MNI EXCLUSIVE: Advisors See $1.5T+ Fiscal, Despite Senate Skid

By Evan Ryser

     WASHINGTON (MNI) - U.S. lawmakers are edging closer to a fiscal package of

USD1.5 trillion or more as worsening economic conditions offer Democrats pushing

for stronger financial support to households and businesses an election-year

advantage, top political advisers said in interviews with MNI. 

     "The Senate Republicans are saying a trillion and that means a

trillion-and-a-half or two before they get all the votes that they need," said

former South Carolina Senator Jim DeMint, an outside Trump adviser and member of

the White House Coronavirus Task Force. 

     Concerns about a fresh hit to an already battered economy have ratcheted

higher in recent weeks alongside surging rates of coronavirus deaths and

infections around the country. 

     "USD1.5 trillion is plausible for a final product," said Brian Riedl, an

outside economic adviser to Senate Republicans now a senior fellow at the

Manhattan Institute. 

     Confusion and disgruntlement amongst Senate Republicans this week as

legislators showed wariness of debt and disagreement as to what ails the

economy, has contrasted sharply to the four major relief bills that Congress

passed nearly unanimously in March and April, pumping some USD3 trillion into

the economy to address the pandemic. 

     Senate Majority Leader Mitch McConnell has been predicting for weeks that a

new bill would involve "dramatically more controversy and partisanship." 

     With some Senate Republicans already messaging that they will not support a

trillion-dollar package, sources say that Republican leaders may have to rely

more on Democrats than before to push a bill beyond the 60-vote threshold. 

     "There are a lot of Republicans who will not lose any sleep if there is no

bill at all," Riedl said. 

     Democrats in the House of Representatives passed a USD3 trillion package in

May while McConnell has said he wants a bill just under USD1 trillion. He is

expected to put forward a separate Republican bill on Monday. 

     -- NEW COALITION 

     "To the extent that McConnell and Trump have a negotiated deal that is

closer to a trillion-and-a-half dollars, that will likely alienate a lot of

Senate Republicans and force McConnell to essentially give Democrats a lot more

say over the final product," Riedl said. 

     The extent to which McConnell's own caucus takes itself out of the

negotiations, Riedl said, "McConnell will have to make more concessions to run

up the numbers on the Democratic side to get it passed." 

     The Senate Republican package to be unleashed Monday is seen as an initial

negotiating offer and is not expected to provide further aid to states and

localities that have seen over 1.6 million jobs lost and significant holes in

their budgets. Instead Republicans are expected to provide flexibility on to how

to deploy existing aid from the CARES Act passed in March.

     Democrats have pushed hard for state aid and the Senate Republican bill,

sources say, could be topped off with additional state and local funds, as well

as higher unemployment benefits, a return-to-work bonus, or a boost to the

Paycheck Protection Program that supports small businesses. 

     -- UPPER HAND 

     "There is no question about it," DeMint said, "the House Democrats do have

the upper hand."

     The conservative former South Carolina Senator said "it's possible" that

the final Congressional package could be pushed to early August as Senate

Republican leadership faces backlash from fiscal conservatives and Tea Party

members, but added "the President is likely to sign whatever that the Congress

does."

     "The Democrats know that they can stick almost anything they want in there

and it is very unlikely that Trump would veto it with the atmosphere we have in

the country right now," DeMint told MNI.

--MNI Washington Bureau; +1 202 371 2121; email: evan.ryser@marketnews.com

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