Stimulus update: White House unveils $1.8 trillion offer—but it’s unclear if Congress has the appetite to pass anything before the election
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Just three days after President Donald Trump tweeted that stimulus negotiations were over, the White House on Friday offered a $1.8 trillion counter-proposal to Democratic leaders.
That’s up from the $1.6 trillion offer the White House gave last week—but still shy of the $2.2 trillion Democratic leaders want.
House Speaker Nancy Pelosi and Treasury Secretary Mnuchin Speaker discussed the offer on Friday, but they didn’t reach a deal. Pelosi’s chief of staff tweeted that the offer lacks “a strategic plan to crush the virus,” a key focus Pelosi highlighted in a press event Thursday.
Yet despite the rift, the two parties are numerically the closest they’ve been since July—when Democratic leaders were asking for $3.4 trillion, while the White House was still under $1 trillion. But as the White House inches closer to Democratic leaders’ ask of $2.2 trillion, Trump risks alienating fiscally conservative Senate Republicans who are already wary of going above $1.5 trillion. Many Senate Republicans are strongly opposed to the amount of economic aid Democrats want to send to state and local governments, with Senator Mitt Romney on Wednesday tweeting that it’s a “bail out” for states.
On Friday Senate Majority leader Mitch McConnell told reporters that another stimulus bill is unlikely to pass before the election. That could be bad news for Trump’s election campaign: As of Friday, Democratic nominee Joe Biden has a +9.7 point lead over President Donald Trump, according to RealClearPolitics poll average.
Yet for months the federal government has failed to heed economists’ calls for more stimulus. The $2.2 trillion CARES Act passed in March helped to ignite the strong economic rebound in the late spring and summer, but in recent months that recovery has slowed: U.S. employment rose by 661,000 in September, down from 1.5 million jobs added in August and 1.8 million added in July.
“The risk is we slide back into the hole if we don’t get continued, additional support from policymakers,” Mark Zandi, chief economist at Moody’s Analytics, recently told Fortune.
While the two parties disagree on the dollar size of the next stimulus package, they do agree on lots of the spending areas. Both parties reaffirmed support this week for another round of $1,200 stimulus checks for adults and $500 for dependents. Both parties support more funding for education, coronavirus-related projects, mortgage and rental assistance, food programs, and state and local government funding.
Still, analysts at LPL Financial wrote in a note Wednesday that “despite the president coming back to the negotiating table Wednesday morning, prospects for the speedy passage of a stimulus bill have weakened significantly,” the analysts wrote, while LPL’s Jeff Buchbinder argued in a note Thursday the “odds are against it.”