President Donald Trump said Tuesday that he had told his administration negotiators to end talks with Democrats on coronavirus stimuli until after the November 3 election.
The declaration stops the ongoing urge to give Americans trillion dollars more relief as the outbreak rages across the US and the economy struggles to recover from virus-induced shutdowns. Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi spoke for an hour on Monday about an aid package and planned to speak again on Tuesday about a possible deal. Trump, who has Covid-19 himself, had asked the sides to close a deal just three days ago after not playing a direct role in the talks for months.
"I have instructed my representatives not to stop negotiations until after the election if we pass an important stimulus bill that focuses on hardworking Americans and small businesses immediately after my victory," Trump tweeted on Tuesday.
The president added that he had asked Senate Majority Leader Mitch McConnell to “focus fully on confirming Supreme Court nominee Amy Coney Barrett” what Senate Republicans were saying in several pre-election Covid- 19 cases have done in their ranks. Trump spoke to Republican congressional leaders about stimulus plans earlier in the day.
Trump appeared to contradict his previous message in a tweet Tuesday night. In response to a headline about US Federal Reserve Chairman Jerome Powell, calling for more fiscal stimulus and saying Congress has little risk of "overdoing it," the president wrote, "Right!"
Pelosi and Mnuchin had a chat Tuesday afternoon, and the Treasury Secretary confirmed that Trump had withdrawn from the discussions, spokesman spokesman Drew Hammill said in a tweet. Pelosi "expressed disappointment with the president's decision," wrote Hammill.
In a statement on Trump's tweets, Pelosi said the president "showed his true colors: he put himself first at the expense of the country, with the full complicity of GOP members of Congress." She added that "The departure of coronavirus talks shows that President Trump is not ready to destroy the virus."
Investors penalized stocks in response to Trump's tweets. The Dow Jones Industrial Average closed more than 300 points, or 1.3%, lower after the announcement.
Although the talks made little progress for months, traders had become more hopeful that the sides could reach an agreement before the elections as many individuals and companies are struggling during the ongoing outbreak.
For months, Congress failed to send new aid to Americans as millions of people were left unemployed as a result of the pandemic struggle to pay for food and housing. Lifelines that supported the economy in the early stages of the pandemic, including the $ 600 weekly unemployment benefit and time window for applying for loans for the small business paycheck protection program, expired weeks ago.
In his tweets on Tuesday, Trump appeared to be arguing that the U.S. economy doesn't need any further stimulus. He wrote, "We are world leaders in economic recovery, and the best is yet to come!"
While the US quickly regained many of the jobs it lost earlier this year, a weaker-than-expected increase in non-farm payrolls of 661,000 in September raised concerns about the slowdown in the US economic recovery. The unemployment rate fell to 7.9%, which is still significantly higher than before the pandemic.
Trump's move to halt negotiations came just hours after Powell urged Congress to approve further fiscal stimulus. A lack of sustainable support from the federal government could "lead to a weak recovery and create unnecessary difficulties for households and companies".
The president decided to back out of negotiations just weeks before an election where his battle against the virus outbreak and containment of the economic damage had hurt his chances of a second term in the White House. While Congress faced a difficult path to provide aid ahead of the election, Trump's decision to suddenly break off active talks shocked political and business observers alike.
"Nobody gets it," a Wall Street executive who refused to be named told CNBC about the decision.
Former Vice President Joe Biden, who backed more incentives as a Democratic presidential candidate, has targeted Trump for not limiting the economic devastation caused by the coronavirus. Jared Bernstein, former Biden economic advisor and informal advisor to his presidential campaign, criticized Trump for postponing talks.
"Given that literally millions of people are starving and displaced, and employment growth is declining, this is no time for the president to stop negotiations," he said. "His lack of leadership throughout the process was and is a major stumbling block."
Democrats and the Trump administration had struggled to agree what provisions a fifth aid package would include and how much the proposal would cost. The Democrats passed a $ 2.2 trillion relief bill last week, while the Republicans offered a $ 1.6 trillion package.
Democratic leaders repeatedly argued that the GOP failed to see the gravity of the crisis. Republicans, who refrained from spending federal funds, insisted that the Democrats propose an unnecessarily expensive plan that included liberal priorities unrelated to the pandemic.
Following Trump's announcement, McConnell told reporters, "I think his view was that they would get no result and that we need to focus on what is achievable." When asked if he supported the decision, the senator replied, "I do."
Democrats and the White House appeared to have agreed on a number of bailout provisions, including another direct payment of $ 1,200 to most Americans, funding for a second round of small business loans, money for schools, and $ 25 billion to cover that Airline payrolls when companies plan tens of thousands of vacations. However, the sides failed to overcome fundamental disputes over several other issues.
Democrats most recently proposed $ 436 billion for state and local governments, while Mnuchin offered $ 250 billion in aid. Pelosi pushed for the reintroduction of unemployment benefits of $ 600 a week by January, but the White House proposed $ 400 a week. Republicans also wanted corporate and school liability coverage, which the Democrats speak out against.
In his tweets, Trump claimed the proposed state and local aid was a "rescue package" for democratically-ruled states that "has nothing to do with COVID-19". The bipartisan National Governors Association has asked for at least $ 500 billion more for federal aid as governments consider cuts to education and essential services as they face higher costs and lower revenues during the pandemic.
The president also said Pelosi "is not negotiating in good faith" after the White House made its $ 1.6 trillion offer.
Polls have consistently shown that voters want Congress to provide more help before the elections. In a new poll by CNBC / Change Research, released Tuesday, likely voters were asked if either of two statements came closer to their views: "The economy is struggling and we need more financial relief from Washington" or "The economy is recovering ourselves and we don't need any. " more financial relief from Washington. "
Nationwide, 66% of respondents said the country needed more help, while 34% said it didn't need any more help. In six swing states – Arizona, Florida, Michigan, North Carolina, Pennsylvania, and Wisconsin – 63% of likely voters said America needed more financial assistance from the federal government, while 37% didn't.
At least three GOP members of Congress quickly questioned Trump's decision. Maine Senator Susan Collins, facing one of the toughest Senate re-election bids, has urged lawmakers to pass another auxiliary bill before November 3.
"It is a big mistake to wait until after the election to come to an agreement on the next aid package for Covid-19," she said in a statement. "I have already made contact with the finance minister, one of the main negotiators, and several of my senate colleagues."
Senator Lisa Murkowski, R-Alaska, said in a statement, "I firmly believe that negotiations should continue."
Rep. John Katko, a Republican from New York who took part in a potentially competitive race in November, tweeted that he wanted the president to "reconsider" the move.
"I disagree with the president. As life is at stake, we cannot afford to end negotiations on an aid package," he wrote.
– CNBC's Brian Schwartz contributed to this report.