MNI POLICY: U.S. Fiscal Talks Could Slip to September

The stalemate between Republicans and Democrats over a fifth U.S. fiscal package risks dragging to September with no face-to-face talks scheduled, negotiators mud-slinging and Congressional leaders likely leaving Washington for party conventions.

Treasury Secretary Steven Mnuchin, White House Chief of Staff Mark Meadows, House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer, haven't talked face-to-face since Friday. A phone call from Mnuchin to Pelosi on Wednesday has deteriorated into a blame-game.

Talks can be scheduled again "when they come in with two trillion," Pelosi said Thursday. Mnuchin told Fox Business earlier in the week he would be willing to spend "a little over one trillion."

"Right now it's a stalemate," National Economic Council Director Larry Kudlow told reporters Thursday.

"Absurd Demands"

Senate Majority Leader Mitch McConnell continues to blame Democrats in remarks on the floor of the legislature, saying "they haven't budged on their absurd demands."

Negotiations will be complicated by the Democratic National Convention next week and the Republican National Convention the following week, in addition to other campaigning as Nov. 3 elections near. Pelosi ended her Thursday press conference hinting she may not be in Washington next week.

The fiscal standoff could continue into September, when lawmakers must forge consensus on funding for the new fiscal year that begins on October 1. That will further delay the lapse in jobless benefits and state government aid that Fed officials like San Francisco President Mary Daly say are vital to sustaining demand as the U.S. struggles to contain Covid-19.

Neither side is actively working on a bill combining fiscal stimulus with legislation to fund regular government operations. The House has passed all 12 appropriations packages, but the fiscal 2021 appropriations process stalled in the Senate over the summer.

"We cannot risk a government shutdown in the middle of a pandemic and an economic crisis," House Minority Leader Steny Hoyer said earlier this week.

September Calendar

A short-term spending bill to keep the government functioning beyond Oct. 1 could come forward, setting up another hard deadline that could force legislators together on stimulus.

Pelosi last week shot down the idea of combining virus relief and the appropriations process, saying negotiators must get back to the table before then.

The House is out until Sept. 14, leaving only 11 voting sessions to pass legislation before Oct. 1. The Senate is out until Sept. 8. Congressional leaders say that if a fiscal deal is reached in August they will give legislators 24 hours to return to Washington to vote.