Stimulus talks in disarray: White House proposal rejected, McConnell describes Democratic statement as 'schizophrenic'
Democrats quickly rejected the White House's first post-election stimulus offer on Tuesday evening, hours after Senate Majority Leader Mitch McConnell (R-KY) proposed a much narrower path, creating a dizzying sequence of events that added new uncertainty to the high stakes talks.
“The President’s proposal starts by cutting the unemployment insurance proposal being discussed by bipartisan Members of the House and Senate from $180 billion to $40 billion,” House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) stated. “That is unacceptable.”
The $916 billion White House offer was slightly more than the $908 billion bipartisan proposal that Democratic leaders are backing as a basis for any deal. The White House proposal, however, included only $40 billion for unemployment benefits and cut supplemental jobless benefits, which is much less than the $180 billion for unemployment benefits and supplemental jobless benefits in the bipartisan proposal.
“Secretary Mnuchin tried another new tact and sent over an offer,” McConnell said on the Senate floor on Wednesday morning. “And in a bizarre and schizophrenic press release, the speaker and the leader said the administration was obstructing negotiations by negotiating.”
The White House offer also included the sticking points for both parties — liability protections that some Democrats call a “poison pill” as well as aid for state and local governments, which Republicans including McConnell have called a “blue state bailout.”
“The White House involvement is significant here,” Norman Ornstein, a scholar at the American Enterprise Institute, told Yahoo Money. “Republicans are loyal to him [the president] if you've got a proposal that got the White House approval, that may include money that even Mitch McConnell doesn't particularly want, they might still support it.”
Treasury Secretary Steven Mnuchin, who presented the White House offer to Democratic leaders, noted that the proposal had been reviewed by McConnell and House Minority Leader Kevin McCarthy (R-CA) — even though the last proposal McConnell publicly supported cost less than $500 billion.
“While it is progress that Leader McConnell has signed off on a $916 billion offer that is based off of the bipartisan framework,” Pelosi and Schumer said, “the President’s proposal must not be allowed to obstruct the bipartisan Congressional talks that are underway.”
‘We'll be back at this after the first of the year’
Before the White House offer became public, McConnell suggested excluding both the liability protections and the aid for state and local governments provisions so that Congress could pass new pandemic stimulus legislation before the year’s end.
Read more: How to file for unemployment insurance
“What I recommend is we set aside liability and set aside state and local and pass those things that we can agree on,” McConnell told reporters Tuesday. “We'll be back at this after the first of the year.”
Pelosi responded by asserting that the comments were “efforts to undermine good-faith, bipartisan negotiations” and referred to them as “appalling.”
Up to 12 million Americans are expected to lose unemployment benefits coverage when two programs enacted under the CARES Act, the massive pandemic stimulus legislation passed in March, expire on December 26. The federal eviction moratorium, paid sick leave, aid to state and local governments, among other relief, also will lapse.
Both Pelosi and McConnell have said that the stimulus deal would be attached to the legislation needed in the next two weeks to avert a partial government shutdown.
“They can pass something within the next two weeks,” Ornstein said. “The impetus for this is the red states, the rural states that are really hurting now, as much as the others. There's pressure on Republicans to get something done as well.”
This post has been updated with new comments from Senator McConnell.
Denitsa is a writer for Yahoo Finance and Cashay, a new personal finance website. Follow her on Twitter @denitsa_tsekova.
Read more:
Up to 15 million Americans face a devastating loss of pandemic stimulus 'the day after Christmas'
Read more personal finance information, news, and tips on Cashay
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and Reddit