Democratic party leaders in Congress said they offered to cut their stimulus proposal by $1tn but were rebuffed by the White House, setting the stage for what could be a final round of talks this week on a compromise.
The Democratic-controlled House of Representatives three months ago passed a $3.4tn stimulus bill, which the Republican-controlled Senate refused consider. More recently, Republicans have put forward proposals for about $1tn in stimulus, which Democrats said they would not support.
Nancy Pelosi, the Democratic speaker of the House, said her side offered late on Thursday to scale back its proposal by $1tn if Republicans increased their offer by the same amount.
“As you know we have been mightily trying to find common ground with our colleagues. It is hard when your values are so different,” Ms Pelosi told reporters on Capitol Hill Friday afternoon. “Yesterday I offered to them, we will take down a trillion, if you add a trillion in. They said absolutely not.”
Ms Pelosi and Chuck Schumer, the Senate’s top Democrat, have met daily with Mark Meadows, White House chief of staff, and Steven Mnuchin, US Treasury secretary, who have negotiated on behalf of President Donald Trump. Mitch McConnell, the Senate Republican leader, has not taken part in the talks.
Mr Schumer on Friday put the blame for the impasse on Mr Meadows, a conservative former House member who was tapped as White House chief of staff this year.
“Mr Meadows is from the Tea party, you have 20 Republicans in the Senate greatly influenced by them, and they don’t want to spend the necessary dollars to help get America out of this mess. Ideology sort of blinds them,” he said
The four negotiators resumed talks on Friday afternoon. Earlier in the day, the labour department reported that the US unemployment rate was 10.2 per cent last month.
In a letter to Democratic lawmakers on Friday, Ms Pelosi said “many critical differences” remained, pointing to Democrats’ demands for more money for cash-strapped state and local governments, low-income Americans relying on food benefits and coronavirus testing and contact tracing.
Ms Pelosi also said the two parties were at odds over extra funding for the US Postal Service, which she said was “central to the life of our democracy” in an election year when many Americans will be voting by mail.
Mr Trump has threatened to act on his own, via executive order, if Democrats and Republicans do not strike a deal by the end of the week.
The president has vowed to extend emergency unemployment assistance and cut payroll taxes, which are used to finance social insurance programmes such as social security and Medicare. Mr Trump has repeatedly called for a payroll tax cut despite the idea being rejected by both Republican and Democratic lawmakers.
A supplementary $600 a week in jobless benefits, in addition to existing state-administered unemployment insurance, was introduced in March as part of the $2tn Cares Act. That extra assistance ran out last week.
Republicans and Democrats alike have raised questions over whether the president has the legal authority to act on unemployment insurance or payroll taxes without the agreement of Congress.
Gene Sperling, an economist who held senior positions in the Obama and Clinton administrations, said Mr Trump’s plan “looks untenable, illegal and disastrous in its impact”.
He said a payroll tax cut would be “the singular worst example, maybe in our history, of a president doing a raid on social security and Medicare finances to help fund a tax relief, much of which would go to large companies, that both parties in both houses have rejected”.