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Trump, Democrats Open to Restarting Relief Talks Despite Stalemate -- Update

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08/10/2020 | 05:31pm EDT

By Natalie Andrews and Sarah Chaney

WASHINGTON -- Trump administration officials and Democratic negotiators urged each other to return to the negotiating table to craft a broad coronavirus package after President Trump issued executive actions on jobless aid and other relief over the weekend.

The actions were designed to step up pressure on Democrats, but they also underscored the limits of the White House's powers over spending, which is controlled by Congress. Mr. Trump indicated Monday he was open to more talks, tweeting of the Democrats: "They know my phone number!"

Treasury Secretary Steven Mnuchin accused congressional Democrats led by House Speaker Nancy Pelosi (D., Calif.) and Senate Minority Leader Chuck Schumer (D., N.Y.) of making unreasonable demands in negotiations for the next round of relief. Republicans have expressed concerns about another massive round of spending to deal with the coronavirus crisis.

"If we can get a fair deal, we'll do it this week," Mr. Mnuchin said in an interview on CNBC. "If [Democrats] are going to be unreasonable, we're not going to get a deal done," he said, adding that "we're not going to go to unlimited amounts of money to get things that don't make sense."

Democrats, who have backed $3.5 trillion in new spending, said that Mr. Trump acted illegally, breaching congressional spending authority with the executive orders, and that his plan wouldn't provide enough relief to the unemployed. They argue Republicans are aiming too low with their $1 trillion aid package, saying it doesn't fully address the economic pain of workers, businesses or states during the pandemic.

"I hope saner voices in the Republican Party will prevail and say, 'Sit down with Pelosi and sit down with Schumer,' " Mr. Schumer said Monday on MSNBC. "We are not going to settle for some skimpy thing that doesn't work."

Mr. Trump signed four executive actions over the weekend aimed at providing $300 in weekly federal jobless aid, suspending the collection of payroll taxes, avoiding evictions and assisting with student-loan payments.

His moves came after negotiations between Republicans and Democrats on a new aid package ended on Friday at a stalemate, even as the economic stakes of failing to reach an agreement escalated. Housing advocates say tens of millions of Americans could potentially lose their homes in the coming months after a federal eviction moratorium and a $600 weekly supplement to unemployment benefits -- which Democrats want to extend -- ran out at the end of July.

New funding for cash-strapped states and cities has also been a central battleground in bridging the gap between the parties. Senate Majority Leader Mitch McConnell (R., Ky.) who largely stayed out of direct negotiations, said on the Senate floor, "Republicans wanted to send cash now for schools, testing and unemployment benefits, and argue over state bailouts later. Democrats said nobody gets a penny unless Texas and Florida bail out New Jersey."

Democrats have sought $915 billion for state and local governments to help them deal with plunging revenues from coronavirus shutdowns and to avoid layoffs of state employees. Republicans, who had included no money for states and cities in their initial plan, offered $150 billion during negotiations.

New York Gov. Andrew Cuomo, a Democrat, and Maryland Gov. Larry Hogan, a Republican, have asked Congress for $500 billion for states.

Mr. Trump's executive actions include giving people $300 a week in special unemployment benefits, with an additional $100 coming from states. That approach was greeted with skepticism by some governors, whose tax receipts have been battered.

"It's just not workable," said New Jersey Gov. Phil Murphy on Monday, adding, "There's not enough money to go around to deal with the variety of tsunamis that we're facing, in this case unemployed or small business or hospital systems or keeping the state solvent to be able to employ front-line workers."

A Labor Department spokesman said that states are encouraged, but not required, to provide the extra $100 a week per person, meaning recipients would still get the additional $300 even if their state doesn't provide extra funds.

It is up to states to decide what funding source to tap for the additional $100 benefit, the representative said. States could use rainy day funds, for instance. States could not, however, use money they are borrowing from the federal government to make regular unemployment payments. Ten states, including California, Illinois and New York, ran through funds for unemployment benefits and are now borrowing from the federal government, according to the Labor Department.

The money could also run out quickly. The federal government spent an average of $16.6 billion dollars a week on the $600 enhancement benefit in the last four weeks of July, according to Labor Department data. Reducing the benefit to half that amount, or about $8.3 billion a week, would exhaust the $44 billion that Mr. Trump allotted in less than six weeks.

Ohio's unemployment agency received an email from the U.S. Labor Department on Sunday night outlining two options for states, according to Dan Tierney, the Ohio governor's press secretary.

The first option was to provide funds for the extra $100 by relying on sources other than their own unemployment trust funds, according to a copy viewed by The Wall Street Journal. The other option was to distribute the extra $300 a week in federally funded benefits without providing the additional $100. Mr. Tierney said Ohio planned to implement the second option but expected it could take some time before the state received the federal money.

The U.S. Labor Department didn't immediately respond to a request for comment on the expected timing of funds distribution.

Congress has already authorized about $3 trillion in new spending since March to help mitigate the impact of coronavirus shutdowns, including stimulus checks and jobless payments to American households and emergency loans and grants to struggling businesses and state and local governments.

Paul Kiernan contributed to this article.

Write to Natalie Andrews at Natalie.Andrews@wsj.com and Sarah Chaney at sarah.chaney@wsj.com


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