President Donald Trump announced on Tuesday that stimulus negotiations between Congressional Republicans and Democrats are off "until after the election." If that happens, economists worry that would hinder the country's economic recovery from the Covid-19 recession.
Trump, who is recovering from Covid-19, tweeted that negotiations between lawmakers will be tabled until after the November 3 general election because Democrats and Republicans cannot agree on how much aid to provide in the bill. Democrats want at least $2.4 trillion; Trump tweeted that Republicans offered $1.6 trillion.
He said that jobs are coming back and the stock market is "at record levels." But to keep the economy improving, many economists agree that another stimulus package is needed.
In a statement, Pelosi said Trump "showed his true colors: putting himself first at the expense of the country, with the full complicity of the GOP Members of Congress," adding that "walking away from coronavirus talks demonstrates that President Trump is unwilling to crush the virus."
The stakes for stimulus talks are high. More than six months after Congress passed the CARES Act, millions of Americans are still out of work and struggling to make ends meet. Many workers who have been unemployed since the beginning of the pandemic are facing the exhaustion of all of their UI benefits soon.
Additionally, small businesses that need aid will potentially shutter for good, and tens of thousands of airline workers could be furloughed, adding to the already-bloated unemployment rolls.
"The S&P 500 is plunging on this, but the true economic effect is all the displaced workers and businesses who are not going to get any more emergency relief until November at the very, very least, and probably in reality not until February," tweeted Ernie Tedeschi, an economist who worked for the U.S. Treasury during the Obama administration.
The Dow Jones Industrial Average closed 376 points lower after Trump's Twitter message, while the S&P 500 fell 1.4%.
Trump called off stimulus talks the same day that Federal Reserve Chairman Jerome Powell called for more fiscal aid, saying it is necessary for any continued economic recovery.
"The recovery will be stronger and move faster if monetary policy and fiscal policy continue to work side by side to provide support to the economy until it is clearly out of the woods," Powell said in remarks to the National Association for Business Economics.
Powell highlighted the disproportionate impact of the Covid-19 recession on lower wage workers.
"A long period of unnecessarily slow progress could continue to exacerbate existing disparities in our economy. That would be tragic, especially in light of our country's progress on these issues in the years leading up to the pandemic," he said.
Rather than hash out a stimulus deal, Trump said Senate Republicans should focus on approving Amy Coney Barrett to the Supreme Court.
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