President Donald Trump said Tuesday he has told his administration’s negotiators to end coronavirus stimulus talks with Democrats until after the Nov. 3 election.
The declaration halts an ongoing push to send trillions of dollars more in relief to Americans as the outbreak rampages through the U.S. and the economy struggles to recover from virus-related shutdowns. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi spoke for an hour about a relief package on Monday and planned to talk about a possible agreement again Tuesday. Trump, who has Covid-19 himself, had only three days ago urged the sides to complete a deal after taking no direct role in the talks for months.
“I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business,” Trump tweeted Tuesday.
The president added that he has asked Senate Majority Leader Mitch McConnell to “focus full time” on confirming Supreme Court nominee Amy Coney Barrett, which Senate Republicans have pushed to do before the election amid several Covid-19 cases within their ranks. Trump spoke with Republican congressional leaders about stimulus plans earlier in the day.
Pelosi and Mnuchin talked Tuesday afternoon, and the Treasury secretary confirmed that Trump pulled out of the discussions, the speaker’s spokesman Drew Hammill said in a tweet. Pelosi “expressed her disappointment in the President’s decision,” Hammill wrote.
In a statement responding to Trump’s tweets, Pelosi said the president “showed his true colors: putting himself first at the expense of the country, with the full complicity of the GOP Members of Congress.” She added that “walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus.”
Investors punished stocks in response to Trump’s tweets. The Dow Jones Industrial Average closed more than 300 points, or 1.3%, lower after the announcement.
Though talks made little progress for months, traders had grown more hopeful that the sides could reach a deal before the election as many individuals and businesses struggle during the ongoing outbreak.
Congress has failed to deliver new relief money to Americans for months as millions of people left jobless by the pandemic struggle to pay for food and housing. Lifelines that sustained the economy throughout the early stages of the pandemic, including the $600 per week unemployment benefit and the window to apply for Paycheck Protection Program small business loans, lapsed weeks ago.
In his tweets Tuesday, Trump appeared to argue the U.S. economy does not need any more stimulus. He wrote that “we are leading the World in Economic Recovery, and THE BEST IS YET TO COME!”
While the U.S. quickly regained many of the jobs lost earlier this year, a weaker-than-expected nonfarm payrolls gain of 661,000 in September fueled more concerns about the U.S. economic recovery slowing. The unemployment rate fell to 7.9%, still significantly higher than before the pandemic hit.
Trump’s push to stop negotiations came only hours after Federal Reserve Chair Jerome Powell urged Congress to approve more fiscal stimulus. He said a lack of sustained support from the federal government could “lead to a weak recovery, creating unnecessary hardship for households and businesses.”
The president decided to pull away from negotiations only weeks before an election in which his struggle to contain the virus outbreak and curb the economic damage from it have harmed his chances of winning a second term in the White House. While Congress faced an uphill path to passing aid before the election, Trump’s decision to suddenly call off active talks shocked political and business observers alike.
“Nobody gets it,” a senior Wall Street executive who declined to be named told CNBC of the decision.
Former Vice President Joe Biden, who has supported more stimulus as the Democratic presidential nominee, has targeted Trump for failing to limit the economic destruction caused by the coronavirus. Jared Bernstein, a former economic advisor to Biden and an informal advisor to his presidential campaign, criticized Trump for postponing the talks.
“With literally millions of people facing hunger and evictions, and with job growth downshifting, this is no time for the president to stop negotiating,” he said. “His lack of leadership throughout the process has been and continues to be a huge stumbling block.”
Democrats and the Trump administration had struggled to agree on what provisions a fifth aid package would include and how much the proposal would cost. Democrats passed a $2.2 trillion relief bill last week, while Republicans had offered a $1.6 trillion package.
Democratic leaders repeatedly argued the GOP did not recognize the gravity of the crisis. Republicans, who grew wary of spending federal money, insisted Democrats proposed an unnecessarily expensive plan that embraced liberal priorities unrelated to the pandemic.
After Trump’s announcement, McConnell told reporters that “I think his view was that they were not going to produce a result and that we needed to concentrate on what’s achievable.” Asked if he supported the decision, the senator responded, “I do.”
Democrats and the White House appeared to have agreed on a range of relief provisions, including another $1,200 direct payment to most Americans, funds for a second round of small business loans, money for schools and $25 billion to help cover airline payrolls as companies plan tens of thousands of furloughs. But the sides failed to overcome fundamental disputes about several other issues.
Democrats most recently proposed $436 billion in relief for state and local governments, while Mnuchin offered $250 billion in aid. Pelosi pushed to reinstate the $600 per week jobless benefit until January, but the White House proposed $400 weekly. Republicans also wanted liability protections for businesses and schools, which Democrats oppose.
In his tweets, Trump claimed the proposed state and municipal aid is a “bailout” of Democratic-run states that is “in no way related to COVID-19.” The bipartisan National Governors Association has pushed for at least $500 billion more in federal relief as governments consider cuts to education and essential services while they face increased costs and lower revenue during the pandemic.
The president also said Pelosi “is not negotiating in good faith” after the White House made its $1.6 trillion offer.
Polls have consistently found voters want Congress to pass more aid ahead of the election. A new CNBC/Change Research poll released Tuesday asked likely voters whether one of two statements came closer to their views: “The economy is struggling and we need more financial relief from Washington,” or “The economy is recovering and we do not need any more financial relief from Washington.”
Nationally, 66% of respondents said the country needs more aid, while 34% answered that it does not need more assistance. In six swing states — Arizona, Florida, Michigan, North Carolina, Pennsylvania and Wisconsin — 63% of likely voters said America needs more financial relief from the federal government, while 37% said it does not.
At least two GOP members of Congress quickly questioned Trump’s decision. Sen. Susan Collins of Maine, who faces one of the Senate’s toughest reelection bids, called for lawmakers to pass another aid bill before Nov. 3.
“Waiting until after the election to reach an agreement on the next Covid-19 relief package is a huge mistake,” she said in a statement. “I have already been in touch with the Secretary of the Treasury, one of the chief negotiators, and with several of my Senate colleagues.”
Rep. John Katko, a New York Republican running in a potentially competitive race in November, tweeted that he wants the president “to rethink this move.”
“I disagree with the President. With lives at stake, we cannot afford to stop negotiations on a relief package,” he wrote.
— CNBC’s Brian Schwartz contributed to this report.