Trump mulls higher US stimulus offer as Mnuchin downplays deal

Washington (AFP) – Getting a new stimulus spending package approved by Congress is unlikely before the November election, US Treasury Secretary Steven Mnuchin said Thursday, even as his boss President Donald Trump indicated he may raise his offer amid an impasse with the Democrats.Lawmakers have tried fruitlessly for months to reach an agreement on a follow-up to the $2.2 trillion CARES Act after key provisions of that rescue measure expired, depriving small businesses of support and sparking mass layoffs by US airlines.

Talks resumed in recent weeks but with the November 3 election drawing ever nearer and Democrats and Republicans still arguing over how much to spend and in what form, Mnuchin acknowledged the talks are facing tough odds.

“A deal would be hard to get done before the election, but we’re going to keep trying,” he said in an interview on CNBC. “So, I don’t want to say that it’s not likely, it’s just there are significant issues.”

The latest White House proposal costs $1.8 trillion, while Democrats controlling the House of Representatives have approved a $2.2 trillion bill.

But in an interview with Fox Business Network, Trump said he would consider spending more.

“I would pay more, I would go higher,” he said, but added “it’s going to be very hard to do anything” with Democratic House Speaker Nancy Pelosi.

But Senate Republicans have balked at the high price tag.

Senate Majority Leader Mitch McConnell signaled opposition to spending anywhere near what Trump has proposed, replying “I don’t think so” when asked at a press conference if he would support the president’s proposal.

– ‘Crush the virus’ –

The stimulus troubles have dogged Wall Street in recent days as traders began realizing new economic government spending may not be approved any time soon. But the Dow regained some ground after Trump’s comments, closing flat Thursday.

The CARES Act has been credited with boosting consumption and keeping small businesses afloat through a program of loans and grants, but those measures have lapsed.

A separate program to stop airlines from laying off workers despite a collapse in travel during the pandemic expired at the start of October, and major carriers have since furloughed around 32,000 employees.

Labor Department data released Thursday showed jobless benefit applications ticked  up unexpectedly in the week ended October 10 to 898,000, their highest level since mid-August. That was also well above the worst week seen in the 2008-2010 global financial crisis.

– Smaller measures rejected –

Trump threw the stimulus negotiations into chaos last week when he ordered Mnuchin to halt the talks, but he quickly reversed course.

Republicans have tried to push through smaller individual bills, but Pelosi said Democrats would only support the measures, including one targeting airlines, in the context of a comprehensive package.

Pelosi and Mnuchin were set to speak again on Thursday, but in a Wednesday interview on CNBC, the House Speaker insisted a new bill must have a “clear plan to crush the virus” as well as funds for education and to protect worker safety.

Pelosi also dismissed the ruling party’s newfound concerns about the price tag.,

“The GOP gave a $150 billion tax giveaway to the wealthiest in America, but now claim we cannot afford to provide expanded benefits for the unemployed,” she tweeted referring to provisions in the CARES Act..

The IMF’s chief economist told AFP this week another $2.2 trillion injection of stimulus would boost US GDP growth by two percentage points next year, over the 3.1 percent GDP rise currently forecast.

On Thursday IMF Managing Director Kristalina Georgieva said she had faith that lawmakers would eventually get a spending package passed.

“Let’s see how quickly it would be deployed, but I have no doubt it will be deployed, because it is necessary before the end of the year,” Georgieva said during a debate on the global economy.