Republican leverage, with polls showing voters blaming the president and GOP lawmakers for the shutdown.

Pelosi said Trump’s pullout from talks demonstrated the White House “is in complete disarray.”

“He shows his contempt for science, his disdain for our heroes — in health care, first responders, sanitation, transportation, food workers, teachers, teachers, teachers and others — and he refuses to put money in workers’ pockets, unless his name is printed on the check,” Pelosi said.

On a phone call with other Democrats, the California lawmaker suggested the steroid regimen the president is taking to combat coronavirus could explain his behavior.

Unnerved Markets

One of the president’s favorite barometers for political success -- stock markets -- underscored the risk of his strategy. The benchmark S&P 500 slumped 1.4% after Trump tweeted his comments late in the trading session, erasing a gain of as much as 0.7%. The Dow Jones Industrial Average and Nasdaq Composite indexes also turned negative.

U.S. Economy’s Recovery Gets Harder as Trump Halts Aid Talks

And the break comes as the president is showing new vulnerability on economic issues. In a CNN poll of likely voters released earlier Tuesday, Biden led Trump 50% to 48% on who would better handle the economy, marking a significant erosion for the president on what had been his signature issue.

In May, the CNN poll found that 54% of registered voters gave Trump the upper hand on the issue, versus just 42% for Biden.

Some of the president’s conservative allies -- including Heritage Foundation researcher Stephen Moore, who has consulted with Trump on the talks -- applauded the news.

“It’s crazy that they’re going to spend all this money on all these programs that will have very little stimulative effect on the economy,” Moore said.

‘Weak Recovery’

Many economists agree that the more than $2 trillion relief bill Trump signed into law in the spring helped to significantly allay economic pain across the country. 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 for the president himself -- may be swift and tangible.

Just days ago, American Airlines (NASDAQ:AAL) Group Inc. and United Airlines Holdings (NASDAQ:UAL) Inc. said they would start laying off 32,000 workers, blaming expiring government aid, the latest in a drumbeat of mass job cuts. Walt Disney (NYSE:DIS) Co. is slashing 28,000 workers while Allstate Corp (NYSE:ALL)., the fourth-largest car insurer in the U.S., announced it will cut 3,800 jobs, roughly 8% of its workforce.

Despite efforts by the Trump administration and Republican allies to promote a bounce-back from the economic collapse the coronavirus precipitated in April, weekly layoffs consistently remain far above pre-Covid records. In September, the U.S. was still down 10.7 million jobs from February, a bigger loss in payrolls than the 8.7 million deficit when employment hit bottom during the 2008-2009 recession.

Americans’ incomes fell by 2.7% in August, the steepest drop in three months, as supplemental insurance benefits from the first round of Covid stimulus expired, threatening to sap consumer spending.

“The economy has been moving more or less sideways since mid-summer,” Mark Zandi, chief economist for Moody’s Analytics, said in a recent note to clients. With prospects fading for more federal relief, “odds that the recovery will come undone are rising.”

Voters historically have put heavy blame on 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 7.9% unemployment rate in September is higher than at the time of either of their losses.

©2020 Bloomberg L.P.

© Bloomberg. Nancy Pelosi walks to the House Floor at the U.S. Capitol in Washington, D.C., on Oct. 6.

Latest comments

Pelosi is the one scrapping it for the last month. Trump just got fed up and called her bluff. She wants money for everything except the American people, what was in there is her pet projects, nothing for you.
Marxist articles like this is why the public has lost all respect for the news media. This is complete BS. McCarthy explained many times that it was Polosi alone who has shipwrecked any chance of a deal by including billions in noncovid spending, which is something 99% of Republicans oppose. So they find 2 Republicans to question Presidents strategy, big deal. Trump has made it clear that he wouldn't sign any pork filled bill. this is 100% the Dems fault which makes this a ridiculous biased article.
The covid experimental drug have effected his mind making him more crazy than before.
donald the losing duck
the Democrats need to stop appending things that have nothing to do with the stimulus to stimulus talks. There is no need for cashless bail, mass prison release including violent criminals, banning voter ID and having universal ballot harvesting.
Like negotiating with economic terrorists. Democrats are trash.
Trump stuns commies
I knew he was pulling everbodys chain.....😛
Trump 2020 get use to it
other items she wanted. change voting laws, pay illegals, bail out destroyed cities from riots
Donnies ego is too imbalanced for an average prez to be good for America. We had hoped that as a billionaire he was mature enough despite his lack of political experience, but he was all Mister FAKE in persona. And he created the 'fake news' phrase and HE TURNS OUT TO BE that very thing. Wow, what guts to fail so badly without foretelling the failure
It's just a matter of forms. Very easy to see. Trump don't want to pass help that is being negotiated by democrats, instead want something is a republican product. The only reality is people don't being anything just because each party wants to pass its own program and show a victory. News has to relate more all these piecemeal negotiation joke. Both parties don't care for people.
Morkets go down into 1st week after election by default, this time may be longer. - So any stim release news would cause a bearish engulfing next day at the open .. gap up 'n *****down ..
Unilateral as in Arbitrary. -- Trump is the most shallo prez in years. Very poor signal acquisition interpretation capabilities
the question is, what makes a president you like. the Donald wanted to drain the swamp. the swamp cannot be drained without a revolution..
And the market just like this man cant make up their mind. Depending on a looney to give you direction is full hubris
Silly propaganda article. Trump move was well calculated and it is supported by all folks that will re-elect him in a month.
Dreaming usually helps
If you think Trump has given up on stimulus before the election you're wrong.He gave up on pelosi's idea of a stimulus.Bring him something only covid related and he'll sign it. It's that easy
Keep telling yourself that MAGA lackey. Reality is someone left him alone with his tweeter machine and he mess up because it is all about.. ME ME ME. Now that Republicans will tell him he messed up he will try to back track and change the narrative.
"rental, mortgage, and food assistance for ordinary Americans impacted by the virus." I guess government dependants are "ordinary" Americans. where does that leave those of us who pay our own bills? bagholders?
If small and medium size businesses don't get help you might not pay your own bills for very long
Dems only want to bail out Dem cities, which have been turned into warzones by them. plus, insane programs. look at what they want, then you will know why
Links?
'..look at what they want, then you will know why..' ?? Where can I read about what DEMS want? Hello! Anybody Home? -- We need info, man!
Disgusting man
 This president is a fake news factory.... so who is swallowing everything this fake news president is shoving down his throat??
Whats with the bailout for Chicago?
FNF - Fake News Factory. Yeah!
and you'll be surprised when Trump wins by a landslide
Trump is horrible for our country! His ego is more important.
Still Paul Freeman is right. Donnies ego is too imbalanced for an average prez to be good for America. We had hoped that as a billionaire he was mature enough despite his lack of political experience, but he was all Mister FAKE in persona. And he created the 'fake news' phrase and HE TURNS OUT TO BE that very thing. Wow, what guts to fail so badly without foretelling the failure
He's not a billionaire, and he was never mature enough to do anything but stroke his ego with his tiny little hands.
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