Not So Great News

This is my stimulus update for Friday, August 7.

Mnuchin, Meadows, Pelosi, and Schumer met for the tenth day yesterday to try to strike a deal, and it doesn’t look like much progress was made, and hopes have now all but faded that a deal will be struck this week.

Stimulus Negotiations

So yesterday the four stimulus negotiators — Mnuchin, Meadows, Pelosi, and Schumer — held a three-hour negotiation meeting, and I’ll show you what they said in their own words.

Here’s Mnuchin and Meadows:

Reporter: So you’re no closer than you were 12 hours ago?

Mnuchin: I would say we’re closer on a lot of issues, we’re still very far apart on some very significant issues. And that if the basis is getting an overall deal done, we would significant compromises on some big issues tomorrow.

Meadows: Yeah. Let me characterize it this way. I would think that the compromises that Secretary minuchin and I put forth on behalf of the President are significantly greater than the compromises that we saw from the other side of the negotiating table.

So I think Mnuchin is framing yesterday’s discussion perhaps more positively than is the reality, he says they’re closer on a lot of issues but still very far apart on some very significant issues, I’d imagine those big issues they’re far apart on are things like unemployment and state and local funding for example.  It also sounds like they’re far apart on food stamps as well as school funding, a Republican idea being to limit school funding to schools that reopen and not to all schools.

And Meadows is of course characterizing the Democrats as not willing to compromise in the way that Republicans have been willing to compromise.

And speaking of the Democrats, here’s Pelosi and Schumer after yesterday evening’s negotiations:

Pelosi: When they said a skinny proposal, it was anorexic. And it was not to meet the needs of the American people. What are your what what is the negotiation about? It’s not about who gets more what, in the halls of Congress. It’s about what it translates into the lives of the American people. And that’s why I could cut ask them why, why won’t you do this? Why won’t you do this? Why won’t you do this, but nonetheless, we’ve had some further exchange of, of paper to be clarified, to see if we can find some further common ground. But we’re very far apart. It’s most unfortunate. I want to yield to the distinguished leader in the Senate. As I’ve said before, a former member of the House of Representatives, we welcome him back to our side of the Capitol.

Schumer: Well, thank you. And first, we’re very disappointed in the meeting. But we urge our Republican colleagues to come back and continue to negotiate a few times it looked like they weren’t going to do that. And we urge them to do it and why? Because negotiation and a broad comprehensive agreement is the best way to go. But their stance was disappointing. We asked them would you mean us in the middle, and they said no, it has to be mostly in our direction. They were unwilling to meet in the middle. They said it mostly has to be their way and they admitted that.

So Pelosi calls the Republicans’ proposal not just skinny but anorexic, and Schumer characterizes the Republicans as being unwilling to negotiate here.

Honestly, they’re just so far apart to begin with, $1 trillion vs. $3 trillion.  Meeting in the middle at $2 trillion sounds reasonable to me, I mean sure, that’s roughly the total amount of corporate and individual income taxes the federal government collects every year, and it’s obviously a very big number, but this is the worst economic crisis our country has faced since the Great Depression.  Cliche, but desperate times, desperate measures.

So here’s how I suspect this is going to work. Hopefully the negotiators will meet again today, I haven’t heard of a scheduled meeting today, which is a bit concerning, but hopefully they’ll give it a go again today.

If that doesn’t happen, or if there are negotiations today and Mnuchin and Meadows maintain their glum tone and tell Trump today over the phone today, “This ain’t working, boss,” I think we might see some of those executive orders that Trump’s been talking about.

And like I said earlier this week, the President might be able to suspend collection of the payroll tax but not to set the payroll tax to a 0% tax rate, that money would still be owed at some point in the future, which is why I’ve referred to it not as a payroll tax cut which would have to be accomplished through the legislative process, the Constitution says that Congress has the power to lay and collect taxes, but rather as a payroll tax deferral.  It’s the same for other things as well, sure the President could potentially order an eviction moratorium, but via executive order he can’t appropriate federal funds to make landlords whole, that rent will still be owed whenever that moratorium ends.

So that’s the problem with the whole executive order strategy, it is like a Bandaid.

July Jobs Report

Now real quick, the July jobs report came out today.

1.8 million jobs were added in July with the jobless rate falling to 10.2%, down from 11.1% in June and 13.3% in May.

That said, fewer than half the jobs lost in April have been recovered in the three months following, that’s May, June, and July.

Now, a lot of this positive trend has, in my view, been bolstered by stimulus for small businesses, namely the PPP (Paycheck Protection Program).

And I think if we want this trend to continue, we need another relief bill.

Unfortunately, given that this jobs report would be characterized as “positive” I think we’ll see some G.O.P. senators saying, see, proof we don’t need more stimulus.

That’s my update for today, I’m really trying to cut through all the noise for you right now and just tell you how the stimulus negotiations are going, because that’s kind of all that matters right now to getting a second stimulus check and getting those federally-funded unemployment benefits extended.

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