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House Speaker Nancy Pelosi said negotiations on a new stimulus with the White House will press ahead and President Donald Trump’s COVID-19 diagnosis might change the tenor of the talks by emphasizing the seriousness of the pandemic.
Pelosi and Treasury Secretary Steven Mnuchin exchanged proposals on a virus relief package the night of Oct. 1 and spoke by telephone on Oct. 2, but it was unclear whether that included discussion about the stimulus.
The speaker and other Democrats have accused Senate Republicans and the White House of not recognizing the extent of damage that the coronavirus pandemic has caused and how big a threat remains.
“This kind of changes the dynamic,” Pelosi said on MSNBC Oct. 2. “Here, they see the reality of what we have been saying all along.”
She said she was optimistic that a bipartisan bill can emerge.
The stimulus negotiations have made some halting progress over the past two months, but the two sides remain far apart on how much of a boost to provide and where it should be directed. Democrats in the House on Oct. 1 passed a $2.2 trillion package — down from the $3.4 million plan they passed in May — as their offer in the latest talks. Mnuchin has proposed a plan of about $1.6 trillion.
The negotiations are taking place amid signs the U.S. economy is struggling to recover from pandemic-induced shutdowns. Job gains slowed in September and many Americans quit looking for work, suggesting the economic recovery is downshifting. Americans’ incomes fell in August by the most in three months after the government’s supplemental unemployment benefits expired, the Commerce Department reported Oct. 1.
Pelosi’s comments on a possible shift in the talks prompted U.S. stocks to pare losses. After falling as much as 1.2% earlier Oct. 2, the S&P 500 Index’s decline was cut almost in half after she spoke. By noon, they had moved downward again.
Sharp disagreements remain on components of coronavirus relief, with the Trump administration rejecting the scale of aid Democrats want for state and local authorities, and Pelosi demanding the end of tax breaks that she says are devoted to the wealthy.
Time to strike a deal is running short, with the presidential and congressional elections 32 days away and Congress expected to go on recess beforehand for the final leg of the campaign. Private economists have already cut their growth forecasts for the fourth quarter after the failure to find a compromise on another fiscal package.
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