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Standoff on US virus relief package leaves damage all around

Steven T. Dennis and Mike Dorning, Bloomberg News on

Published in Business News

There were plenty of casualties left in the rubble of failed negotiations on another trillion-dollar-plus rescue package for a U.S. economy mired in a historic, pandemic-induced recession.

Worst hit are the families, businesses, and state and local governments that have had a safety net pulled out from under them at a time some data suggest that recent gains in employment may be transitory as the continuing spread of COVID-19 infections forces a retrenchment.

In Washington, the political damage is widespread. But the biggest impact may be on President Donald Trump.

The president on Saturday took some modest steps to try to mitigate the economic impact -- diverting disaster money to boost unemployment insurance, and suspending collection of payroll taxes for some workers.

Trump said his actions "will take care of, pretty much, this entire situation." But many economist disagree, and even his own top aides have admitted they're no substitute for a legislative deal.

One thing Trump's response didn't do was spark an immediate return to the bargaining table. Treasury Secretary Steven Mnuchin said Sunday the administration would listen to any proposal put up by Democrats. House Speaker Nancy Pelosi, asked on CNN whether talks would resume after two weeks of fruitless negotiations with the White House, offered only, "I hope so."

 

Trump said Sunday night that Democrats have contacted the administration "and want to get together" and may be more inclined now to negotiate. Two Democratic congressional aides said Pelosi and Senate Democratic leader Chuck Schumer have had no contact with the White House since Friday. No new talks have been scheduled.

The biggest driver for a deal may be the reaction of financial markets and the business community in the coming days. Stocks in Asia markets opened mixed as investors weighed uncertainty over more stimulus.

Despite a report showing the U.S. added 1.76 million jobs in July, the economic situation remains more dire than the depths of the last recession -- when unemployment reached a peak of 10%. Further job gains look increasingly difficult with large parts of the economy hobbled.

High-frequency indicators show that economic and payroll activity slowed or declined in the weeks following the survey period for the government's July jobs report. More than a million workers are filing new unemployment insurance claims every week, and more than half of unemployed Americans have now been without a job for more than 16 weeks, according to the Labor Department.

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