White House makes $1.8 trillion stimulus offer with new $1,200 checks, but deal with Democrats remains elusive

WASHINGTON - Treasury Secretary Steven Mnuchin made an over $1.8 trillion offer to House Speaker Nancy Pelosi, D-Calif., Friday in a renewed search for an economic relief deal, but agreement remained elusive as Pelosi said her terms still weren’t met.

“Of special concern, is the absence of an agreement on a strategic plan to crush the virus,” Pelosi’s spokesman, Drew Hammill, said on Twitter after Pelosi and Mnuchin spoke for 30 minutes Friday afternoon. “For this and other provisions, we are still awaiting language from the administration as negotiations on the overall funding amount continue.”

The negotiations took place just three days after President Donald Trump declared talks over. He’s now reversed himself completely and is urgently seeking a deal with weeks to go before the election - even though some congressional Republicans appear far less enthused over the prospect of a massive new spending bill.

“Covid Relief Negotiations are moving along. Go Big!” Trump said on Twitter Friday. Later in the day, speaking on Rush Limbaugh’s radio program, Trump said, “I would like to see a bigger stimulus package, frankly, than either the Democrats or the Republicans are offering.”

White House communications director Alyssa Farah contradicted that assertion, however, saying that the White House wanted to keep the final tally “below $2 trillion.” Democrats have been seeking a $2.2 trillion bill.

The new $1.8 trillion offer is an increase from the White House’s most recent proposal of around $1.6 trillion, which Pelosi had dismissed as too meager. Among the changes: The new offer proposes $300 billion for cities and states, up from $250 billion in the earlier proposal; it maintains a $400 weekly enhanced unemployment insurance benefit from the previous version, but for a somewhat longer duration, according to a person familiar with the contents who spoke on the condition of anonymity to discuss them.

The White House’s offer on stimulus checks includes $1,000 per child, instead of the $500 per child provided in the original Cares Act approved in March, according to two people with knowledge of the plan. The increase in the payment to children appears to be intended as a compromise measure for rejecting tax credits for children pushed by Pelosi in negotiations.

The figure for states and cities, first reported by Politico, is still significantly lower than Democrats had been seeking. That issue has been a long-running point of contention between the two sides, with Republicans claiming Democrats are trying to “bail out” blue states, a claim that angers Democrats, especially since many Republican governors also are seeking additional federal aid. Roughly $400 billion of the spending would come from money that had already been approved by Congress and would be repurposed, an administration official said, so that the net cost of the bill would be closer to $1.5 trillion.

Trump’s sudden desire for a huge spending bill does not match the mood from many Republicans on Capitol Hill, who have been cooler to the idea of a big package less than four weeks before the November elections. It comes, though, amid signs the U.S. economy is hitting a rough patch several months into a partial recovery. A number of companies in the past few weeks have begun layoffs and furloughs, particularly in the travel industry. Other sectors are also showing signs of strain. Some Republicans, particularly those in tight reelection races, do appear supportive of some sort of new aid. Sen. Joni Ernst, R-Iowa, who is in a tight reelection race, wrote on Twitter that she had spoken to Trump and urged him to provide more economic relief.

“The biggest thing that we need to see in a bill that, frankly, needs to get through quickly, is an extension of the application period for the PPP program, because that’s so essential for small businesses,” Jay Timmons, president of the National Association of Manufacturers, said at a Washington Post Live event on Friday. Without certainty of more aid, he warned businesses might “have to make horrific decisions to lay off parts of their workforce.”

Pelosi had been pushing legislation around $2.2 trillion in the talks with Mnuchin before Trump abruptly pulled the plug on negotiations Tuesday. Trump reversed course several hours later, though, after the stock market sunk and some in his own party objected. Trump has since been convinced by some political allies that a stimulus package would be helpful for his reelection, according to two people who spoke on the condition of anonymity to share details of internal conversations.

“Because it is so necessary to meet the needs of the American people I do hope that we will have an agreement soon,” Pelosi said on MSNBC Friday ahead of her conversation with Mnuchin.

As the coronavirus pandemic intensified in March and April, Congress approved $3 trillion in new spending to try to arrest some of the economic fallout. They have struggled since then to approve another package, though, amid new signs that parts of the economy are weakening.

But with Trump down in the polls a month from Election Day, he is suddenly pushing aggressively for a big new package, in a turnaround almost as abrupt as when he suddenly announced the cancellation of talks on Tuesday.

“He got a terrible backlash from it, including in the stock market, which is what he cares about,” Pelosi said on MSNBC. “And so then he started to come back little by little, and now a bigger package. So we’ll see what they have to offer.”

Many Republicans are skeptical Pelosi would actually agree to a deal that would give Trump something to brag about heading into the election. And there was no guarantee that any deal struck between Pelosi and Mnuchin would pass muster with Senate Republicans.

Senate GOP leaders have said any bill larger than $1 trillion would be difficult for many Senate Republicans to accept, and Majority Leader Mitch McConnell, R-Ky., could be reluctant to put legislation on the floor that would divide his conference - especially as he tries to focus on confirming a new Supreme Court justice ahead of the election. In a provision that could further alienate some conservatives, the White House proposal would allow certain unauthorized immigrants to get stimulus checks.

At an event earlier Friday in Kentucky, McConnell threw cold water on prospects for legislation to pass, saying it was “unlikely in the next three weeks.” A Republican strategist close to McConnell’s office, who spoke on the condition of anonymity to discuss internal GOP thinking, said that there was substantial opposition to the deal both within the administration and among congressional Republicans, predicting that a package of around $2 trillion would receive the support of “maybe 10” Senate Republicans.

Moderates in both parties, especially some in tough reelection races, have been advocating for a new relief deal. But in the GOP these lawmakers are outnumbered by conservatives who are expected to push against the deal.

Rep. James Comer, R-Ky., who attended several events with McConnell in Kentucky on Friday, said that despite their support for the president, “a lot of conservatives are concerned about excessive spending.”

“Until we get liability protection and spending under control I don’t think a lot of conservatives will be real excited to vote for another stimulus package,” Comer said in an interview.

“I’m doubtful in the end something gets done in a big, big way. You’ve got to remember there are a lot of senators on the Republican side of the aisle who are not in cycle and one of the most damaging votes they could take is to spend another couple trillion dollars spent in a relief bill,” former House Majority Leader Eric Cantor, R-Va., who lost his seat to a conservative insurgent in 2014, said in an interview on Fox Business. “There are some Republicans who still believe we have to deal with the increasing debt and deficit of this country.”

In addition to money for cities and states and unemployment insurance, the new proposal includes aid for airlines and small businesses and a new round of $1,200 stimulus checks. Both sides have supported these policies. They also had appeared to settle on $75 billion for coronavirus testing and tracing, although Democrats continued to push the administration for language on a comprehensive testing strategy, something Pelosi said Friday remained unsettled.

The new $1.8 trillion offer is the latest twist in a chaotic chain of events over the past week. From the hospital on Saturday, Trump wrote on Twitter that Congress should pursue a giant stimulus bill.

On Tuesday, he called talks off, saying he instead wanted to focus on having the Senate confirm a new Supreme Court justice. That statement, made in a series of Twitter posts, sent the stock market down sharply.

Later Tuesday, he called for $1,200 stimulus checks, airline aid, and small business assistance. Wednesday, Pelosi and Mnuchin began negotiating an airline aid bill, only to have Pelosi say that airline assistance could only come as part of a broader package.

On Thursday, the White House sent mixed signals, with Mnuchin pursuing a broader deal with Pelosi and other White House officials saying they were only interested in a piecemeal approach.