by Greg Valliere, AGF Management Ltd.
HOUSE DEMOCRATS RETURNED TO WASHINGTON yesterday in a foul mood, bickering over their inability to get a stimulus bill for their reeling constituents. A sizable minority is grumbling about Nancy Pelosi, who refuses to deal.
EVEN THOUGH THE HOUSE has veered leftward in recent years, there are several moderate groups — the Blue Dog Democrats, the New Democratic Coalition and the Problem Solvers. Some of these Democrats are facing tough election fights, and they would support a scaled-backed stimulus.
PELOSI HAS BACKED AWAY from the $3.4 trillion bill that the House passed in May; sources report she would accept something around $2 trillion. Many Republicans want to pass little or nothing, but we’re hearing that Treasury Secretary Mnuchin has been authorized by the White House to offer about $1.5 trillion.
THAT’S BECAUSE PRESIDENT TRUMP wants to pass a stimulus bill and believes that it could help the markets and the economy — and, of course, it could help his re-election prospects. He has declared, correctly in our opinion, that Pelosi doesn’t want a bill because passage could help him politically.
THESE POLITICAL CALCULATIONS DON’T MATTER to constituents who are facing evictions, bankruptcy, and the collapse of small businesses. They gave House members an earful during the long summer break, and this could motivate Congress to act. “We can’t do nothing,” one Democrat told Politico.
AS ONE DEMOCRATIC STAFFER TOLD US yesterday, if the White House could accept $1.5 trillion and the Democrats could agree to $2 trillion, there’s room for a compromise. “Pelosi is determined to win a political victory, but her refusal to compromise is costing her support among her among her troops,” the staffer said.
PELOSI, 80, LIVES ON NOB HILL in San Francisco and may be out of touch with Americans who are struggling, many members complain. And they detect some differences between her and House Majority Leader Steny Hoyer, 81, who may not agree with Pelosi’s vow to keep the House in session for much of October.
OUR BOTTOM LINE is that a stimulus bill isn’t totally dead. The need for more relief
has overwhelming support among economists (and Fed Chairman Jerome Powell). Pelosi is getting a clear signal that it’s time to deal — she won’t talk with Trump, but she’s on cordial terms with Mnuchin, who is prepared to try again for a compromise.
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This post was first published at the AGF Perspectives Blog.
