The Trump administration on Sunday called on Congress to release about $135bn in unspent aid to small business after its latest offer for a big $1.8tn economic stimulus package was rebuffed by many Democrats and Republicans.
The appeal from Steven Mnuchin, the US treasury secretary, and Mark Meadows, the White House chief of staff, in a letter to lawmakers, marks their latest shift in the talks, as they have frequently wavered between openness to a big deal and far more limited solutions.
While the senior Trump administration officials said they would “continue to try to work” on a large piece of legislation with Democratic leaders, they demanded an immediate vote on a bill that would free up unused money from the Paycheck Protection Program, the small business rescue scheme set up at the start of the pandemic which has now expired.
“The all-or-nothing approach is an unacceptable response to the American people,” they wrote.
The White House call for smaller measures will cement fears that Washington will be unable to agree on a plan to help sustain the American recovery in the coming months and prevent it from stalling.
According to Wendy Edelberg and Louise Sheiner of the Brookings Institution, a $2tn spending boost would increase real output in the US by 0.2 per cent this year, and 4 per cent in 2021 and 2022, allowing the economy to return to its pre-pandemic path by the third quarter of next year.
But with the election little more than three weeks away, the Trump administration and congressional Democrats have failed to reach a compromise. US president Donald Trump late last week approved a new offer of more than $1.8tn in aid — including federal unemployment benefits, direct cheques to many US households, and more small business aid — after threatening to walk out of the talks a few days earlier.
The higher bid from the White House was, however, rejected on Capitol Hill by Democratic lawmakers, including Nancy Pelosi, the speaker of the House of Representatives, for being insufficient — a judgment she reiterated on Sunday.
“This past week, the President demonstrated very clearly that he has not taken the war against the virus seriously, personally or nationally. This attitude is reflected in the grossly inadequate response we finally received from the Administration,” she told fellow Democrats in a letter.
Democrats have been largely unified in the quest for a large new package in recent months, with the exception of some moderate lawmakers who have argued that they should settle for a marginally smaller deal. The House in May approved $3tn in new stimulus measures, and then passed a scaled-back version of that plan, worth $2.2tn, a few weeks ago.
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Meanwhile, Republicans and the White House have struggled to coalesce around a unified stance — and failed to approve stimulus legislation in the Republican-controlled Senate.
Spending hawks within the party have balked at the need for any large-scale aid, on the grounds that the recovery is self-sustaining and they do not want to further increase US debt, creating a major obstacle in the talks.
On the other hand lawmakers facing tough re-election battles have been calling for a deal. “My Republican colleagues I listened to . . . quite frankly, I appreciate them, I admire them, but they’re wrong. A bigger number is good,” said Lindsey Graham, the Republican senator from South Carolina in a tight race to keep his seat, told Fox News on Sunday.