Any chance of more stimulus declined even more with Ginsburg's death

Published Mon, Sep 21 202011:02 AM EDT

As if prospects weren't already bleak enough, the death of Supreme Court Justice Ruth Bader Ginsburg further decreases the likelihood of economic support from Congress, analysts said. Capitol Hill is bracing for a rough confirmation fight that is expected to see President Donald Trump soon nominating a successor to the legendary 87-year-old jurist, who passed away Friday after battling a series of health ailments. "The all-consuming debate around the White House's upcoming Supreme Court nominee following the death of Justice Ruth Bader Ginsburg leaves a new round of fiscal stimulus looking less likely," wrote Stephen Innes, chief global market strategist at AxiCorp. The White House and congressional Democrats have been negotiating for months over another stimulus plan to back up the CARES Act passed in the aftermath of the coronavirus pandemic declaration. The administration is looking for a "skinny" bill that would provide between $1 trillion and $1.5 trillion in aid, while House Speaker Nancy Pelosi (D-Calif.) has insisted on something more aggressive. Recent positive economic signals and expected third-quarter GDP growth in excess of 30% have taken some of the urgency out of the talks. Ginsburg's passing, and the political conflagration it has caused, makes a bill before the Nov. 3 election even less likely. "We do think that this means that the fiscal stimulus is really all but dead," wrote Sarah Bianchi, macro research analyst at Evercore ISI. "Congress simply will not have the oxygen or the bandwidth to sort out those difficult issues given what is just changed. It may be that for this election in this time [our] October surprise came a little bit early." "The Supreme Court fight is likely to take all the oxygen on Capitol Hill through November," added Chris Krueger, Washington strategist at Cowen. Krueger said he could see a potential bill coming together during the lame duck session after the election. However, he also noted multiple political dynamics at play. "You do sort of have multiple variables here," Krueger told CNBC's " Squawk Box ." "If the Democrats sweep [in November] the filibuster could well be done. The big deal then is you could in theory increase the size of the Supreme Court and you could also bring in Puerto Rico and Washington, D.C. as new states" all of which he said would amount to "really incredibly massive policy change." Those considerations stand in the way of bringing the two sides together long enough to craft a fiscal deal. "The sad passing of Ruth Bader Ginsburg, who by all accounts was an incredible trail-blazing person, may further distract D.C. as my media stream is now filled with discussion over possible nominees and whether it is even right to nominate someone ahead of the election results," wrote Peter Tchir, head of macro strategy at Academy Securities. "Clearly important discussions for the nation, but something that I fear makes the stimulus that I believe to be necessary, less likely to occur ahead of January (or an economic slap in the face)."

A banner with an image of the late U.S. Supreme Court Justice Ruth Bader Ginsburg and a message referring to the selection of her successor is displayed outside the U.S. Supreme Court in Washington, U.S., September 19, 2020.

Yuri Gripas | Reuters

As if prospects weren't already bleak enough, the death of Supreme Court Justice Ruth Bader Ginsburg further decreases the likelihood of economic support from Congress, analysts said.

Capitol Hill is bracing for a rough confirmation fight that is expected to see President Donald Trump soon nominating a successor to the legendary 87-year-old jurist, who passed away Friday after battling a series of health ailments.