Markets looked to gingerly retrace the risk-off move that rippled across assets late in Tuesday’s US session after Donald Trump partially backtracked on an abrupt decision to kill stimulus talks until the election.
Trump’s original pronouncement rattled stocks, effectively signed economic death warrants for tens of thousands of US workers, and further imperiled industries desperately seeking additional relief, including and especially airlines and restaurants.
In addition, Trump’s decision to cancel stimulus negotiations meant that once any funds being disbursed to the jobless under his August executive order extending a federal unemployment supplement using repurposed disaster relief funds run out, the unemployed would lose one of their lifelines. And on, and on.
Late Tuesday, during an hourslong series of tweets and retweets touching on everything from alleged voter fraud to Hillary Clinton’s e-mails, the president backtracked in favor of a position consistent (sort of) with GOP allusions to “targeted” relief.
“The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business”, Trump shrieked, into the digital void. “Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!”
It wasn’t really a “backtrack” as much as it was an acknowledgement that his decision to call off stimulus talks effectively validated airlines’ concerns that Washington cannot be relied upon to deliver on its promises, which is why some carriers were tempted to move forward with layoffs last week over the objections of Nancy Pelosi and Steve Mnuchin who implored executives to hold off pending relief.
Trump then declared his support for mailing out a bunch of checks to people. “If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY”, he said. “I am ready to sign right now. Are you listening Nancy?”
In essence, Trump wants a targeted bill consistent with something Mitch McConnell can easily get by the Senate ($160 billion for airlines and small businesses) and he wants to mail out checks with his signature on them weeks before the election. Equities clawed back some losses, but even if stocks manage to trade positive Wednesday, the psychological damage is done.
Some GOP aides said it’s not obvious what Trump was trying to achieve by killing the talks initially, even if it’s clear why he would want to mail checks and make direct deposits with just weeks to go before an election, trailing by a wide margin in every national poll.
While the direct payments to households would be welcome, Trump’s overture on that front is indicative of a transactional actor desperate for a political life raft and represents a regression to the crude, overt clientelism of yesteryear city politics.
Joe Biden immediately pounced on the apparent miscalculation. “Make no mistake: if you are out of work, if your business is closed, if your child’s school is shut down, if you are seeing layoffs in your community, Donald Trump decided today that none of that – none of it – matters to him”, Biden remarked.
Pelosi didn’t mince words either. “He shows his contempt for science, his disdain for our heroes in health care, first responders, sanitation, transportation, food workers [and] teachers”, she said.
Trump’s decision to cancel the talks also served as an inadvertent slap in the face to Jerome Powell, who just hours earlier implored Congress to move ahead with additional virus relief.
Corporate America is incredulous. Steve Lamar, the head of the American Apparel & Footwear Association, told Bloomberg Trump’s decision is “very unfortunate” and reminded the president that “the economy is not something that can be put on hold until a time that might be more convenient [because] people are suffering today”.
Levi Strauss CEO Chip Bergh called Trump’s decision “a travesty”. For its part, The National Restaurant Association reminded The White House that “every week of further inaction means that hundreds of additional restaurants will shut their doors in communities nationwide”.
Roger Dow, president of the US Travel Association, called Trump’s move “woefully shortsighted”. “The reality is that small businesses in every pocket of America are shuttering”, Dow chided. “They needed relief months ago”.
Sara Nelson, president of the Association of Flight Attendants-CWA, was nothing short of furious. Her statement, called “Trump Kills Millions of Jobs, Abandons Essential Workers”, reads as follows:
As Secretary Mnuchin and Speaker Pelosi moved close to a deal that would provide relief to working people across the country, President Trump issued one tweet to blow up the deal and leave millions of essential workers in freefall. Senate Republicans will own this cruel maneuver that puts our economy in a tailspin unless they demand COVID relief now.
The jobs and infrastructure Payroll Support Program enjoys support from over 90 Senators and an overwhelming bipartisan members of the House. Federal Reserve Chairman Jay Powell started the day begging Congress to support the economy until it is “clearly out of the woods” and emphasized that relief of any size “will not go to waste.
We need rational people to take control and help our nation. Our union will begin emergency meetings today to determine our options to protect people and keep them from harm.
This was, by almost every account, a poor decision by the president. His late evening call for airline and small business funding will almost surely be met with eye rolls and outright derision, especially coming as it did between dozens of truly bombastic tweets alleging various conspiracies. (At one point, for instance, the president retweeted a bad Photoshopped image of the late Chris Farley screaming at William Barr to “arrest someone”.)
As for the direct checks, even Trump’s most ardent supporters will see through his midnight reversal. But just in case, Pelosi drove it home: “He refuses to put money in workers’ pockets unless his name is printed on the check”.