Odds are rising for a last-minute breakthrough on a stimulus agreement between the White House and Democrats — but Senate GOP support is 'the trillion-dollar question'
- Hopes for a bipartisan stimulus deal between Democrats and the White House rose on Friday.
- House Speaker Nancy Pelosi suggested that President Donald Trump's COVID-19 diagnosis "changes the dynamic" for lawmakers and adds urgency to pass an economic aid package.
- Stephen Moore, an outside economic adviser to the White House, said that Trump needed a political victory to bolster his argument for reelection and that a stimulus deal could provide it.
- Another conservative economist said any plan would need the support of GOP senators, calling it "the trillion-dollar question."
There were fresh hopes among Democrats on Friday for a bipartisan stimulus deal to pump cash into every part of the American economy.
The striking optimism came after a week of negotiations between the White House and Democrats with little sign of a breakthrough. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi remained $700 billion apart on their economic aid proposals, even as House Democrats on Thursday passed a $2.2 trillion stimulus bill to send aid to people and businesses. Pelosi said the talks would continue.
Then President Donald Trump tested positive for COVID-19, throwing the nation into uncharted territory amid a pandemic that's already killed 207,000 Americans and demolished the economy.
The diagnosis may scramble the calculus around a big economic aid package on Capitol Hill as lawmakers are set to head home until after the election. Pelosi suggested it could speed up an agreement between the parties.
"This kind of changes the dynamic, because here they see the reality of what we have been saying all along: This is a vicious virus," she said on MSNBC on Friday.
Stephen Moore, an outside economic adviser to the White House, told Business Insider the White House and Democrats appeared to be closing in on a compromise but that he thought the president's diagnosis had changed little. He said both sides were narrowing their differences on state aid and federal unemployment benefits, two areas of major friction.
"I think you could get a deal soon, even sooner than 10 days," Moore said. "I'd say right now the odds are a 65% chance there will be a deal in the next two weeks."
Moore, a visiting fellow at the conservative-leaning Heritage Foundation, said he advised Trump almost two weeks ago against a stimulus package, arguing that its benefits wouldn't materialize until early next year. But he said Trump would likely search for a "pick-me-up" in the next month to bolster his case for reelection.
"He needs a victory here, and a deal — he thinks it'll help the country but also help him politically," Moore said.
The ongoing areas of disagreement
The drive for a deal could grow on the heels of the newest jobs report, which showed the economy regained 661,000 jobs in September. It was a figure far below the expectations of forecasters, indicating the recovery may be stalling out. The US economy still has 10.7 million fewer jobs now than it did in February.
Larry Kudlow, the director of the White House's National Economic Council, said on Friday carving a middle ground with Democrats on a package was preferable to no outcome at all.
"Would you rather have zero, or would you rather have everything you want?" he said on Fox News. "There has to be compromise in life."
Pelosi said in a statement on Friday she remained "hopeful" about reaching an agreement with the Trump administration.
She listed five areas of disagreement in negotiations:
- Federal unemployment benefits
- Schools, local and state funding
- Tax credits for families with children
- Virus testing & tracing
- Appropriations
Federal unemployment benefits in particular has formed a major rift between both parties. Democrats are seeking to restore the $600 weekly government benefit through January 31. The White House is proposing $400 in weekly jobless aid instead with the program's end in early January.
Whether Senate Republicans back a stimulus deal is 'the trillion-dollar question'
A deal between the White House and Democrats, however, would still need to gain enough Republican votes in the Senate to reach Trump's desk for his signature. That could prove a significant hurdle depending on the price tag, which could be between $1.6 trillion and $2.2 trillion.
Brian Riedl, a conservative economist at the Manhattan Institute in touch with numerous congressional Republican offices, called it "the trillion-dollar question."
"Secretary Mnuchin can negotiate a deal with Democrats, but until Mitch McConnell and Senate Republicans sign off, it doesn't matter," he told Business Insider, referring to the Senate majority leader. "I have not heard whether Senate Republicans are on board with such a deal."
Democrats have long insisted on a broad relief package to aid unemployed people and cash-strapped states. Republicans say only a targeted plan is needed to address the crisis, with measures to provide government assistance to small businesses and help people return to work.
Some GOP senators oppose federal spending that could further swell the debt after lawmakers pumped over $3 trillion into the economy in the spring. They balked at a $1 trillion coronavirus relief package earlier this summer, contending that no additional federal spending was needed to prop up the economy.
McConnell on Thursday held off on judging an emerging stimulus proposal from Pelosi and Mnuchin.
"If they can reach an agreement, I will take a look at it and see whether I can sell that to Senate Republicans," he said. Any legislation with the support of all 47 Democratic-voting senators would require 13 Republicans to join them to pass it.
Experts have urged Congress to pass more economic aid as jobless Americans struggle to afford groceries and pay their rent. Nearly 26.5 million Americans are receiving unemployment benefits.
Jason Furman, a top economist to President Barack Obama, said on Friday that Mnuchin's plan was "better than nothing."
"Worth Dems fighting for more but making sure the country gets something, especially after today's news. And then can add more next year," he wrote on Twitter.
Without further aid, experts say, the threat of another wave of layoffs or furloughs looms as businesses struggle with lower demand and revenue losses. Airlines and restaurants in particular have been calling for another infusion of federal money.