Sep 29, 2020
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About this Deal
After weeks of stalled negotiations over another stimulus package, progress can now be seen toward another deal. House Speaker Nancy Pelosi (D-CA) and Treasury Secretary Steven Mnuchin are finally negotiating again. While a deal hasn't been reached, there are at least 5 positive signs that a deal could be reached this week.
1. $2.2 Trillion House Stimulus Bill
The first positive sign a deal is near is the new Heroes Act introduced by House Democrats. The $2.2 trillion proposal represents a more targeted bill compared to the original $3.4 trillion Heroes Act passed by the House in May. The $2.2 trillion bill comes in at the same cost as Speaker Pelosi's prior offer during negotiations with Mnuchin and White House Chief of Staff Mark Meadows.
While the figure is still much higher than what Republican negotiators have so far agreed to accept, it's a positive sign. To begin with, the bill includes new aid for the airline industry and more money for the Paycheck Protection Program. Both of these provisions should receive bipartisan support.
In addition, the bill proposes $436 billion in relief for state and local governments, down from $915 billion proposed in the original bill. This issue has been a major roadblock to getting a deal done. This represents the first time Pelosi has been willing to compromise on this aspect of the bill.
There is still work to be done. For example, while $436 billion for one year of aid is a significant compromise, it's still far greater than what experts believe state and local governments need over the next year. Most put the figure at $500 billion for the next two years. In addition, the proposal sticks with the $600 in extra weekly unemployment benefits, even though this would result in paying many people more than they made while working.
As a "new" starting point, however, the bill marks a significant step toward a bipartisan deal. You can find a one-page summary of the deal released by House Democrats here.
2. Stimulus Negotiations Have Resumed
After negotiations broke down in early August, the parties engaged in virtually no discussion toward a resolution. With the $2.2 trillion House bill, however, Pelosi and Mnuchin have resumed talks. Just getting the parties in the same room (or on a phone call) is a major step forward. While both sides say they want a deal, until this week, they didn't always act like they wanted a deal.
That changed on Monday. Pelosi and Mnuchin spoke Monday evening according to Drew Hammill, Pelosi's spokesman. Keep in mind that Pelosi and Mnuchin have already negotiated four relief bills earlier this year totaling nearly $3 trillion. They followed up that conversation with a 50-minute telephone call earlier today. They are scheduled to speak again tomorrow when Mnuchin is expected to offer a detailed response to the new $2.2 trillion proposal.
3. Both Sides Sound Positive
Pelosi, Mnuchin and even Meadows sound downright optimistic, a rare commodity in Washington. Pelosi told reporters at the Capital that a stimulus deal could be reached this week. In an interview with MSNBC she said, "We’re in a negotiation and hopefully we will come to a bipartisan agreement that will remove all doubt that the legislation will pass and be signed by the president." She described her discussions with Mnuchin as "positive."
Meadows likewise sounded a note of optimism. He told reports at the Capital that he had spoken with Pelosi and "hopefully we'll make some progress and find a solution for the American people." Overall, the Washington Post described the developments as a "new burst of optimism."
4. House Democrats Want a Stimulus Package
Pressure for Pelosi to reach a deal has been mounting. After negotiations stalled in early August, more than 100 House Democrats sent Pelosi letters urging the Speaker to make progress on various aspects of a stimulus deal. More recently, a bipartisan group of House lawmakers released a $1.5 trillion stimulus framework. Called a March to Common Ground, the framework highlighted the lack of progress on another round of Covid-19 relief:
"Having seen no progress on a new COVID-19 relief package in four months, and in recognition of Americans’ increasing suffering, the Problem Solvers Caucus (PSC) has developed a comprehensive, bipartisan framework to meet the nation’s needs for the next 6-12 months, that can pass both chambers of Congress and be signed into law by the President."
In short, Pelosi is feeling the pressure from members of her own party to get a deal done.
5. President Trump Wants a Stimulus Deal
Likewise, a deal is critical for President Trump. Trump has repeatedly said he favors a deal, often at spending levels greater than what many Republicans endorse. For example, Trump is supportive of the $1.5 trillion March to Common Ground framework. In response to the proposal, Meadows described Trump as "encouraged" by the proposal. He added that he was "probably more optimistic about the potential for a deal in the last 72 hours than I have been in the last 72 days."
In a tweet earlier this month, Trump encouraged Republicans to "go for the much higher numbers" in a stimulus package.
Trump faces a bitterly contested election in November. Trailing in the polls and with the recent release of select information from his tax returns, he's no doubt wanting to send the American people some good news before they head to the polls (or their mailbox as the case may be).
That's not to suggest he'll accept any deal, of course. But based on recent information, the parties are "only" $700 billion apart ($2.2 trillion new Heroes Act versus $1.5 trillion Trump has publicly supported). Before Covid-19 $700 billion was a lot of money. Now, it seems like a rounding error.