Steven Mnuchin, the US Treasury secretary, signalled that Donald Trump’s administration was prepared to boost its offer for a new fiscal stimulus package to about $1.5tn, in a last-ditch attempt to strike a compromise with congressional Democrats.
Speaking to CNBC, Mr Mnuchin said he had been in intense talks with Nancy Pelosi, the Democratic House speaker, in recent days and expected to make a final proposal to her later on Wednesday.
“We’re gonna give it one more serious try to get this done and I think we’re hopeful that we can get something done. I think there’s a reasonable compromise here,” Mr Mnuchin said.
The expected offer by Mr Mnuchin still falls short of the latest Democratic plan in the House, which calls for $2.2tn in new spending on new direct payments to US households, emergency unemployment benefits and federal aid to businesses and cash-strapped state and local governments.
Many economists and Federal Reserve officials have warned that the US recovery from the shock of the pandemic is likely to be weaker and slower in the absence of a new relief package, raising the chances of widespread bankruptcies, dwindling job growth and long-term damage to the labour market.
Among the biggest sticking points in the negotiations is the insistence by Democrats on a big round of federal assistance, in excess of $400bn in their latest plans, to municipal and state authorities. The White House and congressional Republicans have been resisting funding on that scale.
If no compromise is reached, Democrats in the House are expected to move ahead with a vote on their own plan so that their lawmakers can campaign for re-election saying that they at least tried to find a solution. Republicans who control the Senate introduced legislation for a stimulus package worth about $500bn — far short of what the White House is offering — to help their own campaigns, but it failed to clear a key procedural vote in the upper chamber this month.
Businesses that have been hit hard by the Covid-19 crisis have been vocal in pushing Congress to try to reach a deal, particularly airlines, which have said they will dismiss or furlough tens of thousands of staff if no agreement is reached this week.
“I am hopeful that we can come to an overall understanding,” said Mr Mnuchin. “And if we do that, hopefully the airlines will postpone their actions.”
The increasingly poisonous pre-election political atmosphere on Capitol Hill, including following President Donald Trump’s nomination of Judge Amy Coney Barrett to the Supreme Court, has made it more difficult for lawmakers to reach an accord in the same way that they did in March and April, when they approved $3tn in initial pandemic relief.
If no deal is reached this week, hopes of a compromise would probably be postponed until at least after the November election, and possibly until the next Congress is formed in January.
Joe Biden, the Democratic presidential nominee, has backed his party’s plans for new stimulus and said one of his first economic priorities would be to direct immediate help to struggling households and businesses.