Pelosi, Mnuchin Point Fingers as Stimulus Talks Stall

By Yuval Rosenberg

Pelosi, Mnuchin Point Fingers as Stimulus Talks Stall

Satirical newspaper The Onion published a
story Friday saying that House Speaker Nancy
Pelosi and Treasury Secretary Steven Mnuchin had announced they
would be meeting to put the final touches on a 1,000-piece “Starry
Night” jigsaw puzzle.

“We really want to get his puzzle done before the election, but
it’s also important not to rush things and jam pieces of the night
sky together that don’t actually fit,” the two officials supposedly
said. “It’s true that we hoped to get the puzzle done faster when
we started in June, but even working on it day and night, it takes
time to assemble so many pieces. There are still some sticking
points, like whether a few of the border pieces are lost for good
or whether they’re just in a couch cushion somewhere in the Oval
Office, but as soon as we find those and finish the cypress tree,
we’ll be all ready to present it to the public.”

That fake news might be more encouraging than the current
reality, where the two sides have reverted to finger-pointing,
suggesting that a deal before the November elections 11 days away
could be reached if only the other side would compromise.

“We could do that before the election, if the president wants
to,” Pelosi told MSNBC on Friday.

Mnuchin told reporters that the two sides had made significant
progress, but put the onus on Pelosi for further movement. “We’ve
offered compromises,” he said. “The speaker, on a number of issues,
is still dug in. If she wants to compromise, there will be a
deal.”

Both Pelosi and White House Chief of Staff Mark Meadows said
they remain optimistic that an agreement can be reached soon.
“Hopefully we can get a deal in the next day or so,” Meadows

said. “We’re still working through it, Secretary
Mnuchin and I have talked and we’re still working with her teams,
but actually making adjustments and trying to look at language to
reach a compromise.”

But President Trump on Friday again criticized Pelosi’s
insistence on additional aid to state and local governments,
claiming that the speaker “wants to bail out poorly run Democrat
states” (even though governors of red states have also called for
aid). Trump again accused Pelosi of not wanting a deal before
voters cast their ballots.

A new wrinkle: With many Senate Republicans opposed to
relief spending along the lines of the roughly $2 trillion package
being negotiated, some House Democrats have reportedly told Pelosi
that they don’t want to vote on legislation before the election
unless she gets assurances that the Senate will as well. Pelosi
said Friday that Trump would have to convince members of his party.
“The fact is that the president has been back and forth: ‘Stop the
negotiations,’ ‘Oh, I want more money than Nancy,’ ‘I hope she’ll
agree with me,’” she said. “But he has to talk to the Senate
Republicans.”

What it all means: Despite some faint hope that a deal
might come together, it’s looking less and less likely that
anything will get done before the elections. “The ball is not
moving much right now,” White House economic adviser Larry Kudlow
told Bloomberg Television. “It’s very difficult. The clock is
ticking ... Even if you had a deal in the next few days, you have
to go through committee print and have votes in House and Senate.
It’s not going to be easy.”

Or as The Wall Street Journal’s Nick Timiraos
put it: “The stimulus talks: No one wants to hang up the
phone even if there’s not much more to say.”

The numerous issues that still must be worked out mean that
another relief bill might have to wait until 2021. Lawmakers could
still consider coronavirus relief measures in the lame duck session
after the election, when they will also have to pass a new spending
bill by December 11. But the election results could complicate any
lame duck legislation.

“Putting off votes on a stimulus package until after the
election raises the risk that the Trump administration will be less
inclined or able to push a package through the GOP Senate,”
Bloomberg News
reported Friday. “That likely would be amplified
if Trump loses to Democrat Joe Biden and Republicans lose their
Senate majority -- leaving action on stimulus for the
pandemic-stricken U.S. economy until late January at the
earliest.”

If the Recovery Is Self-Sustaining, Do We Need
More Stimulus?

As lawmakers continue to battle over the size and scope of the
next coronavirus relief bill, some experts are wondering just how
much help the economy really needs. While the White House continues
to tout a V-shaped recovery that will sustain itself without
further assistance, most economists say that while the U.S. may
avoid a double-dip recession, policymakers are running the risk of
producing a lackluster recovery if the government fails to provide
substantial additional support.

A big concern, according to Kate Davidson and Nick Timiraos of
The Wall Street Journal, is repeating the mistakes of the Great
Recession, when in the opinion of many economists fiscal support
was reduced too soon. The economy didn’t fall back into
recession, but it did putter along with growth well below potential
for years.

“This is not a good time to have fiscal policy switch from being
accommodative to creating a drag,” former Fed Chairwoman Janet
Yellen
told the Journal. “That’s what happened [in 2008],
and it retarded the recovery.”

Different trajectories: Spending too little now could
have considerable long-term costs as the economy remains below
potential for a longer time in the future. According to Louise
Sheiner and Wendy Edelberg of the Brookings Institution, the
economy will take about a decade to return to pre-pandemic levels
in the absence of any additional support. On the other hand, a $2
trillion package would bring the economy back to pre-pandemic
levels by the end of 2021.

The Fed gets vocal: Historically low interest rates have
robbed central bankers of their primary tool for addressing
recessions, and Fed officials have been speaking out in favor of
more aggressive fiscal support for the economy. Chicago Fed
President Charles Evans recently said that policymakers must
recognize the long-term effects of an ongoing pandemic: “Even after
the worst of the crisis passes, the scarring of families’ balance
sheets may weigh on spending and leave them further behind over the
longer term.”

Earlier this week, Fed governor Lael Brainard
made a case for substantially more federal
spending:

“Continued targeted support to replace lost incomes will be an
important factor in determining the strength of the recovery. Apart
from the course of the virus itself, the most significant downside
risk to my outlook would be the failure of additional fiscal
support to materialize. Too little support would lead to a slower
and weaker recovery. Premature withdrawal of fiscal support would
risk allowing recessionary dynamics to become entrenched, holding
back employment and spending, increasing scarring from extended
unemployment spells, leading more businesses to shutter, and
ultimately harming productive capacity.”

The Trump-Biden Coronavirus Debate Summed Up in Less Than 300
Words

What President Trump said at the
final debate against Democratic nominee Joe Biden
Thursday night: “[W]e're fighting it and
we're fighting it hard. ... We have a vaccine that's coming, it's
ready. It's going to be announced within weeks, and it's going to
be delivered. ... it will go away and as I say, we're rounding the
turn, we're rounding the corner, it's going away. . . .

“I don’t think it’s going to be a dark winter at all.
We're opening up our country. We've learned and studied and
understand the disease, which we didn't know at the beginning. ...
I say we're learning to live with it. We have no
choice.”

What Biden said: “220,000 Americans dead. If you
hear nothing else I say tonight, hear this. Anyone who's
responsible for not taking control . . . anyone who is responsible
for that many deaths should not remain as President of the United
States of America.”

What the numbers say: The United States reported
more than
71,600 new Covid-19 cases on Thursday, according
to
Reuters, approaching the single-day record of
77,299 set in July.
NBC News’s tally found that the United States
actually topped the previous record on Thursday, with more than
77,600 new cases.

And The New York Times reports that “More than 41,000
people are currently hospitalized with the coronavirus in the
United States, a 40 percent rise in the past month, and cooler
weather that pushes more people indoors is threatening to expand
the outbreak still more. At least 14 states saw more people
hospitalized for the virus on a day in the past week than on any
other day in the pandemic,
according to the Covid Tracking Project. Seven
more states are nearing their peaks.”

Send your tips and feedback to yrosenberg@thefiscaltimes.com.
Follow us on Twitter:
@yuvalrosenberg,
@mdrainey and
@TheFiscalTimes. And please tell your
friends they can
sign up here for their own copy of this
newsletter.

News

Views and Analysis