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Stimulus talks are truly down to the wire. On Sunday, House Speaker Nancy Pelosi told the White House a deal must be reached by Tuesday if the two sides are going to pass a package before the election.
As the clock keeps ticking, Treasury Secretary Steven Mnuchin and Pelosi will attempt to hash out a stimulus agreement when they meet Monday afternoon, according to a report by Bloomberg.
The two sides are still far apart on issues like coronavirus testing—Pelosi wants more guarantees on how the money would be spent, and the Speaker said on ABC News Sunday that “we don’t have agreement in the language yet, but I’m hopeful” in relation to a deal. But the main sticking point remains the overall price tag : Democratic leaders want $2.2 trillion, while the White House has offered $1.8 trillion. The two sides have come closer in recent weeks: Back in July, Democrats wanted $3.4 trillion, and the White House was under $1 trillion.
But even if the White House and Pelosi do reach a deal, it doesn’t guarantee passage in the Senate. Indeed, Republican senators including Rick Scott and Marsha Blackburn have already rejected the idea of passing a stimulus package of $1.8 trillion.
“If Speaker Pelosi ever lets the House reach a bipartisan agreement with the administration, the Senate would of course consider it,” Senate Majority Leader Mitch McConnell said in a statement Saturday.
The more fiscally conservative Republicans’ reticence to pass a larger deal is in stark contrast to the White House’s attitude to spending whatever it takes. President Trump said he’d be willing to raise the price tag above the $1.8 trillion mark to get a deal done. Some see Trump’s concession as being driven by electoral calculations: Bankrate.com senior economic analyst Mark Hamrick recently told Fortune that the offer was “desperate.”
“The White House seems willing to spend whatever to win, which is logical. It just seems the Senate is breaking with the White House,” Brett Ryan, senior U.S. economist at Deutsche Bank, tells Fortune. Ryan calls the situation “an intra-party fight amongst Republicans, essentially.”
Indeed, Senate Republicans already look like they’re going to move forward without an agreement between the White House and Pelosi. On Wednesday, they’ll vote on a more modest stimulus package of $500 billion. The deal will include enhanced unemployment benefits, Paycheck Protection Program loans, and funding for testing and schools. It won’t include another stimulus check or funding for hard-pressed state governments.
Though unemployment remains high and the clock is ticking for aid like enhanced unemployment insurance to make its way to those in need, economists like Ryan aren’t optimistic economic necessity will win the day on Capitol Hill when it comes to the timing of a stimulus deal. “They are pretty much going through the political motions here ahead of the election,” Ryan says, “so that everybody can say, ‘We tried and we can blame the other side for not coming through’ or something along those lines.”
While the White House and Democratic leaders are butting heads on the dollar size and many of the specifics of the next stimulus package, there is some common ground on where the money should be spent. Both parties have reaffirmed support for another round of $1,200 stimulus checks. Both parties support more funding for education, coronavirus-related projects, enhanced unemployment benefits, mortgage and rental assistance, and food programs.
But as the back and forth continues as time runs out, Ryan highlights the reality: “The risk here is that you’re setting the recovery back.”
More must-read finance coverage from Fortune:
- What Wall Street needs from the 2020 election
- How J.P. Morgan is proceeding with extreme caution—and still making plenty of money
- “A tale of two Americas”: How the pandemic is widening the financial health gap
- A disputed election could cost the U.S. its “AAA” credit rating
- As earnings season kicks off, only 48% of companies have resumed giving investors guidance