The Washington PostDemocracy Dies in Darkness

The Finance 202: Trump administration, Democrats reach Wile E. Coyote moment in virus relief talks

with Brent D. Griffiths

The effort on Capitol Hill to head off economic calamity with another round of emergency relief has reached a Wile E. Coyote moment.

Negotiations between congressional Democratic leaders and the Trump administration have run off a fiscal cliff with no sign the urgency of the situation will yield a breakthrough.

After three hours of talks on Thursday evening, the two sides agreed on this much: There is not much on which they agree. The future of the talks themselves remains a matter of dispute. Treasury Secretary Steven Mnuchin after the meeting said negotiators will decide today if they should continue trying to reach consensus. White House Chief of Staff Mark Meadows told reporters the parties are “still a considerable amount apart,” per Erica Werner, Jeff Stein and Paul Kane.

While the Hill dealmaking remains in suspended animation, millions of Americans are confronting financial free-fall. 

They include renters, jobless Americans, small-business owners and others. The expiration at the end of last month of $600 in weekly enhanced unemployment benefits cut a lifeline for more than 31 million people. Compounding their crisis, the federal moratorium on evictions has also expired, as have many state-level bans on electricity shut-offs

Meanwhile, the deadline hits Saturday for small businesses to apply for forgivable loans under the Paycheck Protection Program, and many businesses that got help shortly after the program launched in April have already run out of money, CNN’s Katie Lobosco reports.

The July jobs report out this morning will offer the most comprehensive view yet of hiring that economists expect to have slowed or contracted as a resurgent pandemic dragged on the nascent economic rebound. Economists surveyed by the Wall Street Journal projected payrolls growing by 1.5 million and the jobless rate dropping from 11.1 percent to 10.6 percent. “Such job gains would signal the labor-market recovery continued, though at a weaker pace than in the previous two months,” the WSJ's Sarah Chaney writes. “A double-digit jobless rate would still be historically high.”

Real-time data continue to point to a skid. “U.S. retail foot traffic is slackening and growth in the number of shifts worked by hourly employees has ground to a halt, a clutch of high-frequency data showed this week, offering the latest evidence the economic recovery that appeared so promising two months ago is rapidly losing momentum,” Reuters reports.

“Weekly data that Reuters follows from sources ranging from the New York Federal Reserve to mobility tracking and small business payroll service providers shows that after big upticks in May and June, activity growth stalled in July as COVID-19 spread rapidly in key areas of the country across the South and Southwest. That recent flat-lining trend has persisted as August began.” 

From Oxford Economics: 

Back on the Hill, the two parties have yet to make progress on core issues.

“Political negotiations can often drag on and have messy blowups before both sides compromise, but the current round of talks appears to be making little progress at all,” Erica, Jeff and Paul write. House Speaker Nancy Pelosi (D-Calif.) described the parties as “very far apart.”

The key sticking points:

  • The overall price tag. House Democrats passed a $3.4 trillion package in May; the administration has offered to spend $1 trillion. Meadows signaled the White House could agree to more.
  • Aid to states and cities. Democrats want to send $1 trillion to local governments to make up for budget shortfalls, fund public health efforts and keep government workers employed; Trump calls that a bailout for states led by Democrats, and the administration has countered with $150 billion.
  • The federal unemployment boost. Democrats advocate extending the $600 payments through January; Republicans proposed an extension at $400 that Democrats so far have rejected.

And there are other hangups. "Democrats are pushing for money for food stamps and child care,” the Post team writes. “The two sides are also arguing about money for schools and the Postal Service. Republicans have sought to link some of the school money to schools reopening, which Democrats oppose. There is a dispute about pensions, and other issues also remain unresolved.”

White House officials and Democratic leaders ended a three-hour negotiation on Aug. 6 without reaching a coronavirus relief deal. (Video: The Washington Post)
The tone of the talks is arguably as telling as the substantive disagreements. 

Negotiators are even arguing about the negotiations:

  • Mnuchin said if the two sides can’t agree to keep working toward a resolution, President Trump will move unilaterally to extend unemployment benefits and the eviction moratorium while cutting payroll taxes by executive order; Senate Minority Leader Charles E. Schumer (D-N.Y.) said Trump lacks the legal authority to do so and Democrats would challenge the move in court.
  • Senate Majority Leader Mitch McConnell (R-Ky.), who is not participating in the formal talks, said he will keep the body in session next week if no agreement is reached, but several GOP senators said they are going home.
  • House Speaker Nancy Pelosi (D-Calif.) said at one point during the Thursday evening session, Meadows slammed his hand on the table; Meadows denied it.

Meanwhile, as three lawmakers tested positive for the coronavirus, congressional leaders remain at odds over safety provisions for the U.S. Capitol, Paul and Rachael Bade report: “Congressional leaders can’t even agree on what type of thermometer to use to monitor lawmakers and aides for coronavirus symptoms.”

Coronavirus fallout

Landlords push back on eviction moratorium.

They argue that such actions are just a short-term fix: “The industry is already struggling to navigate the complex set of overlapping state and local eviction bans, they say. When the bans eventually end, millions of renters will owe months of back rent they can’t afford, delaying their eventual eviction while leaving landlords to swallow the shortfall, they say,” Renae Merle reports.

“For four months, the 12 million renters living in homes that are federally subsidized or have federally backed mortgages were protected by a federal eviction ban included in the Cares Act. But the ban ended last month, and landlords can start initiating eviction proceedings in late August. It is unclear whether Trump now wants to reinstate that federal moratorium, which covered about one-third of renters, or has something broader in mind.”

  • Warren slams private equity firms over possibility they would buy distressed real estate at bargain prices: “This profiteering is far from ‘once-in-a-generation’ though: It’s straight out of private equity’s playbook during the 2008 financial crisis … We cannot stand by while this history repeats itself. If we fail to prevent another private equity real estate grab, we risk allowing another massive upheaval in the housing market that could wreak more havoc on low-income Americans, especially Black and brown families still recovering from losing their homes a decade ago,” Sen. Elizabeth Warren (D-Mass.) and Carroll Fife, director of the Oakland office of the Alliance of Californians for Community Empowerment, write in joint Post op-ed.
More farmers are declaring bankruptcy even with record levels of federal aid.

The pandemic and a years-long slump are just too hard to overcome: “About 580 farmers filed for Chapter 12 bankruptcy protection in the 12-month period ended June 30, according to federal data. That was 8 percent more than a year earlier, though bankruptcies slowed slightly in the first half of 2020 partly because of an infusion of federal aid and hurdles to filing during the pandemic, according to agricultural economists and attorneys,” the Wall Street Journal's Jesse Newman reports.

  • The losses have been startling: “Hog farmers have lost nearly $5 billion in actual and potential profits for 2020, according to the National Pork Producers Council, a trade group. In California, agricultural businesses stand to lose as much as $8.6 billion, according to a study commissioned by the California Farm Bureau Federation.”
The coronavirus hobbled Amazon, but the tech giant rebounded for its best earnings in history.

Like many companies, the tech giant was unprepared for the pandemic: “Delivery times and customer reviews slipped, essential items were unavailable in some areas, and worker absences created extended challenges. For the first time in years, the company’s share of e-commerce in the U.S. actually fell,” the Wall Street Journal's Sebastian Herrera and Merrill Sherman report.

“But as the virus raged on, Amazon spent billions of dollars on its response, hiring workers, increasing pay, improving delivery times, conducting medical tests for employees and stabilizing its supply chain. Its share of online sales has already begun to rebound … The e-commerce juggernaut has added more than $700 billion to its market value since its March lows, or about the size of Facebook Inc. Its market capitalization now exceeds $1.5 trillion, behind only Apple Inc. and Microsoft Corp. among public companies.”

  • CEO Jeff Bezos sold $3.1 billion in shares: The company's stock is up 73 percent this year. “Bezos, the world’s richest man, had said he planned to sell stock worth about $1 billion each year to fund his rocket company, Blue Origin,” Reuters's Munsif Vengattil and Akanksha Rana report. (Bezos owns The Washington Post.)
More from the U.S.:
  • At least 4,848,000 cases have been reported; at least 156,000 have died
  • Virus spreads further across the country: “Mississippi, now experiencing the country’s highest rate of positive tests, is emblematic of the pandemic’s new reality. The virus is no longer principally an urban problem: It is present throughout every state, and those infected often don’t know it, leading to what top public health officials call ‘inherent community spread,’" Sarah Fowler, Anne Gearan and Rachel Weiner report.
  • Death toll cold approach 300,000 by December, influential model says: “According to researchers, if 95 percent of people were to wear a mask in public starting today, some 66,000 lives could be saved,” Jennifer Hassan reports.
  • State Department lifts blanket international travel advisory: “The department cited ‘health and safety conditions improving in some countries and potentially deteriorating in others' in its decision to alter the advisory system and said the change in method will allow travelers to make ‘informed decisions’ based on the situation in specific countries,” Siobhán O'Grady reports.
More from the corporate front:
  • Uber's quarterly sales fall for the first time: “Sales fell 29 percent in the second quarter to $2.24 billion, ending a decade of unchecked growth. The loss in the quarter also widened, but Uber maintained … that it will achieve its goal of turning an adjusted profit by the end of next year,” Bloomberg News's Lizette Chapman reports. The company also reported more earnings from food delivery than transporting people for the first time.
  • Nintendo reported a 428 percent surge in profits: “The Japanese gaming giant reported operating profit of 144.7 billion yen ($1.4 billion) in the April-June quarter, smashing analyst expectations and representing a massive climb from the 27.4 billion yen it posted in the year-ago quarter,” CNBC's Ryan Browne reports.
  • Airbus adds more deliveries, breaks three-month drought: “Airbus delivered 49 aircraft in July, up from 36 in June as it continues to recover from a slump in deliveries during this year’s lockdowns, the company said,” Reuters's Tim Hepher reports.

Trump tracker

Trump officially starts the clock on TikTok divestment.

The president issued two executive orders late last night: “The orders take effect in 45 days and prohibit any U.S. company or person from transacting with ByteDance, TikTok’s Chinese parent company, or WeChat. While the nature of the banned transactions are not specific, it may mean the companies would not be able to appear on Apple’s App Store or Google’s Play Store in the United States. It also could make it illegal for U.S. companies to purchase advertising on TikTok,” Rachel Lerman reports.

“But the order should not affect a deal if Microsoft or another U.S. firm manages to buy TikTok before the 45 days are up.”

  • WeChat is especially popular in China: “It’s one of China’s most innovative Internet products to date, with Facebook adopting similar features years later in its Messenger app. But it’s also been adopted by Chinese officials as a useful surveillance tool, with growing numbers of people prosecuted for sharing politically sensitive content in chat groups.”

From our Beijing bureau chief:

Trade fly-around

Trump reimposes tariffs on Canadian aluminium.

“Tariff Man” is back: “The move, which prompted Canada to pledge retaliation, reignites trade tensions with a key partner just months after the adoption of a new North American trade agreement,” Jeanne Whalen and Amanda Coletta report. The president said the decision is because Canada reneged on a promise not to “flood” the U.S. with its exports.

“In a statement, [U..S. Trade Representative Robert] Lighthizer’s office said the United States is reinstating the 10 percent tariffs on non-alloyed unwrought aluminum because Canada was sending more aluminum to the U.S. than had been agreed. Canada’s Deputy Prime Minister, Chrystia Freeland, called the move ‘unwarranted and unacceptable’ and said the country would soon announce ‘dollar-for-dollar countermeasures.’”

Market movers

Stocks close up for the fifth day.

Tech remains Wall Street's saving grace: “The Dow Jones Industrial Average closed 185.46 points higher, or 0.7 percent, at 27,386.98. The S&P 500 climbed 0.6 percent to 3,349.16 and the Nasdaq Composite advanced 1 percent to 11,108.07. Thursday marked the Nasdaq’s first close above 11,000 and the index’s seventh straight gain. Both the Dow and S&P 500 posted five-day winning streaks. The S&P 500 also closed just 1.3 percent below its Feb. 19 record,” CNBC's Fred Imbert and Thomas Franck report.

“Facebook jumped more than 6 percent and Apple shares climbed 3.5 percent. Netflix advanced 1.4 percent. Amazon and Microsoft rose 0.6 percent and 1.6 percent, respectively. These stocks have contributed a massive share of the broader market’s gains off the March 23 low and are all handily outperforming the S&P 500."

Facebook shares rally after launch of TikTok competitor: “Shares of Facebook stock closed up more than 6 percent on Thursday following the U.S. launch of Reels, a new Instagram feature designed to rival Chinese upstart TikTok,” CNBC's Salvador Rodriguez reports.

Money on the Hill

Bernie proposes wealth tax targeting billionaires' gains during the pandemic.

Tech titans who have made billions, sometimes in just a day, would stand to lose a lot: “The ‘Make Billionaires Pay Act’ would impose a one-time 6 percent tax on wealth gains made by billionaires between March 18, 2020, and Jan. 1, 2021. The funds would be used to pay for out-of-pocket health-care expenses for all Americans for a year,” CNBC's Lauren Feiner reports.

Here's what top billionaires would owe, per Sen. Bernie Sanders's office. Sanders (I-Vt.) is introducing the legislation with fellow Democratic Sens. Ed Markey (Mass.) and Kirsten Gillibrand (N.Y.), another fellow former presidential hopeful.

  • Bezos: $42.8 billion
  • Tesla CEO Elon Musk: $27.5 billion
  • Facebook CEO Mark Zuckerberg: $22.8 billion

Pocket change

National Rifle Association leaders drained $64 million from the nonprofit, according to a civil suit filed in 2020 by New York Attorney General Letitia James. (Video: N.Y. attorney general)
New York attorney general seeks to dissolve NRA.

The gun rights group is facing accusations of wide-ranging fraud and self-dealing: “The chief executive of the National Rifle Association and several top lieutenants engaged in a decades-long pattern of fraud to raid the coffers of the powerful gun rights group for personal gain, according to a lawsuit filed by the New York attorney general, draining $64 million from the nonprofit in just three years,” Carol D. Leonnig and Tom Hamburger report.

“In her lawsuit, Attorney General Letitia James called for the dissolution of the NRA and the removal of CEO Wayne LaPierre from the leadership post he has held for the past 39 years, saying he and others used the group’s funds to finance a luxury lifestyle. She also asked a New York court to force LaPierre and three key deputies to repay NRA members for the ill-gotten money and inflated salaries that her investigation found they took.”

  • Trump and NRA officials lashed out in response: "This was a baseless, premeditated attack on our organization and the Second Amendment freedoms it fights to defend,” NRA President Carolyn Meadows said in a statement. 

Gig workers for Target's delivery service say glitches are cutting into pay: Gig workers who handle in-store shopping and home delivery say they make most of their money through customer gratuities, and the recent disruptions reflect the emerging two-tier employment system at Shipt’s parent company, Target,” Abha Bhattarai and Nitasha Tiku report.

“Although Shipt deliveries helped drive much of the retailer’s record growth during the coronavirus crisis, its workforce is not guaranteed a minimum wage, sick leave or other benefits afforded Target employees, who start at $15 an hour and collected $200 bonuses early in the pandemic … In interviews, gig workers nationwide say that months of complaints about tip problems have yet to get a response from Shipt or Target alerting shoppers to the issue.”

Campaign 2020

Trump is bleeding support from big Wall Street donors. 

Blackstone's Steve Schwarzman is an exception. “A few years ago, Stephen Schwarzman was just the latest deep pocket on Wall Street to open up to Donald Trump. Right now, he’s the biggest one left,” Bloomberg's Shahien Nasiripour and Hema Parmar report. “Donations to Trump’s 2020 campaign from the most elite corners of American finance would be down drastically compared with 2016 -- were it not for the notable exception of Schwarzman, who has become one of the president’s most ardent Wall Street backers.

“Indeed, the private equity mogul single-handedly accounts for the vast bulk of the reported contributions toward Trump’s re-election effort over the past 18 months from people associated with the 31 banks and investment firms that dominate the U.S. financial industry. Schwarzman, co-founder of Blackstone Group Inc., has contributed $3.7 million of the $4.8 million from this select group, a Bloomberg analysis found. Without him, the total amount would represent a 69% decline from the 2016 cycle.”

The regulators

SEC adds two commissioners. 

Senate confirms Hester Peirce, a Republican, and Democrat Caroline Crenshaw. The two “will serve as SEC commissioners until at least 2024 after receiving the Senate’s endorsement. The Senate confirmed Peirce and Crenshaw for terms on the Securities and Exchange Commission by voice vote Thursday. [Trump] nominated them in June,” per Bloomberg Law. 

Daybook

Today:

  • The Labor Department releases July's jobs report

The funnies

Bull session

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