Business Maverick: Stimulus Impasse Risks Dragging to September, Imperiling Economy

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With no talks scheduled on a virus-relief package seen as vital by Federal Reserve officials and market participants alike, the stalemate between Republicans and Democrats risks dragging on for weeks.

The four main principals — Treasury Secretary Steven Mnuchin, White House Chief of Staff Mark Meadows, Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer — haven’t talked since Friday. And Senate Majority Leader Mitch McConnell and Schumer continued to exchange rhetorical broadsides on the Senate floor Tuesday, without new ideas for a compromise.The White House says Democrats must reduce demands for state and local aid and for $600 a week in unemployment relief to restart the talks.

“Even if they were magically fully implemented today, retroactive to the start of this month, they would provide only a $400 billion boost to the economy by year’s end,” Zandi said. That’s “well short of the $1.5 trillion I estimate is necessary to avoid backtracking into recession.”Federal Reserve Bank of Richmond President Thomas Barkin said Tuesday that for the economy, Covid-19 threatened to become like a “” in the road, which needs fiscal support to cover over.

Pelosi on Sunday shot down the idea of combining virus relief and the appropriations process on Sunday, saying negotiators must get back to the table before then.As of Tuesday afternoon, however, there still had been no direct communication between Pelosi and Mnuchin since Friday, according to an official familiar with the matter.

 

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