Stimulus Checks Update: Trump Willing To Work With Democrats After Stock Market Downturn?

Senate Majority Leader Mitch McConnell on Friday said it was unlikely the next round of coronavirus stimulus would be approved in the next three weeks, but Wall Street was betting an agreement would be reached eventually.

President Donald Trump on Tuesday pulled the plug on negotiations with Democrats but then backpedaled, urging legislation that would provide individuals with $1,200 direct payments, and aid to airlines and small businesses. House Speaker Nancy Pelosi has indicated she has no desire to deal with the situation piecemeal.

“The situation is kind of murky and I think the murkiness is a result of the proximity to the election and everybody kind of trying to elbow for political advantage,” McConnell said at an event in Kentucky, acknowledging the need for more stimulus. “I’d like to see us rise above that like we did back in March and April, but I think that’s unlikely in the next three weeks.”

Despite the disarray in Washington, Wall Street was headed for its best week since August as investors started banking on a new round of stimulus and an election win Nov. 3 by Democratic presidential nominee Joe Biden, who has a substantial lead in recent polls.

“Stimulus isn’t not going to happen. It’s just that the timing is not that clear. And that’s a situation where I think the market is going to be able to look through it ultimately,” Tom Lee, founder of Fundstrat told CNBC. “It’s not like one side or the other doesn’t want stimulus. The sticking point is the ultimate magnitude.”

Trump's tweet on Tuesday sent the market plunging more than 300 points but that reversed Wednesday when he called for limited aid.

Federal Reserve Chairman Jerome Powell earlier this week urged lawmakers to approve a robust package to prevent lasting damage to the economy. Unemployment remains stubbornly high, with only half the jobs lost at the start of the pandemic coming back.

Pelosi told reporters Friday she planned to continue negotiating with Treasury Secretary Steven Mnuchin. The two have been speaking nearly daily for the last two weeks despite Trump’s interference.

“This week, when President Trump walked away from the coronavirus relief negotiations, he walked away from a strategic plan to crush the virus – showcasing his deadly contempt for science, for governance and for the health and lives of the American people,” she wrote to Democratic lawmakers Friday.

Democrats have lowered their expectations for a coronavirus relief package from more than $3 trillion to $2.2 trillion, and the White House has indicated it could support as much as $1.6 trillion in relief although it was unclear whether Senate Republicans would be on board.

Sticking points include the size of supplemental unemployment benefits and aid to cash-strapped state and local governments that have borne the brunt of coronavirus pandemic costs. Pelosi is seeking $600 a week in supplement unemployment benefits and $250 billion for governments. Mnuchin has offered $400 a week in supplemental benefits, and Trump has labeled aid to state and local governments a bailout for badly run Democratic states and cities.