Facing Revolt, Pelosi Prepares New Stimulus Bill
Author: Greg Valliere
September 25, 2020
THE STOCK MARKET BRIEFLY RALLIED YESTERDAY on reports that a stimulus bill will be revived by Nancy Pelosi, who faces growing resistance from her own troops. The rally was short-lived because a deal any time soon still looks unlikely.
THE BACKGROUND: Pelosi, 80, faces one of the most intense challenges of her speakership. Dozens of House Democrats are reporting that their constituents are fearful of evictions, bankruptcies, small business closures and the softening labor market.
THESE DEMOCRATS DON’T WANT TO GO HOME at the end of this month to campaign without any hope that relief is coming. They consider Pelosi tone deaf, and they even would support a modest Republican bill, which they view as better than nothing.
PELOSI FINALLY CAPITULATED YESTERDAY, announcing that she will attempt to jump-start the talks. But her price tag — around $2.4 trillion — is way too expensive for Republicans, many of whom want no more than $1 trillion. President Trump could accept about $1.5 trillion, but that would be a tough sell for House and Senate Republicans.
IN ADDITION TO GRUMBLING FROM HER OWN TROOPS, Pelosi faces the overwhelming concern from experts who believe the economy is softening and needs help now. Fed Chairman Jerome Powell has been pleading for more fiscal stimulus.
KEY INGREDIENTS OF PELOSI’S BILL will include include stimulus checks, aid for airlines and small businesses, money for cities and states, plus rental assistance, unemployment checks and funds for the U.S. Postal Service.
WHAT ARE THE CHANCES? We thought there would be a $1.7 trillion stimulus bill in August, because it was the logical move for an economy that still looks shaky. But logic did not apply; the bloated $3.5 trillion initial bid from Pelosi was an easy target for fiscal conservatives.
NEW ODDS: Pelosi has to give her troops something to take home, so we think the House will pass a bill within the next few days. Talks with Republicans may persist even as Congress leaves town in October. Chances of House passage: 75%. Chances of enactment: 30%. After the election, if it’s clear that the economy is softening, chances of passing a stimulus bill should increase to 60% or better.
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POLITICAL UPROAR: It’s impossible to exaggerate the sense of exasperation among Republicans who once again have been forced to defend the indefensible. Trump’s continued refusal to commit to a peaceful transfer of power has rocked this city, and has gotten him off his message for still another day, as the media fans the flames.
PLAYING WITH FIRE: It’s one thing to seek recounts; it’s another for Trump to assert that he may not accept the results of the election. This has deeply disturbed GOP leaders like Mitch McConnell and Lindsey Graham, whose sycophancy has limits.
AND IT RISKS STEPPING ON TRUMP’S campaign message, including a Supreme Court nomination tomorrow afternoon. The surge of support for Amy Coney Barrett has faded a bit; the only other serious challenger, Barbara Logoa, is viewed by many Trump advisers as locking up Florida and helping the GOP in other states with large Hispanic populations.
TRUMP’S SUPREME COURT PICK will dominate the news on Sunday morning and Monday, then the focus will shift to Tuesday night’s presidential debate. This will be the most important event of the campaign; the bar is set low for Joe Biden, who could improve his shaky frontrunner status with a solid performance.
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