US treasury secretary Steve Mnuchin. Picture: GRAEME JENNININGS/REUTERS
US treasury secretary Steve Mnuchin. Picture: GRAEME JENNININGS/REUTERS

Washington — Treasury secretary Steven Mnuchin and House Speaker Nancy Pelosi met for about 90 minutes Wednesday in their first in-person negotiations on a fresh fiscal stimulus package since August.

Mnuchin made no remarks as he left Pelosi’s office at the Capitol to discuss the talks with Senate majority leader Mitch McConnell.

The session boosted optimism that a coronavirus relief deal might yet be salvaged following months of stalemate and with just weeks before the election. Mnuchin earlier in the day said his talks with Pelosi were “one more serious try” at reaching an agreement.

The Treasury chief suggested on Wednesday morning he would offer Democrats a proposal for roughly $1.5-trillion in pandemic assistance. He said on CNBC the administration’s counter-offer to Pelosi is similar to a plan put forward by a bipartisan group of House members — which included an escalation in spending up to $2-trillion if the coronavirus pandemic persists.

That is still short of a $2.2-trillion relief package that Democrats unveiled on Monday and are preparing to bring to a House vote. It is also more than what Senate Republicans have said they would support.

Mnuchin said he hopes to have an “understanding” worked out by Thursday.

Pelosi had asked Democrats to deliver a “strong vote” for the party’s latest package, which is smaller than the $3.4-trillion they passed in May but rejected by Republicans. In a letter to colleagues, she described it a “proffer” in talks.

House majority leader Steny Hoyer told fellow Democrats Wednesday his intention is to send the bill to the floor Wednesday or Thursday if there is no deal with Mnuchin.

“To the extent that Mnuchin has indicated that he will use the Problem Solvers proposal as a basis for any counter-offer, actually brings us much closer to an agreement than we have ever been,” said  Hakeem Jeffries, a member of Pelosi’s leadership team.

Renewed optimism on the potential for a compromise saw US stocks climb on Wednesday, after futures had earlier tipped another down day.

“Whether we get this fiscal deal done or we don’t, I am confident we will continue to have economic growth and rebound,” Mnuchin said earlier. “I’m confident we can get something done, and if we don’t, we will come back and work on it after the election.”

He also underscored that more support for airlines is critical, as carriers face the risk of a wave of layoffs. Mnuchin said that he doesn’t expect a stand-alone bill for airline aid, and that he would update top executives on the talks after he met Pelosi.

The negotiations between the Trump administration and congressional Democrats are at a critical juncture. Either Pelosi can cut a deal with the White House or the Democratic-led House will vote on her $2.2-trillion plan without Republican support, allowing members to leave town for pre-election campaigning.

If no deal is reached, Democrats could vote by Thursday. Timing will depend on the result of Pelosi’s talks with Mnuchin. Republican leaders have already rejected the proposal. McConnell said on the Senate floor that the Democratic plan is filled with “poison pills” not related to the pandemic.

Officials in both parties have privately questioned whether the differences could be bridged. Pessimism about reaching a deal was one of the factors that helped push stocks lower on Tuesday. Private economists have increasingly abandoned predictions for a deal before the election. JPMorgan Chase and Goldman Sachs recently cut their forecasts for growth next quarter as a consequence.

Bloomberg

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