Trump Backtracks, Calls for Narrower Stimulus Deals

Trump Backtracks, Calls for Narrower Stimulus Deals

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Plus, federal bureaucracy ‘bloat’ at 60-year high
Wednesday, October 7, 2020

Trump Backtracks, Calls for Narrower Stimulus Deals

Maybe it’s a negotiating strategy, maybe it’s the meds, maybe it’s just chaos. Whatever the reason, President Trump on Tuesday night called on Congress to pass a number of narrower coronavirus relief bills — just hours after he abruptly pulled the plug on talks for a more comprehensive package.

Trump’s confusing tweets:
As part of another epic tweetstorm, Trump said that the House and Senate should “IMMEDIATELY” approve bills to provide $25 billion in payroll support for airline workers, $135 billion in aid to small businesses and another round of $1,200 direct payments to American households. He followed up Wednesday morning by retweeting his own message on stimulus checks from Tuesday night, urging House Speaker Nancy Pelosi (D-CA) to “Move Fast, I Am Waiting To Sign!” But those exhortations all came after Tuesday afternoon tweets in which Trump said he had directed his team to stop negotiating until after the election.

So are stimulus talks off or on? Trump’s backtracking sowed some confusion about the state of the talks and whether the president was reversing himself, perhaps after being spooked by the stock market’s reaction to his initial announcement or by the prospect of taking the blame for the lack of another stimulus package.

Senate Majority Leader Mitch McConnell (R-KY) backed Trump’s decision to halt talks on a larger deal, but some other Republicans disagreed with the move. Sen. Susan Collins of Maine, facing a tough reelection race, said waiting until after the election was a “huge mistake.”

Tony Fratto, a former aide to President George W. Bush, who is now a partner at Hamilton Place Strategies in Washington, told The New York Times that Trump had given Democrats a gift: “Republicans can try to explain that the blame is on Democrats. Democrats only have to hold up Trump’s tweet, taking the blame himself.”

What the White House is thinking:
Mark Meadows, the White House chief of staff, said Wednesday morning that he and the president had spoken to Treasury Secretary Steven Mnuchin about pursuing smaller, separate bills. “The secretary and I have been talking about what we could do with stand-alone bills to help airlines, small businesses and the American people with stimulus checks, so hopefully we can convince Speaker Pelosi to do something on a stand-alone basis,” Meadows told “Fox & Friends.”

Asked about warnings from the Federal Reserve and elsewhere that the economy needs another shot of stimulus — and about how it would be to the president’s political advantage to have another relief package passed — Meadows said the talks with Pelosi weren’t leading anywhere. He pointed to the wide gap that remained on aid to state and local governments, which Democrats say is needed to protect jobs but Trump has derided as bailouts for blue states.

“We’re still willing to be engaged, but I’m not optimistic for a comprehensive deal,” Meadows said. “I am optimistic that there’s about 10 things that we could do on a piecemeal basis if the speaker is willing to put it before her members.”

Pelosi had questioned whether the steroids Trump is taking to treat his Covid-19 infection were affecting his decision-making (some White House staffers reportedly wondered the same thing). But she suggested Wednesday that his backtracking was all about shifting blame.

“Well, it's hard to see any clear, sane path in anything that he's doing. But the fact is that he saw the political downside of his statement of walking away from the negotiations,” she said in an interview on ABC’s “The View.” “He’s rebounding from a terrible mistake he made yesterday, and the Republicans in Congress are going down the drain with him on that.”

Pelosi did speak with Mnuchin on Wednesday morning, and the Treasury secretary reportedly asked about a relief bill for airlines. The conversation did not go well. Pelosi, according to a spokesperson, reminded Mnuchin that Republicans had blocked just such a bill on Friday and asked him to review that legislation “so that they could have an informed conversation.”

What it all means:
In some ways, we’re now back to where we were a few months ago, when the White House was pushing a piecemeal deal and Pelosi was insisting that the pandemic and its economic wreckage required a more comprehensive package. Only now there’s less time to get something done, and the GOP has other items on its agenda.

“We’ve only got four weeks to the election, and we have a justice of the Supreme Court to get passed. It’s too close to the election — not enough time to get stuff done at this stage in the game,” top White House economic adviser Larry Kudlow told CNBC. “What the president was saying is, ‘We’re too far apart for a gigantic bill.’”

A bill to help airlines and thousands of industry workers facing furloughs may still be possible, but a larger package appears dead for now, unless Trump has another sudden change of heart and decides to squeeze rank-and-file Republicans who remain opposed to additional spending. “It became very obvious over the last couple days that a comprehensive bill was just going to get to the point where it really did not have much Republican support at all,” Meadows told reporters. “It was more of a Democrat-led bill, which would have been problematic more so in the Senate than in the House.”

Quote of the Day

“If there isn’t more stimulus, the recovery is in danger of collapsing. It’s that simple. Waiting until after the election is waiting too long."

Peter Morici, a right-leaning economist and emeritus business professor at the University of Maryland who has argued in favor of Trump’s reelection, in a Washington Post piece warning that lack of additional stimulus could stall the economic recovery or result in a slide back toward recession.

Chart of the Day: Outlays on Unemployment Aid

Federal spending on jobless aid dropped sharply following the expiration of the $600 per week in enhanced unemployment benefits in July, falling from a peak of about $29 billion per week in June to less than $8 billion in mid-September. Economists worry that the loss of income for millions of unemployed workers – about 25 million are relying on some kind of support right now – will ripple through the economy, creating a negative feedback loop of reduced spending and layoffs that Federal Reserve Chair Jay Powell warned about on Tuesday. (Bloomberg)

Both Trump and Biden Plans Would Push Debt Higher: CRFB

Each set of proposals laid out in the campaigns of President Trump and former Vice President Joe Biden would increase the national debt by about $5 trillion over a decade, according to a new analysis from the Committee for a Responsible Federal Budget.

There is considerable uncertainty around the plans — CRFB said it found “more than 800 distinct proposals” — so the analysis provides low-cost, central and high-cost estimates. “Under our central estimate, we find President Donald Trump’s campaign plan would increase the debt by $4.95 trillion over ten years and former Vice President Biden’s plan would increase the debt by $5.60 trillion,” CRFB said.

The debt-to-GDP ratio (see the chart below) would also rise in similar ways. “Debt would rise from 98 percent of Gross Domestic Product (GDP) today to 125 percent by 2030 under President Trump and 128 percent under Vice President Biden, compared to 109 percent under current law.”

Trump Admin Pushes Federal Bureaucracy ‘Bloat’ to 60-Year High

Despite rhetoric about shrinking government, the Trump administration has presided over an expansion of total federal employment and record levels of bureaucratic bloat, according to a new study from political scientist Paul C. Light of the Brookings Institution and New York University.

President Trump inherited a “true” federal workforce of about 9 million — the total of all civil servants, postal workers, active duty military, contractors and grantees — and has added about 2 million more positions over the last four years, Light says. About half of that growth has occurred in just three departments — Defense, Transportation and Health and Human Services — and the workforce now includes a record number of contractors, totaling roughly 5 million.

New layers of bloat. In addition to the raw numbers, Light also studied the way in which the federal government has added new layers of management over time – the seemingly inevitable bureaucratic expansion that he refers to as “bloat.” Light found that instead of reducing the bloat as promised, the Trump administration has added new layers within the bureaucracy and more leaders within each layer.

“Like branches on a tree, new layers increased the height of government, while new leaders expanded its width,” Light says. “Absent strong oversight and aggressive trimming, this hierarchy grows naturally as Congress creates new positions in the appropriations process, presidents deploy their support staff, civil servants move steadily upward, and new titles such as ‘chief of staff’ become de rigueur.”

The high price of bloat. The bloat isn’t just a fiscal issue. It also slows the government down and makes it harder to respond to crises, such as the one the county currently finds itself in. Some chilling examples cited by Light:

“COVID-19 showed just how far Americans must go to find accountability in the federal hierarchy. Healthcare heroes waiting for personal protective equipment faced 18 layers between the top of the Department of Health and Human Services and the PPE at the Strategic National Stockpile. Small businesses waiting for Paycheck Protection support faced 16 layers between the top of the Treasury Department and the Small Business Administration’s program office, and families with loved ones in skilled nursing facilities faced 19 layers between the top of the Department of Health and Human Services and the division of nursing homes at the Centers for Medicare and Medicaid Services.”

Number of the Day: 5.3 Million

IRS Commissioner Charles Rettig reportedly confirmed Wednesday that the agency still has a backlog of about 5.3 million paper items, 2.5 million of which are unopened paper returns. (h/t Bloomberg’s Ally Versprille)

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