Trump Administration and House Face Reckoning on Virus Relief

(Bloomberg) — Stimulus talks between the Trump administration and congressional Democrats will reach a fork in the road on Tuesday as both sides either quickly seal a deal or the House moves to pass a Democratic proposal and leave town for pre-election campaigning.

Donald Trump wearing a suit and tie: President Donald Trump

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President Donald Trump

The House released its $2.2 trillion proposal Monday night and the White House greeted initially it with silence.

Its reaction will likely come in a morning call between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin that largely determines whether another coronavirus stimulus gets done.

While the details of the legislative text adds clarity to the talks, the top-line spending level is no closer to that so far supported by Republicans. President Donald Trump has indicated he could agree to as much as $1.5 trillion in aid — still higher than the $650 billion put forth in a “skinny” aid package by Senate Republicans earlier this month.

Should no deal be forthcoming, House Democrats have said they intend to proceed on their own in voting on the new plan, allowing the party’s candidates in the Nov. 3 elections to highlight a recent vote on coronavirus relief. The last vote was on the bigger, $3.4 trillion Heroes Act back in May.

The negotiations have been at an impasse since August.

Read More: Latest Democratic Relief Bill Would Extend Airline Aid to March

Pelosi said earlier Monday that the White House would have to agree to “much more” spending for a fresh round of stimulus if there is any hope of striking a deal before the election. “We can get this done,” Pelosi said Monday on MSNBC, while emphasizing the need for more money.

She spoke to Mnuchin on Monday evening and they planned to talk again on Tuesday, her spokesman said.

A key source of division has been Democrats’ push for large-scale aid to state and local authorities. The plan released Monday has $436 billion for one year of assistance, less than a previous demand for $915 billion, which had triggered scorn among 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, and it has more than double the amount 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. It also has $600 per week in extra unemployment benefits through January, the same amount that expired in July and helped disposable incomes surge even as the economy tipped into recession.

Housing Aid, Virus Testing

The legislation continues the Heroes Act’s aims of bolstering housing assistance, with tens of billions of dollars to assist renters and homeowners make monthly rent, mortgage and utility payments.

Read More: Why the True Covid Death Toll May Be Way Over 1 Million

Also included is $75 billion for coronavirus testing, contact tracing and isolation measures, along with $28 billion for procurement, distribution and education campaigns for a safe and effective vaccine.

Democrats have also cut spending demands on hazard pay for essential workers, housing assistance, health insurance and the Postal Service.

With the Senate under Republican control, and its leaders now pre-occupied with Trump’s nomination of Judge Amy Coney Barrett to the Supreme Court, the bill is unlikely to advance without a major turnaround in the Trump administration’s position.

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

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