Talks over the next round of stimulus relief appear to be breaking down with no deal on the table as both sides blame each other for the lack of a deal. Democrats claim they have asked Republicans to meet them halfway on the stimulus proposal, but Republicans refuse to do so.
However, Republicans previously said they have been making concessions while Democrats have budged little. In the meantime, hope of a second round of coronavirus stimulus checks and an extension of expired benefits is running out.
Michael Mauboussin: Here’s what active managers can do
Stimulus relief talks are breaking down
Multiple news reports indicate that the stimulus talks are collapsing following Thursday's meeting between White House officials and top Democrats in Congress. Treasury Secretary Steven Mnuchin met with White House Chief of Staff Mark Meadows, Senate Minority Leader Chuck Schumer and House Speaker Nancy Pelosi on Thursday for more than three hours.
They had very little to show for that meeting and did not guarantee that they would even meet today. Previously, they had set a deadline of today to get a deal done, saying that if a deal is not struck by today, the stimulus talks might not even continue.
Meadows and Mnuchin said that they did make some progress on potential compromise in a few areas. However, they still differ widely on the topline numbers and the largest individual provisions, including financial assistance for state and local governments.
Democrats are set on getting aid for all state and local governments, including those that have had budget problems since long before the COVID-19 pandemic struck. Republicans say Democrats want to bail out Democrat-run states and governments that have been poorly managing their budgets for years.
Both sides playing the blame game
According to Bloomberg, Pelosi said Republicans aren't facing the seriousness of the economic problems facing the U.S. Schumer called Thursday's meeting "disappointing" because the White House refused to meet them in the middle during the stimulus relief talks.
Schumer said the Democrats are willing to meet again today to continue the stimulus talks. However, Mnuchin and Meadows said they will talk with Trump and call Schumer and Pelosi to figure out if they should even meet today.
It's possible that today's jobs report will influence whether the stimulus talks pick up again today. Other data has suggested that economic activity has slowed down again over the last few weeks. However, the jobs report is expected to show a small increase in jobs.
Despite that, the unemployment rate will likely hold at a higher rate than where it was at the peak of the recession that came after the 2008 financial crisis. Bloomberg suggests that if the jobs report ends up being better than expected, the White House could be even more resistant to spending the $3.5 trillion Democrats have demanded during the stimulus talks.
On the other hand, if the jobs report is worse than expected, the stimulus relief talks could be sped up. For now, jobless Americans are left without any extra benefits after the additional $600 in weekly benefits ran out.
Unemployment remains one of the major sticking points in the stimulus talks. Republicans want to reduce the benefit, so people don't keep getting paid more on unemployment than they did on the job. However, Democrats want to extend the $600 in weekly benefits.
On Thursday, one of the biggest sources of anger during the stimulus talks was aid for state and local governments. Mnuchin said Trump won't allow a bailout of governments that had budget problems since long before the pandemic, although he is willing to provide some aid related to COVID-19 spending and to help police and firefighters.