Democrats call Trump’s stimulus orders ‘unconstitutional’

President acts after talks with Democrats over congressional rescue package collapse

US President Donald Trump has signed executive orders that include financial support to Americans hard hit by the coronavirus pandemic and students with college debt.

 

Democrats on Sunday insisted Congress must pass a rescue package to help Americans weather the economic storm from the pandemic, dismissing Donald Trump’s executive action on aid as “weak and unconstitutional”.

“Right now, we need to come to agreement. We have got to meet halfway,” Nancy Pelosi, the Democratic speaker of the House of Representatives, told Fox News Sunday. “We’ve got to do the best we can for the American people.”

Mr Trump on Saturday bypassed lawmakers and signed orders to help the economy following the collapse of talks with Democrats over the contours of a fifth Congressional rescue package. She said she agreed with Ben Sasse, a Nebraska Republican senator, who described the executive orders as “unconstitutional slop”.

The White House and Democrats have been at loggerheads for weeks over the stimulus plan, including how much they should provide the millions of Americans who remain out of work because of Covid-19.

Ms Pelosi and Chuck Schumer, the Senate minority leader, want Mr Trump to back a $3.4 trillion package that the Democratically controlled House passed in May. But Mr Trump wants to keep the price tag closer to $1 trillion. He has accused the Democrats of playing politics to dent his odds of re-election.

Charles Evans, the president of the Chicago Federal Reserve, on Sunday said it was very “unfortunate” that negotiations on Capitol Hill had collapsed, and stressed that another relief package was essential.

“Fiscal policy has been unbelievably important in supporting the economy during the downturn,” Mr Evans told CBS News.

“That continues to be important because we’ve not got control over the virus spread . . . Public confidence is really important and another support package is really incredibly important.”

Moving goalposts

Steven Mnuchin, the treasury secretary who is leading the negotiations for the administration, accused the Democrats of moving the goalposts during negotiations, but said the White House was willing to entertain new ideas if the Democrats would compromise.

“I’ve told the speaker and Senator Schumer, any time they have a new proposal, I’m willing to listen,” Mr Mnuchin told Fox News Sunday.

The battle comes three months ahead of the presidential election. Earlier this year, Mr Trump was confident that a vibrant economy would provide a strong tailwind for his re-election campaign.

But he now faces a much tougher battle because of his widely panned handling of the pandemic. Joe Biden, the Democratic candidate, has a healthy lead in the national polls and most of the critical swing states.

The impetus to take action has grown amid concerns that spikes in Covid-19 cases in the sunbelt states and more recently in the midwest, is creating a drag on the economic recovery.

The number of confirmed coronavirus cases in the US topped 5m at the weekend, while the number of deaths from the disease surpassed 162,000, according to Johns Hopkins University.

The labour department last week said the unemployment rate fell to 10.2 per cent in July, but the pace of job creation slowed significantly from June.

Executive orders

Over the weekend, Mr Trump signed one order providing $400 a week to unemployed people, less than the $600-a-week benefits that expired last month. But the president wants states to pay 25 per cent of the cost, which has sparked criticism from Democrats because many states are struggling financially as the economic crisis takes a serious toll on their tax revenue base.

The executive orders were also limited in that they did not provide any money for small businesses, or any kind of direct payments to taxpayers, which would require authorisation from Congress.

Democrats want any rescue package to include $1 trillion for states and cities to help them deal with the cost of tackling the virus and make up the tax revenue shortfalls. But Mr Trump has balked at the demand, saying they want to bail out local governments that are badly run by Democrats.

At a signing ceremony on Saturday, Mr Trump argued that $600 was too high and had been a “disincentive” to people returning to work.

Larry Kudlow, the top White House economic adviser, on Sunday said the administration believed states had not spent all the money allocated to them in the $2.2 trillion Cares Act stimulus passed in March. “There is considerable overflow that they could make use of,” he told CNN.

Mr Biden accused Mr Trump of pushing “half-baked” ideas and sowing division. “Instead of staying in Washington and working with Republicans and Democrats to reach a bipartisan deal, President Trump is at his golf club in New Jersey signing a series of dubious executive orders,” Mr Biden said. “This is no art of the deal.” – Copyright The Financial Times Limited 2020

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