Mnuchin expects to restart talks with Pelosi on new virus aid

Fed officials say Congress needs to pass more stimulus deal to keep recovery on track.

'If the Democrats are willing to sit down, I’m willing to sit down anytime for bipartisan legislation, let’s pass something quickly', Treasury Secretary Steve Mnuchin told a Senate banking committee hearing on Thursday [File: Toni L Sandys/The Washington Post via AP]

Treasury Secretary Steven Mnuchin plans to resume talks with House Speaker Nancy Pelosi to work on a compromise for a new round of stimulus for the U.S. economy, according to a person familiar with the plans.

Word of possible new negotiations came as Mnuchin told a Senate Banking Committee hearing on Thursday that a targeted pandemic relief package is “still needed.”

“If the Democrats are willing to sit down, I’m willing to sit down anytime for bipartisan legislation, let’s pass something quickly,” Mnuchin said.

Pelosi, at a news conference, expressed hope that there would be another round of talks, but gave no indication that Democrats would bend on their stance that the country needs $2.2 trillion in fresh aid. President Donald Trump has indicated he could back up to $1.5 trillion, though that is more than many Senate Republicans support.

“We’ll be, hopefully soon, going to the table with them,” she said.

Powell’s Concern

The risk of a slowdown in the economic recovery is rising with the lack of movement on another stimulus package. Initial claims for unemployment insurance remained at a level above the peak during the Great Recession of 2007-09, the latest weekly data showed on Thursday.

Federal Reserve Chairman Jerome Powell reiterated his conclusion that “it’s likely that additional fiscal support will be needed,” speaking at the same Senate panel where Mnuchin was testifying.

The recovery has been faster than anticipated so far, Powell said, thanks to income support to those affected by the pandemic.

“The risk is that they’ll go through that money, ultimately, and have to cut back on spending and maybe lose their home,” the Fed chief said. “That’s the downside risk of no further action.”

Read more: Goldman Cuts U.S. Growth Forecast on Lack of Extra Fiscal Aid

A senior House Democratic official familiar with the situation said Thursday that the agreement on a stopgap funding bill to keep the government running may provide an opening for negotiations on stimulus, which had been stalled since early August. That temporary legislation has been passed by the House and is expected to get final approval from the Senate next week.

Fox News first reported on Mnuchin’s plans to resume talks, which follow a selloff in the U.S. stock market. The S&P 500 Index opened lower Thursday, erasing its gain for the year. It was up 0.3% as of 11:39 a.m. in New York.

Both the House and Senate are scheduled to be in session next week. Leaders in both parties have said lawmakers could be called back to Washington at any time to vote on a stimulus deal.

House Majority Leader Steny Hoyer, speaking on the floor Thursday, said that action is needed on a stimulus and that the next week will be crucial in trying to get an agreement.

“I am very hopeful that we will have either an agreement or a bill that we can pass,” he said.

Despite expressions of optimism from Democratic leaders, many Senate Republicans remain skeptical that a deal can be reached and a vote held before the Nov. 3 election.

“There’s always a chance for anything around here, but it would be very slim I think,” Appropriations Chairman Richard Shelby, an Alabama Republican, said on Wednesday.

(Updates with Pelosi, Hoyer comments beginning in fourth paragraph)

–With assistance from Craig Torres, Catarina Saraiva, Erik Wasson and Laura Litvan.

Source: Bloomberg