As millions of Americans struggling through the second wave of COVID-19, President Trump announced that he was halting COVID-19 stimulus talks with the House Democrats until after he wins the upcoming election.
What's the background:
- Since the last COVID-19 stimulus package in June, Congress and the White House have been negotiating a new response plan to support households and businesses through the ongoing pandemic.
- Last week, Democrats passed a new $2.4 trillion stimulus plan which was down from it's original $3.5 trillion. Secretary of the Treasury Steven Mnuchin proposed a $1.6 trillion package in response. Among other issues, the two parties were at odds over how much state and local aid to include.
Why did Trump cancel talks? The President is frustrated with the pace of negotiations and many of his conservative allies are hesitant to pay for a fifth relief package after approving $3 trillion in aid over the Spring.
What does this mean?
- The election: Trump's announcement makes it harder to blame the Democrats and makes clear that the Republicans are blocking further aid. At first glance, this doesn't seem like the brightest political move especially coming from someone down 10+ points in the polls.
- Needless harm: COVID cases are spiking again in many US states, prompting a second wave of business closures. Without government support, many small businesses will go under and hundreds of thousands of jobs could be lost. Making matter worse, victims of this economic crisis won't have access to any government support.
- Economic turmoil: Earlier in the day, Federal Reserve Chairman Jerome Powell warned of 'dire economic consequences' if Congress and the White House couldn't agree on additional support. In response to President Trump's announcement, stocks immediately turned and the S&P 500 closed down 1.4%
What's next: It's all a bit unknown. One option is that the Senate Republicans pass their own version of a stimulus and force the House Democrats to counter it. But the closer we get to the November 3rd election, the more it's looking like no deal until the results are in.
What about Canada: Thankfully Prime Minister Trudeau and his Liberal Government are moving forward with a number of additional stimulus measures to assist Canadian households and businesses through this second wave.