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Pelosi, Mnuchin Still Far Apart on Virus Stimulus Deal

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U.S. House Speaker Nancy Pelosi told top Democrats Thursday that she’s skeptical of getting a deal for a new economic stimulus in negotiations with Treasury Secretary Steven Mnuchin, according to two House Democratic officials.

Pelosi spoke with her leadership team on a conference call before the next scheduled round of talks with Mnuchin. The two met for about 90 minutes Wednesday without coming to an agreement, but Mnuchin said progress was made.

At a news conference after the call, Pelosi said the two sides are still far apart on the total amount of stimulus and how it would be apportioned. Many of the same sticking points that have resulted in the current stalemate, including aid to state and local government, remain.

“We’re hopeful we can reach agreement because the needs of the American people are so great,” Pelosi said. “But there has to be a recognition it takes money to do that.”

Both sides face increased pressure to act as more companies announce job cuts, including airlines that had received help under earlier rounds of federal support, and there is little time to act before the Nov. 3 election.

The S&P 500 Index pared its advance by more than half after Pelosi’s skepticism was reported. U.S. stock markets have been whipsawed this week by speculation over whether a stimulus deal can be reached.

House Democrats proposed a $2.2 trillion stimulus package that Pelosi described as a “proffer” in negotiations with the White House. Republican congressional leaders have rejected it.

Mnuchin said President Donald Trump instructed his negotiators “to come up significantly” from the initial GOP proposal of a $1 trillion pandemic relief plan.

They offered Pelosi a maximum of $1.6 trillion, some of which is covered by unused small business relief funds, according to people familiar with the proposal. That would include $400 a week in additional unemployment insurance, less than the $600 the Democrats want, the people said, but more than the $300 the White House put forward earlier. The package would also provide $250 billion in assistance to state and local governments, $100 billion more than a previous White House offer, but not as much as Democrats say is needed.

“I think that the president made a very good and generous offer that addresses most if not all — the vast majority of issues,” White House Chief of Staff Mark Meadows told reporters Wednesday night. “And yet we’re still apart on money and the priorities for that allocation. Discussions will continue.”

Meadows said the Trump administration’s counterproposal was “certainly above the $1.5 trillion that has been articulated to date,” but that “if it starts with a two, there’s going to be a real problem.”

House Democrats are still planning a vote on their $2.2 trillion proposal. It’s less than the $3.4 trillion bill the House passed in May, but still more than Republicans have said they could accept. Senate Majority Leader Mitch McConnell said Wednesday that it was rife with “poison pills” that have nothing to do with pandemic relief.

The House is scheduled to leave Washington at the end of this week, though members will be on call to return if there is a stimulus vote. Most senators may leave after next week, with the exception of a late-October vote on the nomination of Amy Coney Barrett to the U.S. Supreme Court. They also could be called back if a deal is reached.

Officials in both parties have privately questioned whether the differences could be bridged. The lack of progress in Wednesday’s talks dimmed optimism in financial markets about a stimulus deal, as stocks closed well off their highs of the session.

Although Trump and his aides have continued to express confidence that the economy is recovering, the pandemic continues to reverberate for companies and workers. Walt Disney Co. said Tuesday it’s slashing 28,000 workers in its slumping U.S. resort business. American Airlines Group Inc. said Wednesday night that it would begin to furlough 19,000 employees on Thursday, while United Airlines Holdings Inc. is planning to cut more than 13,000.

“The biggest concern that I have right now is that we just learned that 19,000 people on American Airlines, there’s going to be another furlough. There’s probably other airlines in the mix,” Meadows said aboard Air Force One on Wednesday night.

Private economists have increasingly abandoned predictions for a stimulus deal before the election. JPMorgan Chase & Co. and Goldman Sachs Group Inc. recently cut their forecasts for growth next quarter as a consequence.

“While there is a chance a deal could be reached in the next day or so, the odds still seem stacked against additional pre-election fiscal stimulus,” Goldman analysts including Alec Phillips wrote in a note Wednesday. “The soft deadline for a pre-election deal is tomorrow.”

Clash Over State, Local Aid

A key point of disagreement has been the Democrats’ push for large-scale aid to local and state governments. Their plan released Monday has $436 billion for one year of assistance — less than a previous demand for $915 billion, which triggered scorn from Trump administration officials who called it a bailout for poorly run states.

The Democratic plan includes new aid for airlines, restaurants and small businesses that wasn’t in the original House package but which both sides want as part of any package. It also has more than double the amount they originally proposed for schools.

The bill would provide another round of $1,200 direct relief payments to individuals and $500 per dependent — less than the $1,200 for dependents Democrats originally proposed.

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