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MNI INTERVIEW: Trump May Deal on State Aid Over Direct Checks


U.S. lawmakers should forget about another fiscal package focused on weekly unemployment checks that will harm the faster-than-expected jobs recovery, while Donald Trump nears backing aid for state and local governments, former Trump advisor Casey Mulligan told MNI.

It's probably too late now for a second round of checks like the USD1,200 Congress authorized earlier this year to reach voters before the Nov. 3 election, Mulligan said, giving Trump less reason to push for a major fiscal deal now than he had in August.

"I am not sure Congress has anything to offer" Trump to help finalize a deal, Mulligan said. "What would the President get out of the deal?" he said.

Congressional Democrats now need to offer up another incentive beyond the USD1,200 direct checks such as immigration reform to get a deal, Mulligan said. Some Democrats are instead pushing for an renewal of the USD600 a week jobless benefit top-up, which Mulligan also called a bad idea.

"No deal is good for the economy," Mulligan said. "We do not need the unemployment benefits."


"It is certainly wrong and maybe dishonest to say, 'The people who aren't unemployed nonetheless benefit from the unemployment benefits,'" said Mulligan. He was chief economist at the Council of Economic Advisers from Sept. 2018 to Aug. 2019.

Mulligan's view cuts against Federal Reserve officials and groups like the IMF calling for more fiscal support. FOMC members Wednesday pledged to keep near-zero interest rates until full employment returns and projected the jobless rate won't return to the 3.5% seen before the pandemic through 2023.

Mulligan, who aligns ideologically with White House chief of staff Mark Meadows and Trump's outside economic advisor Stephen Moore, says the surest way to see continued labor market improvement is slashing jobless benefits.

"You want to forecast the unemployment rate for December, then I would really like to know what the unemployment benefits are going to be in September," he said. Unemployment benefits are currently "a stratospheric type of bonus," he said. "You can't expect a normal operational labor market as that continues."


House Speaker Nancy Pelosi has stated Democrats are willing to lower the total stimulus amount to USD2.2 trillion while Mark Meadows, White House chief of staff, says President Trump has increased his offer to USD1.3 trillion from USD1 trillion.

Mulligan said Trump is far closer to Democrats on aid to states than typically assumed based on his tweets that accuse Democrats of "bailing out poorly run States, using CoronaVirus as the excuse!"

"I am very confident that the President is ready to deal on the state bailouts," Mulligan said. "The fact that he tweets regularly about how awful the bailouts would be means that he is ready to deal."

"He is more or less acknowledging the people who are going to be pissed off by the blue state bailouts. He is totally prepared to deal on that and he has since April and that helps get a deal done," Mulligan said of Trump.

"On one side of it there is room for optimism because he has something to offer Pelosi, and that's the blue state bailout, and on the other side everyday its harder for me to see" a fiscal package coming together, he said.

MNI Washington Bureau | +1 202-371-2121 |
MNI Washington Bureau | +1 202-371-2121 |

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