Talks Have Begun on Next Stimulus Bill; Targeting Dr. Fauci
July 14, 2020
MITCH McCONNELL AND STEVEN MNUCHIN are already talking about the next stimulus bill, which will take shape later this month. This comes as three competing narratives affect the talks: first, signs that new Covid-19 cases have stalled the economy; second, the need to provide funding for schools; third, grim new deficit figures, showing that red ink could soar past $4 trillion this year.
THE DOMINANT FACTOR, in our opinion, is that the virus is out of control in Florida, Texas and other states, which will necessitate another major stimulus bill. As for deficits — we’re still in the triage stage; Congress first has to save the patient.
SEVERAL WEB SITES, including TheHill.com, are reporting this morning that McConnell will have a draft bill ready to share with lawmakers when they return next Monday. “I’m predicting we will have one more rescue package, which we’ll begin to debate and discuss next week,” McConnell said yesterday. His goal is to complete a bill in the next three weeks.
A LENGTHY LAUNDRY LIST: There are so many “must pass” provisions that it will be difficult to keep the price tag under $1 trillion; we think something like $1.5 trillion is more likely — with President Trump inclined to “go big” on spending.
WHAT’S CERTAIN? Mnuchin knows that two provisions are virtually mandatory — aid to reeling state and local governments, and liability protection for companies affected by the virus. McConnell will not bend on that; he said yesterday that he will insist on liability protection that would be retroactive to December 2019 and extend to 2024.
OTHER LIKELY PROVISIONS will include aid to schools, some type of check to individuals and families, and an incentive to get people back to work. Trump’s chances of getting a payroll tax cut are fair at best; an infrastructure provision is unlikely.
ONCE McCONNELL AND MNUCHIN iron out a bill, tough negotiations loom in late July between them and Democrats, headed by Nancy Pelosi and Chuck Schumer. They want to spend far more and could refuse to sign off on a modest measure, playing hardball just before the August recess.
OUR BOTTOM LINE IS UNCHANGED: Trump wants a bill. Fed Chairman Jerome Powell wants a bill. Most — but not all — Republicans want a bill. Many Democrats will abandon their $3 trillion package for something like $1.5 trillion. The simple fact is that the virus crisis is intensifying, and McConnell knows that failure to pass a bill would greatly increase chances of the GOP losing the Senate this fall.
* * * *
WHY GO AFTER DR. FAUCI? The White House has produced talking points on Anthony Fauci’s alleged mistakes (some of which are are exaggerated, and others came as the pandemic began, when everyone was in uncharted waters). Yet the White House wants to portray the nation’s top virus expert as a deeply flawed Cassandra; President Trump has re-tweeted emails that mock Fauci for wanting to close businesses, ballparks and schools.
TWO-THIRDS OF AMERICANS respect Fauci on the virus; one-third supports Trump, so the president needs scapegoats. China is a valid target, no argument there. But to slime Fauci diminishes the president and makes the White House response look even more dysfunctional.
TRUMP UNDOUBTEDLY IS REACTING TO POLLS that show his support falling fast among a crucial constituency — senior citizens, who are most vulnerable to the virus. Suddenly the retirement havens of Florida and Arizona are in play.
THERE’S A LOT TO BE OUTRAGED ABOUT — including the astonishing rise of gun violence in urban America. But attacking Fauci as if he’s a political foe is a crude effort to diminish the doctor, who has the guts to proclaim that the country opened up too soon — which is becoming a major narrative of this crisis. The White House, not surprisingly, is determined to muzzle the messenger.
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 Asset Management (Asia) Limited (AGF AM Asia) and AGF International Advisors Company Limited (AGFIA). AGFA is a registered advisor in the U.S. AGFI is registered as a portfolio managers across Canadian securities commissions. AGFIA is regulated by the Central Bank of Ireland and registered with the Australian Securities & Investments Commission. AGF AM Asia is registered as a portfolio manager in Singapore. 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.
© 2020 AGF Management Limited. All rights reserved.