“I have instructed my representatives to stop negotiating until after the election,” Donald Trump wrote on Twitter Tuesday afternoon. He went on to write that, “after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.”
The stock market immediately sank on the news, with the Dow down 374 points or 1.33% at 3:20 p.m. ET.
The declaration comes a day after Trump was released from Walter Reed hospital and returned the White House. As CNN put it: “A strongly medicated President Donald Trump bolted from his VIP hospital bubble Monday, staging a bizarre White House comeback that included an irresponsible mask removal and a reckless pronouncement there is nothing to fear from COVID-19, which has already killed 210,000 Americans.”
On Saturday, Trump had tweeted: “OUR GREAT USA WANTS & NEEDS STIMULUS. WORK TOGETHER AND GET IT DONE. Thank you!” Indeed, on the economic front, a second round of $1,200 stimulus checks had been widely embraced by both parties as a way to help Americans that are still reeling from the economic effects of the pandemic. House speaker Nancy Pelosi and treasury secretary Steve Mnuchin have been negotiating for the past two weeks to try and hammer out a second stimulus deal after talks fell apart earlier this summer. The overall size of the package has been the main sticking point: Democrats were pushing for a package worth at least $2.2 trillion, but the White House hasn’t wanted to go above $1.6 trillion. The parties had gotten a bit closer since August when Democratic leaders wanted $3.4 trillion and Republicans were determined not to go above $1 trillion.
Interestingly, Trump’s decision to cease talks and kill the possibility of more stimulus checks before the election comes the same day as a CNN poll finds voters are now evenly split at 48% on Trump’s handling of the economy. That’s a marked change from early March when 54% of those polled approved of his handling of the economy vs. 42% who did not.
Earlier Tuesday Fed chief Jerome Powell weighed in, saying that he too was worried about the fragile state of the economy. “The expansion is still far from complete,” Powell said in a speech to the National Association for Business Economics. “Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses. Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth.”
Though Trump has long touted a strong economy as his signature issue, Goldman Sachs’ chief economist wrote on Monday wrote that a blue wave would actually be plus for the economy. “All else equal, such a blue wave would likely prompt us to upgrade our forecasts. The reason is that it would sharply raise the probability of a fiscal stimulus package of at least $2 trillion shortly after the presidential inauguration on January 20, followed by longer-term spending increases on infrastructure, climate, health care and education that would at least match the likely longer-term tax increases on corporations and upper-income earners,” Jan Hatzius wrote.
Reaction to Trump’s declaration on Twitter was mixed. “You actually have the presidency now, I’m not sure if you realize that? So you can pass that now and help the people that are suffering in this country you claim to love so much. Not really sure why u keep saying “when I’m elected, when I’m elected,” wrote one commenter.
Another simply added: “Don’t sweat it, bro. We got a new guy coming in to take over soon.”