US policymakers held another round of talks Monday on a new spending package to aid the virus-hit economy, but the negotiations have lost momentum, dimming hopes that an agreement can be reached before the November 3 election.
With Covid-19 cases on the rise nationwide, the need for stimulus has taken on a new urgency, especially as many support programs have expired or are about to, including a moratorium on foreclosures and evictions as well as loans for small businesses, which threatens to spark a wave of bankruptcies and homelessness.
After months of negotiations between Treasury Secretary Steven Mnuchin and Democratic House Speaker Nancy Pelosi, time has nearly run out to get stimulus approved before President Donald Trump stands for reelection next week.
Whether a measure can be approved in the "lame duck" session before the new Congress is seated in January is unclear.
Pelosi spoke with Mnuchin on Monday for just short of an hour, and her spokesman said she "remains optimistic that an agreement can be reached before the election."
The sides have narrowed their differences on the size of a package to around $2 trillion, but remain at odds over the exact cost and what it includes, with Republicans pressing for more limited measures and Democrats insisting on aid for state and local governments.
"As the nation faces record spikes in new COVID cases, we continue to eagerly await the Administration's acceptance of our health language, which includes a national strategic plan on testing and tracing," Pelosi's deputy chief of staff Drew Hammill tweeted.
- 'Crush the virus' -
But Republican Senate Majority Leader Mitch McConnell has balked at the size of the spending package, and Hammill cautioned that getting a deal "depends on Leader McConnell agreeing to bipartisan, comprehensive legislation to crush the virus... and put money in the pockets of the American people."
Pelosi said Sunday the health language is "central" to a deal and indicated Democrats are willing to adjust the wording of the legislation to accommodate compromises with the administration.
But anything "that does not crush the virus is really official malfeasance," she said on CNN.
Prior to Monday's negotiating session, White House economic adviser Larry Kudlow said the talks had "slowed down, but they're not ending."
"We're close, but there are still important policy issues that separate us and our team believes there have to be more compromises on the House side for us to get there," Kudlow said on CNBC.
Wall Street fell on the downbeat comments, with the Dow losing 2.3 percent in its worst session in weeks.
Kudlow continued to tout a solid economic recovery from the damage inflicted by the coronavirus pandemic and widespread business shutdowns, which he said will be "self-sustaining" even without a new stimulus package.
But most economists disagree, saying the world's largest economy avoided an even worse downturn only because of the nearly $3 trillion in support quickly pumped into the system in the form of expanded unemployment benefits, payroll support and loans for businesses of all sizes.
The resurgence of the virus could make Americans reluctant to venture into stores or businesses, even without restrictions imposed by authorities, which makes prospects for recovery uncertain at best.