All Eyes on Mitch McConnell as GOP Erupts on Stimulus Bill
Author: Greg Valliere
July 22, 2020
A STIMULUS BILL WON’T WIN ENACTMENT in July — which means the shaky economy won’t get a booster shot until next month. A major obstacle, ironically, is that Republicans can’t agree among themselves; a fight with Democrats is several days away.
PUSHBACK AT LUNCH: White House officials got an earful at yesterday’s Senate Republican lunch. There’s growing opposition from deficit hawks (especially in the House) to spending another $1 trillion-plus, and the details of this bill are contentious.
AFTER YESTERDAY’S VENTING, it became apparent that Senate Majority Leader Mitch McConnell needs to write a bill, fast. That’s because his GOP colleagues are simply dealing with trial balloons and vague proposals; they need to pass something and begin negotiations with the Democrats, who sense a political opening.
THE DEMOCRATS WANT A $3 TRILLION BILL, which they won’t get, but they’re prepared to eviscerate the GOP for letting unemployment benefits lapse at the end of this month. Public opinion overwhelmingly favors more stimulus — and besides, the deficit has never bothered the Democrats, so they’re all-in on a big package.
THE DEFICIT DOESN’T BOTHER DONALD TRUMP EITHER: He desperately needs a stimulus bill, and he’s not particularly concerned with the details.
IT WAS CLEAR YESTERDAY that Trump’s veto threats are just bluster; the White House seemingly abandoned a threat to oppose funding for testing, tracing and the Centers for Disease Control. And it appears that Trump would sign a bill without a payroll tax cut, which he said just days ago must be in the final measure.
STRANGE BEDFELLOWS: Just as former House Speaker John Boehner needed Democrats a decade ago, Trump and McConnell may need Democrats now if GOP lawmakers balk on an expensive bill. The Democrats will extract a price: far more spending than a measly $1 trillion.
WE STILL THINK THE McCONNELL BILL SHOULD PASS in the Senate next week, with support from a handful of Democrats, which should launch negotiations with the House over their aspirational measure. Meanwhile, 20 million Americans probably will lose their benefits before a final bill is enacted; the real deadline for Congress is Aug. 7, when their summer vacation begins.
PLAYING WITH FIRE: If this bill bogs down, there’s little doubt that Republicans would receive a majority of the blame. The Democrats can say they passed their bill on May 15 — and then the Republicans stalled. GOP chances of retaining the Senate could slip further if this drags well into August.
TRUMP HAS SEEN THE POLLS: His performance in yesterday’s Coronavirus briefing was reasonably solid; he knows his re-election is now in doubt. So he stayed on message (other than inexplicably offering best wishes to Ghislaine Maxwell).
The views expressed in this blog are provided as a general source of information based on information available as of the date of publication and should not be considered as personal investment advice or an offer or solicitation to buy and/or sell securities. Speculation or stated believes about future events, such as market or economic conditions, company or security performance, or other projections represent the beliefs of the author and do not necessarily represent the view of AGF, its subsidiaries or any of its affiliated companies, funds or investment strategies. Every effort has been made to ensure accuracy in these commentaries at the time of publication; however, accuracy cannot be guaranteed. Market conditions may change and AGF accepts no responsibility for individual investment decisions arising from the use of or reliance on the information contained herein. Any financial projections are based on the opinions of the author and should not be considered as a forecast. The forward looking statements and opinions may be affected by changing economic circumstances and are subject to a number of uncertainties that may cause actual results to differ materially from those contemplated in the forward looking statements. The information contained in this commentary is designed to provide you with general information related to the political and economic environment in the United States. It is not intended to be comprehensive investment advice applicable to the circumstances of the individual.
AGF Investments is a group of wholly owned subsidiaries of AGF Management Limited, a Canadian reporting issuer. The subsidiaries included in AGF Investments are AGF Investments Inc. (AGFI), AGF Investments America Inc. (AGFA), AGF Investments LLC (AGFUS) and AGF International Advisors Company Limited (AGFIA). AGFA and AGFUS are registered advisors in the U.S. AGFI is a registered as a portfolio manager across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. The subsidiaries that form AGF Investments manage a variety of mandates comprised of equity, fixed income and balanced assets.
About AGF Management Limited
Founded in 1957, AGF Management Limited (AGF) is an independent and globally diverse asset management firm. AGF brings a disciplined approach to delivering excellence in investment management through its fundamental, quantitative, alternative and high-net-worth businesses focused on providing an exceptional client experience. AGF’s suite of investment solutions extends globally to a wide range of clients, from financial advisors and individual investors to institutional investors including pension plans, corporate plans, sovereign wealth funds and endowments and foundations.
For further information, please visit AGF.com.
©2021 AGF Management Limited. All rights reserved.