Trump’s confusing back-and-forth on fiscal stimulus, sort of explained

President Donald Trump left the confines of Walter Reed Monday night. Soon after, perhaps predictably, he let loose on Twitter, where he threw economic stimulus talks into turmoil. First, he canceled negotiations between Treasury Secretary Steve Mnuchin and congressional Democrats, tweeting on Tuesday, “I have instructed my representatives to stop negotiating until after the election when, immediately after I win.”

Then, the next morning, he blamed Pelosi for not sending him a bill to sign.

The back-and-forth is confusing on a basic political level. It’s a bad idea to take the blame for killing a deal to help the American people in the final weeks of a campaign, a point that was made by Republicans, including Trump’s own campaign staff.

To clean up the mess, Trump pivoted to blaming Pelosi for the stalled efforts. According to Trump, she’s the one holding up a bill that he is “waiting to sign,” which would send $1,200 checks and perhaps more to the American people. But the reality is that there is no such bill, the only bill that’s actually passed anywhere is the HEROES Act.

Underneath the bad politics is a fundamental policy disagreement among Republicans. Republicans are divided on the merits of what to do about the economy — some, like Treasury Secretary Mnuchin, want a big stimulus deal, others are only willing to do a very modest targeted rescue of a few businesses, while still others, like Sen. Rand Paul, want nothing on principle. At a moment when Republican leaders want unity ahead of an election, there will be dissension in the ranks.

The outcome will come down to what happens in the Senate, where Majority Leader Mitch McConnell has been reluctant for months to push any legislation at all. Blaming Pelosi for the standoff is politically convenient, but the proximate stumbling block this whole time has been internal disagreement among Senate Republicans.

Back in mid-May, House Democrats wrote and passed the HEROES Act, a $3 trillion fiscal stimulus package with money for households, money for schools, money for state and local governments, and money for urgent public health needs. It was largely an extension of the basically successful framework of the CARES Act, with an expansion of scope to include the state and local aid.

This was a big bill but, critically, it did not include automatic stabilizers that would have ensured the economy got extra help in 2021 if needed (in effect a concession to Republicans built in from the start).

Nobody expected the GOP-run Senate to agree to that bill, but many observers were surprised that Republicans responded with nothing at all. Through June, July, and August, Senate Republicans wrote no legislation and no meaningful negotiations took place between House Democrats and representatives of the Trump administration. Then, with the economy stumbling in late summer, Senate Republicans hastily threw together a $650 billion bill on September 10. That bill got 52 Republican votes with Paul defecting on the grounds that it was too much spending.

The key takeaways from this are that even a very small stimulus was somewhat controversial among McConnell’s right flank, which explains why he spent months ignoring the issue. It also revealed that some Republicans might be willing to join Democrats in passing a larger package.

Action then shifted to direct talks between Pelosi and Mnuchin. In the course of those talks, Pelosi lowered her target substantially to $2.2 trillion while Mnuchin promised more than McConnell’s offer — up to $1.6 trillion. The difference was both about the size of the package and in particular the inclusion of aid to state and local governments. Republican economists who favor fiscal stimulus tell me that while the idea of the government spending money on anything is controversial on Capitol Hill, the state/local aid concept in particular is toxic because congressional Republicans have a strong view on the merits that forcing big cuts in spending is a good idea.

But Mnuchin himself was, to an extent, freelancing with this effort. McConnell started warning Trump that his Treasury secretary might be on the verge of striking a deal that would prompt a Republican caucus fight.

But Trump went well beyond declining to agree to a bill to proudly announcing Tuesday afternoon that he was killing negotiations, tweeting that Pelosi “is not negotiating in good faith” and “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.”

This essentially took Trump out of one political jam and landed him into a different one, since the last thing vulnerable Republicans trying to win reelection — including members of his own campaign staff — want is the message that the president has given up on trying to help people in need.

McConnell’s assertion, reported in the Washington Post, that a stimulus deal couldn’t pass the Senate is almost certainly an overstatement — but it would need to be a bill that got plenty of Democratic votes. If the president and McConnell enthusiastically backed a bill, then dredging up 15-20 Republican senators to vote for it would almost certainly be possible.

The trouble, from McConnell’s point of view, is that this would involve a big ugly fight, and legislative caucus leaders like to avoid big ugly fights. Back during George W. Bush’s presidency, Republican House Speaker Dennis Hastert articulated a principle he dubbed “the majority of the majority” rule. This meant that not only did legislation need to be backed by a majority of House members to pass, but it needed to be backed by a majority of House Republicans to be brought to the floor for a vote. This is not an actual rule of congressional procedure, and it has been selectively violated over the rules from time to time.

The best way out of this jam for the country would be for Trump to decide he doesn’t really care about McConnell’s personal comfort level with a caucus fight.

Virtually all progressives and some conservatives believe that spending money helps bolster a depressed economy, but other conservatives — including many senators and many members of Trump’s own staff — do not. To effectively do a deal, Trump would need to decisively break with those people and sign an agreement whose premise is that it does help. And to effectively pressure Pelosi, Trump would also need to decisively break with those people and enthusiastically barnstorm in favor of an alternative stimulus proposal.

Mixed messages help duck a fight, but they don’t actually get anything done.