The Washington PostDemocracy Dies in Darkness

Pelosi anticipates reaching economic relief deal with Mnuchin, saying Trump diagnosis ‘changes the dynamic’

Administration officials now pushing hard for agreement; House speaker urges airlines to stop furloughs

Lawmakers and pundits reacted to President Trump and first lady Melania Trump’s positive coronavirus tests on Oct. 2 (Video: The Washington Post)

House Speaker Nancy Pelosi said Friday she anticipates striking a bipartisan economic relief deal with the Trump administration, suggesting that the president’s coronavirus diagnosis could speed up an agreement. She called on airlines to hold off on imminent furloughs pending a deal.

“This kind of changes the dynamic because here they see the reality of what we have been saying all along — this is a vicious virus,” Pelosi (D-Calif.) said on MSNBC.

“I’m optimistic. I’m always optimistic,” she said. “We always have to find a path — that is our responsibility to do so — and I believe that we will.”

Democrats had sought a $2.2 trillion package, while the White House’s most recent offer was closer to $1.6 trillion. Pelosi and Treasury Secretary Steven Mnuchin spoke Friday afternoon for 65 minutes and plan to continue their discussions, according to Drew Hammill, a spokesman for the House speaker.

The pace of talks — and the possibility of a deal — have picked up markedly in recent days. White House Chief of Staff Mark Meadows told reporters Friday that President Trump had inquired about the status of negotiations Friday morning, shortly after the president announced his positive coronavirus test.

Senate Majority Leader Mitch McConnell (R-Ky.) sounded a positive note at a news conference in Kentucky.

“I’m trying to figure out here whether I should predict another bill quickly or not, but the talks have speeded up in the last couple days,” said McConnell, who is not directly involved in the negotiations but is regularly briefed by Mnuchin. “I think we’re closer to getting an outcome.”

With the talks picking up steam, Pelosi released a statement Friday calling on airlines to delay imminent furloughs of workers after payroll support included in the Cares Act expired Wednesday. Pelosi said a six-month extension of the Payroll Support Program would be included in any deal or passed as a stand-alone bill. American Airlines and United Airlines this week announced they would be furloughing a combined 32,000 employees because federal aid expired and the travel industry remains battered by the coronavirus pandemic.

Both airlines released statements pledging to reverse the furloughs if Congress acts but urging lawmakers to move quickly.

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The U.S. economy plunged sharply into a recession earlier this year when the coronavirus pandemic led many companies and employers to lay off workers and temporarily close. The economy recovered a bit during the summer, but it has shown signs of lagging in recent weeks, particularly as several large companies have announced new plans for layoffs. The emerging head winds have helped revive talks between the White House and Democrats, but several significant issues remain unresolved.

Pelosi outlined some of them in a letter Friday afternoon to House Democrats that pointed to unemployment insurance, money for cities and states, and tax credits for children and families as among the areas where she had yet to reach agreement with Mnuchin.

“We are expecting a response from the White House on these areas and others with more detail,” Pelosi wrote. “In the meantime, we continue to work on the text to move quickly to facilitate an agreement.”

In a sign that a deal could be emerging, Mnuchin told at least one Republican senator in a phone call Thursday night that the agreement with Pelosi would include a substantial amount of money for state and local governments, a provision numerous conservative Republican senators have strongly resisted, according to one person who spoke on the condition of anonymity to share details of the private conversation. The call was interpreted as designed to prepare conservatives for the White House to give more on state and local aid than they had previously expected.

A Treasury Department spokeswoman confirmed that Mnuchin spoke on the phone with GOP senators, but she would not comment on their substance.

Mnuchin and Pelosi have mostly conducted their negotiations over the phone, but they met at length in person on Wednesday. After Trump reported his positive coronavirus diagnosis early Friday, Mnuchin reported testing negative and phoned Pelosi to inform her of that result, Pelosi said.

The speaker said that she had been tested Friday morning “out of an abundance of caution,” and her office later announced that the result was negative.

Layoffs pile up as jobless claims remain stubbornly high

After bipartisan talks broke down in early August, prospects for any new stimulus deal before the election looked grim, despite continued high unemployment and the virus’s persistent spread. But with moderates in both parties increasingly anxious over Congress’s inaction, negotiations between Pelosi and Mnuchin resumed this week and appeared to be getting serious, even as House Democrats approved their own $2.2 trillion bill late Thursday without GOP support.

House lawmakers left the capital Friday after casting what were supposed to be their final votes before the election, but they could be called back to vote on a deal.

Several items have been agreed to, including a new round of $1,200 checks to individuals. Pelosi said they were nearing agreement on $75 billion for coronavirus testing and tracing, with Democrats pushing for language ensuring a comprehensive testing strategy.

Other key items remained outstanding, including the state and local aid, unemployment insurance and a child tax credit. Pelosi’s comments Friday suggested talks were getting into granular details — she described pushing for $144 billion for a portion of the legislation dealing with a hodgepodge of spending items, including agriculture and transit support. She said that the administration was trying to cut that figure down to $100 billion.

White House officials also called for striking a deal. Trump administration officials have been pushing much more aggressively for a stimulus package in recent days, amid Trump’s weak approval numbers and the signs of weakness in the U.S. economy.

Mnuchin said Friday parts of the economy “need more help,” citing in particular restaurants and other hard-hit industries.

Several members of the Independent Restaurant Coalition, a trade group formed this year to lobby for an industry devastated by the coronavirus outbreak, said Friday that if Congress does not enact a substantial relief package, it could lead to the closure of 85 percent of small, independently owned restaurants in the country.

On Fox Business, White House economic adviser Larry Kudlow sounded optimistic about the odds of a stimulus package and suggested it was essential to approve additional support for small businesses and the unemployed.

“Would you rather have zero or would you rather have everything you want?” Kudlow said. “There has to be compromise in life.”

Two people who have spoken with senior administration officials in recent weeks, commenting on the condition of anonymity to share details of private conversations, said the White House is pushing harder for a deal in part because Trump trails in the polls.

“People in the administration got spooked Trump hasn’t risen more in the polls, and that’s given an impetus to a negotiated deal,” one of them said.

In the early days of the pandemic in the spring, Congress rushed to pass four bipartisan bills totaling an unprecedented $3 trillion in spending. Many of the programs approved at that time have run their course, but with the election approaching, partisan tensions have increased and Congress has not acted since.

Some conservatives, including a sizable minority of Senate Republicans, argue that Congress has already spent enough money and that no more action is needed, in light of the ballooning budget deficit.

On Friday morning, leaders from the conservative groups Americans for Prosperity, R Street, the Libre Initiative and Heritage Action joined a conference call urging lawmakers to reject any agreement.

“We are very concerned about any possible deal at this point,” said Tim Phillips, president of Americans for Prosperity. “We are urging Congress: Do not do another spending deal.”

Tim Carman, Lori Aratani and Ian Duncan contributed to this report.