January 26, 2021

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Trump nudges Republicans to increase economic stimulus offer

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US President Donald Trump has urged Senate Republicans to increase the size of their stimulus proposal, the latest sign that the White House is increasingly eager to reach a deal with Democrats over a fresh injection of fiscal support into the US economy.

In a tweet on Wednesday, Mr Trump encouraged Senate Republicans to put forward a bigger proposal than their initial package worth about $500bn, which was blocked last week by Democrats who said it was inadequate to cope with the downturn brought on by the pandemic.

“Go for the much higher numbers, Republicans, it all comes back to the USA anyway (one way or another!)” the president wrote.

Both the president and Mark Meadows, White House chief of staff, have indicated that they are in the process of restarting negotiations with Democrats over a bill and are increasingly optimistic about finding a compromise.

Mr Meadows told CNBC that he was “probably more optimistic about the potential for a deal in the last 72 hours than I have been in the last 72 days”.

Speaking to reporters outside the White House, Mr Meadows said he was encouraged that Nancy Pelosi, the Democratic speaker of the House, had said the House would stay in session until a relief bill was passed. He also pointed to a new proposal from Congress’s bipartisan Problem Solvers Caucus, which attempted to strike a balance between the more conservative package proposed by Republicans and the more generous offer from Democrats.

“I’ve had a number of conversations with Democrats on Capitol Hill . . . and I think there’s a growing sense that there’s still some real needs that need to be addressed. And I’ve tried to express the willingness on behalf of the White House to openly address them,” Mr Meadows said.

The Problem Solvers Caucus’s proposal, announced this week, would provide $1.5tn in relief. Democrats have indicated they would be willing to accept a $2.2tn injection, while Senate Republicans last week failed in their attempt to pass the $500bn “skinny” bill, which offered Americans just $300 a week in enhanced federal unemployment benefits — half of what they were receiving at the start of the crisis.

While Ms Pelosi has expressed scepticism about the Problem Solvers’ legislation, or any attempt to pass individual relief bills, rather than comprehensive legislation, she and Chuck Schumer, Senate minority leader, said in a statement that they were “encouraged” by the president’s comments.

“We look forward to hearing from the president’s negotiators that they will finally meet us halfway with a bill that is equal to the massive health and economic crises gripping our nation,” they said in a statement.

Kayleigh McEnany, White House press secretary, said on Wednesday that the president wanted to see a new round of direct stimulus payments to Americans in future legislation — something that was not included in Senate Republicans’ proposal.

“He is very keen to see those direct stimulus payments,” Ms McEnany said, adding that the White House was open to different bipartisan proposals: “There are many bipartisan proposals out there that have merit.”

At an ABC town hall on Tuesday evening, Mr Trump also suggested he was increasingly optimistic about a deal. “What I want to do is see some additional stimulus. And we’re trying to get it — and we may. Just before I came here we had some pretty good talks with the Democrats — we’ll see.”

Economists have warned that without more fiscal support, the tentative US rebound is in danger of slipping, particularly if a fresh wave of coronavirus infections forces businesses and schools to return to strict lockdowns.

Jay Powell, the Federal Reserve chair, on Wednesday called for additional fiscal support for the US economy, saying that a new relief package was embedded in forecasts for a strengthening recovery among private forecasters and US central bankers. He also expressed some optimism for a compromise on Capitol Hill. 

“There does seem to be an appetite on the part of all the relevant players to doing something, the question is how much and when,” he said.

Mr Powell said the previous rounds of stimulus had been “essential” to the progress made until now, and the economy had proven “resilient” after the federal unemployment benefits expired in late July.

But many millions remain jobless, small businesses are struggling and state and local governments are suffering financially. The lack of additional fiscal relief was a big “downside risk” to the outlook, as it could scar and damage the economy over the medium and longer term, Mr Powell said.

Additional reporting by James Politi

2020-09-16 16:40:35

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