Donald Trump has approved a revised coronavirus stimulus package and wants to strike a deal with Democrats in Congress, said Director of the National Economic Council Larry Kudlow. He added that Treasury Secretary Steve Mnuchin would hold negotiations on the package with Speaker of the US House of Representatives Nancy Pelosi on Friday afternoon.
"The president has approved a revised package. He would like to do a deal. It will be relatively broad-based but I can't go through details to it", Kudlow told Fox Business.
Money for small businesses and an extension of the Paycheck Protection Program are included in the package backed by President Trump as well as direct checks and aid to airlines, Kudlow said.
Controversial statements by the White House
The Trump administration has made conflicting statements on the next stimulus package that is intended to extend help to millions of Americans and US companies that have been affected by the coronavirus pandemic.
On 8 October, Trump voiced optimism about negotiations, saying there was a "really good chance" that Democrats and Republicans could come to an agreement on new aid measures before the upcoming presidential election, schedule for 3 November. Earlier today, Trump tweeted that negotiations on the aid package are moving along.
In an interview with Rush Limbaugh, the president said he would like to see a coronavirus package that would be bigger than what the Democrats and the Republicans have previously offered.
However, on Friday, Senate Majority Leader Mitch McConnell said that this scenario is highly unlikely due to the “vast” differences between the two sides.
"We do need another rescue package, but the proximity to the election and the differences of opinion about what is needed at this particular juncture are pretty vast", McConnell said at a press conference in his home state of Kentucky.
What are the main differences?
Negotiations between the two sides have been going on for months. The Democrats want to provide more aid to local governments, companies, and jobless Americans, with the price tag standing at $2.2 trillion dollars. The Republicans have previously insisted on $1.6 trillion, arguing that another aid package worth trillions of dollars would exacerbate the US national debt, which has in recent years soared to 27 trillion.
- Other points of contention include:
Federal unemployment insurance benefits. Democrats insist that the $600 per week payments should be extended, whereas the Republicans are insisting on $400. - Democrats want to provide state and local governments with $436 billion in relief. Trump has insisted that the new aid should not be more than the $150 billion state governments received earlier this year.
CNBC reported, citing an unnamed source, that Trump had agreed to raise the package offer to $1.8 trillion in order to appease the Democrats and strike a deal before the election.
Why is it important?
The United States is the worst affected country by the coronavirus. It has the highest number of cases, 7.6 million, and the greatest death toll from the disease, more than 213,000, according to data provided by Johns Hopkins University. The pandemic has also caused one of the worst economic downturns, with millions of Americans losing their jobs. According to data from the US Labour Department, more than 26 million people received jobless benefits in the middle of September. Failure to reach a deal on the stimulus package would extend talks at a time when Americans are in dire need of financial assistance.
As mentioned earlier, on 6 October Trump said he had instructed his aides to focus on his Supreme Court nominee rather than on the aid package. The statement sent markets tumbling. News of a potential deal, however, will have a positive effect, says Julian Klymochko, CEO and chief investment officer at Accelerate Financial.
"The market loves stimulus and any additional stimulus efforts will be taken well by investors, leading the market higher. At this point in time, bond investors do not care at all about record deficit spending. No need to worry about 'bond vigilantes'", said Klymochko.
Commenting on Trump’s controversial statements about the negotiations with the Democrats, Tom Luongo, a geopolitical analyst and publisher of the Gold Goats 'n Guns Newsletter, said the president has checkmated his opponents.
"Trump's initial breaking off talks was a boss move. It put Pelosi on her back foot and took control of the stimulus package narrative. Offering up a deal, then going on Rush Limbaugh's show and saying he wants a bigger deal than the Democrats is another boss move, keeping everyone on their toes, sowing chaos while keeping the attention firmly on himself. Smart electoral politics".
"Pelosi needs a deal to keep the mutiny within the DNC at bay. Trump doesn't need a deal because Biden hasn't made the case with the voters. The polls are wrong, Trump is in the driver's seat this election. It is his to lose and the Democrats, especially Pelosi, are acting like they've already lost. If she signs a deal now, she looks like the loser. If she doesn't sign a deal she looks like a hyper-partisan troll", said Tom Luongo.