US policymakers continued to hold talks Monday on a new spending package to aid the virus-hit economy, but the negotiations have lost momentum, dimming hopes that an agreement can be reached before the November 3 election.
With Covid-19 cases on the rise nationwide, the need for stimulus has taken on a new urgency, especially as many support programs have expired or are about to, including a moratorium on foreclosures and evictions as well as loans for small businesses, which threatens to spark a wave of bankruptcies and homelessness.
"The talks have certainly slowed down, but they're not ending," White House economic adviser Larry Kudlow said Monday on CNBC.
After months of negotiations between Treasury Secretary Steven Mnuchin and Democratic House Speaker Nancy Pelosi, time has nearly run out to get stimulus approved before President Donald Trump stands for re-election next week.
Whether a measure can be approved in the "lame duck" session before the new Congress is seated in January is unclear.
"We're close, but there are still important policy issues that separate us and our team believes there have to be more compromises on the House side for us to get there," Kudlow said.
A source familiar with the discussions told AFP AFP Pelosi and Mnuchin will speak by telephone at 1800 GMT.
The sides have narrowed their differences on the size of a package to around $2 trillion, but remain at odds over the exact cost and what it includes, with Republicans pressing for more limited measures and Democrats insisting on aid for state and local governments.
Wall Street fell on the downbeat comments, with the Dow trading 2.5 percent lower around 1545 GMT.
'Crush the virus'
Kudlow continued to tout a solid economic recovery from the damage inflicted by the coronavirus pandemic and widespread business shutdowns, which he said will be "self-sustaining" even without a new stimulus package.
But most economists disagree, saying the world's largest economy avoided an even worse downturn only because of the nearly $3 trillion in support quickly pumped into the system in the form of expanded unemployment benefits, payroll support, and loans for businesses of all sizes.
The resurgence of the virus could make Americans reluctant to venture into stores or businesses, even without restrictions imposed by authorities, which makes the prospects for recovery uncertain at best.
Over the weekend, Pelosi said that legislators have put stimulus wording on paper and she remains "optimistic" about the chances for approval, noting that the language in the bill can be changed to accommodate compromises with the administration.
"I'll never give up hope," Pelosi said on CNN, adding that she aims for progress with Mnuchin regarding concerns she raised in the talks last week.
But with cases of the virus rising, "To do anything, though, that does not crush the virus is really official malfeasance," she said. "We are still waiting for the final okay, and that is a central issue in all of this."
