Donald Trump calls off coronavirus relief talk, putting stimulus checks and unemployment benefits at risk
US President Donald Trump has called an abrupt end to negotiations with Democrats over additional COVID-19 relief, delaying action until after the election despite ominous warnings from his own Federal Reserve chairman about deteriorating conditions in the economy.
- Economists warn the US faces a “double-dip” recession without more economic relief
- Stocks dropped suddenly on news negotiations had broken down
- Mr Trump’s supporters say it won’t affect his chances at the polls
Mr Trump tweeted that House Speaker Nancy Pelosi was “not negotiating in good faith”.
He said he had instead asked Senate Majority Leader Mitch McConnell to direct all his focus before the election into confirming his US Supreme Court nominee, Amy Coney Barrett.
“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Mr Trump tweeted.
The collapse in talks means Mr Trump and Republicans will aim for re-election without delivering stimulus to voters — such as a pre-election batch of $US1,200 ($1,689) direct payments, or “Trump cheques” to most individuals — even as the national jobless rate is about 8 per cent and millions face the threat of eviction.
The unexpected turn could be a blow to Mr Trump’s re-election prospects and comes as his administration and campaign are in turmoil.
Mr Trump is quarantining in the White House after contracting COVID-19, and the latest opinion polls show him significantly behind former vice-president Joe Biden, with the election just four weeks away.
Mr Trump’s move came immediately after he spoke with the top Republican leaders in Congress, who had been warily watching talks between Treasury Secretary Steven Mnuchin and Speaker Pelosi.
Mr Trump cited Speaker Pelosi’s demands for state and local governments as a key reason for pulling out of the talks.
Speaker Pelosi and Mr Mnuchin were far apart on that issue — with Mr Trump offering $250 billion while Speaker Pelosi was holding out for more than $400 billion.
Democrats were also asking for a higher weekly jobless benefit and refundable tax credits for the working poor, among other provisions.
Trump ‘unwilling to crush the virus’
Speaker Pelosi said Mr Trump was “unwilling to crush the virus” and “refuses to give real help to poor children, the unemployed, and America’s hard-working families”.
Mr Biden issued a statement after the collapse in negotiations, saying the President had ended efforts to pass relief that “our nation desperately needs”.
“He ended talks that would get help for our businesses and schools, for families struggling and for those unemployed — that would have preserved hundreds of thousands of jobs,” Mr Biden said.
“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.”
White House officials did not immediately respond to a request for further explanation of the timing of the President’s decision to halt negotiations.
Tim Murtaugh, a Trump campaign spokesman, pushed back against the notion that the move could hurt Mr Trump at the ballot box.
“Nancy Pelosi, Chuck Schumer, and Congressional Democrats have not been honest brokers,” Mr Murtaugh said.
Senator McConnell told reporters on Capitol Hill he supported the President’s decision.
“Well I think his view was that they were not going to produce a result and we need to concentrate on what’s achievable,” he said.
While Mr Trump said he’ll immediately restart talks in November if he wins re-election, a Biden victory could mean the economy would go without further stimulus until February.
The economy has recovered more quickly than most economists expected, largely because of the $US2 trillion stimulus Congress approved in March.
The $US1,200 stimulus cheques, supplemental $US600 unemployment benefits each week, and aid to small businesses boosted household incomes and enabled many low-income Americans to pay bills and rent and maintain their overall spending, according to data from Opportunity Insights.
But the recovery has slowed, and certain sectors such as restaurants, hotels, theatres and airlines remain in bad shape, shedding jobs and risking permanent realignment.
Without more stimulus, economists expect growth will slow further in the final three months of the year.
“You’re going to see quite a significant drag on growth,” said Gregory Daco, chief US economist at Oxford Economics.
“It would really risk a double-dip recession.”
Wall Street slumps as Trump calls off negotiations
Mr Trump broke off talks after Federal Reserve Chairman Jerome Powell warned the economic recovery remains fragile seven months into the coronavirus pandemic without further economic stimulus.
The Dow Jones swung instantly from a gain of about 200 points to a loss of about 300 points.
Mr Powell, in remarks before the National Association for Business Economics, made clear too little support “would lead to a weak recovery, creating unnecessary hardship for households and businesses”.