Trump Backtracks, Calls for Narrower Stimulus Deals

By Yuval Rosenberg

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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