Pelosi and McConnell Clash Over Coronavirus Stimulus
The election may have changed the political landscape in Washington, D.C., but even before the results are final, congressional leaders and the Trump administration signaled Friday that one thing hasn’t changed: the partisan stalemate surrounding another coronavirus stimulus bill.
Senate Majority Leader Mitch McConnell (R-KY) again called for a smaller, targeted relief package, saying that the October jobs report released Friday — which showed that the unemployment rate had fallen to 6.9% — indicated that narrow legislation is all that’s needed. (See below for more on the jobs report.)
“Our economy is really moving to get back on its feet. That I think clearly ought to affect what size of any rescue package we additionally do,” McConnell said at a news conference in Kentucky. “I do think we need another one, but I think it reinforces the argument that I’ve been making for the last few months that something smaller — rather than throwing another $3 trillion at this issue — is more appropriate, with it highly targeted towards things that are directly related to the coronavirus, which we all know is not going away until we get a vaccine.”
White House economic adviser Larry Kudlow said Friday that, given stronger-than-expected economic data, the Trump administration — which had shifted positions over weeks of negotiations on another stimulus bill, sometimes from one day to the next — would oppose a package along the lines of the roughly $2 trillion deal that Treasury Secretary Steven Mnuchin had been negotiating with House Speaker Nancy Pelosi (D-CA).
“We’re not interested in, you know, two or three trillion,” Kudlow said, calling instead for a “targeted package to specific areas.”
Pelosi has for months rejected that approach, and she did so again on Friday. “It doesn’t appeal to me at all because they still have not agreed to crush the virus,” Pelosi said, adding, “that isn’t something we should be looking at.”
In a statement, the speaker said that the economic data and the surge in coronavirus cases called for a more comprehensive response: “With millions more Americans stuck in long-term unemployment, a million fewer teachers and education jobs compared to a year ago, nearly 8 million people having fallen into poverty and up to 17 million children food insecure, we must crush the virus and protect the lives and livelihoods of the American people.” She called for Republicans to return to the negotiating table.
What’s next: With lawmakers set to return to the capital next week for a lame-duck session of Congress, the Trump administration is indicating that it will let McConnell be the point person for negotiations with Pelosi rather than have Mnuchin resume talks, The Washington Post’s Erica Werner reports. McConnell said this week that he could back some aid to state and local governments, a Democratic demand that had been a major sticking point in Pelosi’s negotiations with the administration.
“But with McConnell and Pelosi so far apart at the outset, it’s unclear where compromise might lie — and highly uncertain what Trump might be willing to sign on his way out of office,” Werner writes. “The negotiations might hinge in part on a Dec. 11 deadline when government funding runs out and a new spending bill will have to pass to avert a government shutdown.”
Election uncertainty may still loom over any talks, too. While Republicans appear likely to keep control of the Senate, Democrats still have a chance to wrest it away, depending on the outcome of two January runoff elections in Georgia. Those races, and the prospect that Joe Biden will be inaugurated in late January, may make Democrats less likely to compromise with McConnell during the lame duck.
Pelosi announced that she’s running for another term as speaker and she told reporters Friday that she saw her leverage in coronavirus relief talks increasing, rejecting that idea that the election would force Democrats to swallow a narrower bill. “She exuded confidence in a Biden presidency, telling reporters once he’s inaugurated he would be able to use the bully pulpit to shepherd a large spending bill that includes infrastructure construction -- even through a Senate continuing under Republican control,” Bloomberg News reports.
“The public wants a big jobs bill,” Pelosi reportedly said. “Now we have the upper hand.”
Republicans obviously see it much differently.
Number of the Day: 121,888
One day after the U.S. hit 100,000 new coronavirus cases, the nation surged well past that milestone, with more than 121,000 new infections on Thursday. “This virus doesn’t care if we voted for Donald Trump, doesn’t care if we voted for Joe Biden,” said Gov. Mike DeWine of Ohio, which also set a new record for cases Thursday. “It’s coming after all of us.”
Unemployment Rate Falls to 6.9% as US Reclaims Half the Jobs Lost to Coronavirus
The U.S. economy added 638,000 nonfarm jobs in October and the unemployment rate fell a full percentage from the month before, down to 6.9%, the Department of Labor announced Friday.
“These improvements in the labor market reflect the continued resumption of economic activity that had been curtailed due to the coronavirus (COVID-19) pandemic and efforts to contain it,” the department said. “In October, notable job gains occurred in leisure and hospitality, professional and business services, retail trade, and construction. Employment in government declined.”
Some good news: The results point to a stronger-than-expected economy in October. “Progress in the U.S. labor market is holding up as household savings help fuel spending and business investment rebounds, putting the economy in better shape than many analysts expected just six months ago,” Bloomberg’s Katia Dmitrieva wrote.
Economist Tim Duy noted that the labor force participation rate rose in October, another sign that the economy continues to strengthen. Although Congress cut off a firehose of fiscal support in the form of enhanced unemployment benefits three months ago, “the labor market doesn’t seem to notice,” suggesting that demand will continue to grow, even without additional federal help.
Some bad news: Other experts were less optimistic, finding signs of weakness despite the solid topline numbers. “Today's jobs report shows that our recovery is losing momentum,” wrote Ernie Tedeschi of the research firm Evercore ISI. “Every month since July has seen successively slower growth, and slower growth raises the risk that we get knocked down by adverse circumstances.”
Bloomberg’s Dmitrieva pointed out the big increase in the number of long-term unemployed, which increased by more than a million to 3.56 million. About one third of the roughly 11 million unemployed workers in the U.S. have been out of work for more than six months, and their number is growing rapidly.
And the sheer number of unemployed workers is still overwhelming. Economist Heidi Shierholz of the Economic Policy Institute noted that the economy is still roughly 10 million jobs shy of the employment level in February, before the pandemic took hold. About 1.3 million of those lost jobs are in state and local governments, mostly in education.
A long road back: Economist Jason Furman — who argues that a more “realistic unemployment rate” that takes into account classification errors and changes in the labor force participation rate would register 8.4% in October — said Friday that the latest report “is consistent with a ‘partial bounce back’ in the labor market, as the unemployment rate falls quickly at first, followed by a ‘slog’ where the unemployment rate slowly falls but remains at an elevated level for a prolonged period.” The bounce back could take a long time, Furman said, especially as the coronavirus continues to depress economic activity for the foreseeable future.
Chart of the Day: An Uneven Recovery
The coronavirus recession has been particularly hard on low-income workers. “The recession is basically over for high earners,” says NPR’s Planet Money, which posted this chart showing unemployment levels for different income groups to Instagram Thursday, before the latest jobs report. “But for folks with lower incomes, unemployment has hit Depression-era levels.”
One Big Election Winner: The Health Care Industry
Whatever the result of the presidential election, it looks like divided government is a near certainty, and that’s good news for what Bloomberg’s Max Nisen calls “the health care industrial complex.”
“Big pharma and health insurers are the real winners of the 2020 election,” Nisen says in an opinion piece Thursday. “Anyone who has to interact with and pay for care in America has less to celebrate.”
Nisen notes that the stocks of health insurers and pharmaceutical firms have been soaring since Election Day as traders digest the results. Divided government means one of the biggest threats to health care profitability — namely, coordinated political action to reduce costs throughout the health care system — is looking far less likely than it did before the election, when many prognosticators were predicting a “blue wave” that would give Democrats full control in Washington.
Now, facing a Senate that is expected to be controlled by Republicans, it’s unlikely that a potential Biden administration would be able to sign any major health care changes into law as the upper chamber blocks significant reforms.
Trump’s legacy: The Trump years have been very good for the health care industry, Nisen says: “There was limited change under Trump. He failed to repeal the Affordable Care Act, and executive actions aimed at reining in drug prices and increasing health-cost transparency have had little effect if they've been implemented at all. His legacy is mostly a modest jump in the number of Americans without health coverage resulting from efforts to undermine the ACA and Medicaid, a mismanaged pandemic, and a bunch of lawsuits.”
Health care profits growing: “The past few years under President Donald Trump have shown how much money the industry can make from America's health-care status quo,” Nisen writes. “Annual gross profit at the 25 most valuable health companies jumped by about $80 billion over the first three years of his term to more than $650 billion. Its profit now seems likely to expand even further for the next few years. Great for investors, if not so much for the broader population and health-care system as a whole.”
Threat neutralized: Joe Biden’s proposals include a public option for health insurance and drug-price negotiating power for Medicare, but those are probably off the table now. “There's only so much Biden could accomplish with executive action,” Nisen says. “Many of his efforts would aim to undo Trump's damage, which might even benefit health companies. He would likely take a harder line on health-care antitrust issues, but if that's the biggest problem, the sector as a whole will be delighted.”
- We Now Return to Our Regularly Scheduled Pandemic – Justin Fox, Bloomberg
- The Economy Is Healing. But Not Fast Enough to Prevent Serious Damage. – Neil Irwin, New York Times
- Is America Becoming a Failed State? – Paul Krugman, New York Times
- What the Voters Are Trying to Tell Us – David Brooks, New York Times
- In a Speech of Historic Dishonesty, Trump Tried to Reinforce His Long-Planned Effort to Retain Power – Philip Bump, Washington Post
- America's New Power Couple: Mitch and Joe – Politico
- If Biden Wins, He Must Play Hardball Against GOP Obstruction. Here’s How – Paul Waldman, Washington Post
- The Supreme Court Will Extinguish Health-Care Hysteria – George F. Will, Washington Post
- Why Are Democrats So Upset? – Francis Wilkinson, Bloomberg
- One America, Two Nations – Richard Haass, Project Syndicate