As the unemployment rate fell to the single digits last week, hope for a compromise stimulus package may have disappeared.
The Financial Times (FT) reported Sunday (Sept. 6) the strong jobs report has given the White House and the Republicans confidence that the economy will rebound without a new round of spending. Congress was deadlocked as it went on summer break.
“In the CARES Act, we got to a deal because there was a crisis mentality on both sides, when the market was crashing and the economy was shutting down,” Ben Koltun, senior research analyst at Beacon Policy Advisors in Washington, told the FT referencing the $2.2 bipartisan measure passed in March. “The crisis mentality is just not there right now on the Republican side.”
On Friday, the U.S. Bureau of Labor Statistics (BLS) reported the country added 1.4 million jobs in August and the unemployment rate fell to 8.4 percent, down from 10.2 percent in July. On Thursday, the U.S. Department of Labor revealed the number of Americans who claimed jobless benefits dropped to its lowest level since the start of the pandemic.
Those better than expected results have taken some of the pressure off the GOP and Trump administration officials to reach a deal, the newspaper reported.
Following the jobs report, Larry Kudlow, President Donald Trump’s top economic adviser, told Bloomberg that the economy is on a self-sustaining recovery path and the country could live without another infusion of cash.
In May, House Democrats passed a $3 trillion coronavirus stimulus package that offered continued benefits for the unemployed, a second direct payment to Americans and hazard pay for front-line workers and relief for cash-strapped state and local governments.
The GOP-controlled Senate countered with a $1 trillion measure.
But the Democrats have held out for a $2 trillion compromise. Negotiations stalled and the lawmakers went home for break without an agreement.
When Congress returns this week, the FT reported Republicans are expected to propose new stimulus legislation worth $500 billion, considerably less than the compromise Democrats may have considered.
On Fox News Sunday, Treasury Secretary Steven Mnuchin said U.S. House Speaker Nancy Pelosi (D-California) has refused to negotiate unless Republicans agree on a $2.5 trillion compromise.
U.S. Rep. Josh Gottheimer (D-New Jersey) told the FT that people are frustrated that both sides aren’t talking.
“You have to get back to the table,” he said
Still, White House Chief of Staff Mark Meadows held out hope for a compromise and that a deal can still be passed. He told the FT the biggest stumbling block is how much money to allocate for state and local governments. While Democrats want more than $900 billion, while Republicans say they are willing to support one-third of that amount.