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Trump halts COVID-19 stimulus talks until after election

October 6, 2020

The US economy has been pummeled by the pandemic. The Federal Reserve was hoping for further relief, but the president's surprise announcement caused Wall Street stocks to drop.

US President Donald Trump gives a thumbs up after leaving Walter Reed National Medical Center
Image: Jonathan Ernst/Reuters

US President Donald Trump on Tuesday ordered a stop to negotiations with Democrats on a new economic stimulus package that would provide additional COVID-19 relief until after the presidential election on November 3.

"I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major stimulus bill that focuses on hardworking Americans and small business," tweeted the president.

The surprise announcement caused US stock markets to tumble.

Nancy Pelosi, the Democratic speaker of the House of Representatives, had been negotiating the terms of the next federal coronavirus aid deal with US Treasury Secretary Steven Mnuchin over the past week.

The Democrats were seeking around $2.2 trillion (€1.9 trillion) in new spending against the administration's offer of $1.6 trillion.

The bill was to build on the more than $3 trillion in coronavirus aid enacted into law earlier this year to bolster the US' pandemic-battered economy.

Trump added that Pelosi was "not negotiating in good faith."

Read more: Coronavirus: How are the 4 biggest economies trying to stem insolvencies?

Trump 'turned his back' on Americans

Trump's sudden decision to end talks on the coronavirus stimulus package was met with fierce criticism from Democrats, as well as some Republican lawmakers.

"The president turned his back on you," Trump's Democratic rival, former Vice President Joe Biden, wrote on Twitter.

Biden also said that the next presidential debate, scheduled for next week, should not take place unless Trump recovers from COVID-19.

Pelosi dismissed the president's comments on shutting down negotiations by saying Trump was set to lose the election and that the stimulus package could be passed during the "lame duck" session when a president awaits replacement after the November 3 election. 

"Forget about him. Four weeks, six, seven hours from now, lame duck," she said late Tuesday, referring to the reduced powers of an outgoing president.

There were some voices of dissent within Trump's party as well. Republican Senator Susan Collins, from Maine, described Trump's decision as a "huge mistake."

However, Senate Majority Leader and Republican Mitch McConnell justified Trump's decision to postpone negotiations, telling reporters: "his view was that they were not going to produce a result and we need to concentrate on what's achievable."

Stocks fall sharply

In recent days, financial markets were hopeful that another round of economic stimulus from Congress would boost the US economy.

But US stocks fell sharply and were down more than 1% in late afternoon trading Tuesday, after Trump's announcement.

The Dow Jones Industrial Average fell 309.6 points, or 1.1%, to 27,839.04, the S&P 500 lost 37.53 points, or 1.10%, to 3,371.1 and the Nasdaq Composite dropped 139.42 points, or 1.23%, to 11,193.06.

Federal Reserve Chair Jerome Powell earlier Tuesday warned a failure by the US to provide further relief "would lead to a weak recovery, creating unnecessary hardship for households and businesses."

Read more: Coronavirus, record stimulus halt US dollar's show of strength

see, kmm/rs (AP, Reuters)

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