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Even Jerome Powell couldn’t help the joke. A few hours earlier, the head of the US Federal Reserve had again made a public call to Democrats and Republicans in the US Congress to end negotiations on a new aid package for businesses and consumers. If a deal fails, the consequences for the economy could be dramatic, Powell said.
I do not help. On Tuesday, US President Donald Trump closed it: “I have instructed my representatives to stop negotiations until after the elections,” he said on Twitter. Immediately after his electoral victory, he will initiate an extensive stimulus package.
Trump is ending a months-long tug of war on aid, which should initially help the crown-hit U.S. economy, through the fall and next winter. Because the first measures, which Congress had already approved in March, expired in the summer.
To date, a total of $ 2.5 billion has gone to businesses and consumers, in the form of discounted loans and personal checks for low- and middle-income families. Initially, a second package was planned afterwards, but both parties had not been able to reach an agreement before the summer holidays. The positions had been too far apart.
The most contentious points included government-funded allowances for clinic employees, rent and food subsidies for the socially disadvantaged, and additional funds for the post office for postal voting. In all, the Democrats’ demands would have resulted in a package valued at around $ 3 trillion. Republicans, on the other hand, thought that $ 1 trillion was enough. Even a compromise proposal by Democratic opposition leader Nancy Pelosi, which would have included spending around $ 2.2 trillion, did not provide a solution.
Climbing at the wrong time
“The termination of the negotiations provides evidence that the president does not want to do anything in the fight against the virus,” Pelosi said after Trump posted his tweet.
The renewed escalation in the political struggle between Republicans and Democrats is not just a concern of Federal Reserve Chairman Powell. The US economy recovered slightly in September. In addition to the ultra-lax interest rate policy of the central bank, the money that the United States government made available to families in the first half of the year contributed to this. The measures boosted consumption and demand for stocks.
But the American economy is far from being over the top. Tourism and aviation, for example, are still on the ground. And the situation in the labor market remains tense. More than 29 million people currently need government support, according to statistics from the Ministry of Labor. More recently, more than 800,000 people filed initial jobless claims each week. Before the crown crisis reached a critical point in March, the number of new applications only increased to more than 100,000 in individual cases.
To Powell’s colleagues at US regional central banks, this is an indication that the US job market rally has already lost momentum. At the recent meeting of the Federal Reserve, according to the minutes, therefore, they strongly advocated quick stimulus measures.
Republicans and Democrats criticize Trump
But not only pundits and the opposition offended Trump by halting the negotiations, but also his supporters in the ranks of the Republicans. As the “Wall Street Journal” reports with reference to advisory circles, Trump spoke with Senate Majority Leader Mitch McConnell and Treasury Secretary Steven Mnuchin on Tuesday before canceling his tweet. Neither of them advised him to break up the negotiations.
Some Republicans pointed out that with Trump’s decision to hand over the failure of the aid package to the Democrats, it will be difficult. They fear that the matter could play into the hands of political opponents.
“I don’t see how that should help Trump politically,” said William Hoagland, who once worked for Republicans in Congress on budget issues. He finds it “incredible to literally paralyze the negotiations”, Hoagland is quoted in the “Wall Street Journal.” Similarly, Republican Susan Collins: The decision to postpone until after the election is “a big mistake.”
Trump’s Democratic challenger Joe Biden didn’t miss the chance either: “Make no mistake,” he said, “when you’re unemployed, when your business is closed, when your son’s school is closed, when people around you are laying off. “. convert: Donald Trump decided today that none of this … means anything to him. “
