WASHINGTON (AFP) - Facing an outcry from all sides over the prospect of further delay in pandemic aid for families and businesses, and trailing badly less than a month before the election, US President Donald Trump has shifted gears and called for limited stimulus measures.
The apparent about-face on Tuesday evening came hours after he torpedoed promising negotiations with Democrats in Congress on a comprehensive aid package, and ruled out any new stimulus spending until after the Nov 3 election, despite the economic damage wrought by Covid-19.
But after his hardline stance drew a flurry of outrage and concerned statements even from conservative voices and the powerful US Chamber of Commerce, and stocks fell sharply, Trump returned to Twitter to call for stand-alone measures to help airlines and provide new stimulus checks to individuals.
The shift allows Trump to say he is fighting for American companies and workers, knowing Democrats are unlikely to agree - since passing narrowly-targeted measures would surrender their leverage to win concessions on elements like badly-needed support for state and local governments.
Economists say a new aid package to follow on the US$2.2 trillion (S$3 trillion) CARES package approved in late March, much of which has expired, is critical to shoring up the world's largest economy and staving off massive layoffs amid the downturn caused by the coronavirus pandemic.
Airlines already have begun implementing tens of thousands of job cuts - and issued pleas to policymakers to renew direct aid - and Disney alone is cutting 28,000 US workers due to severe hit to the tourism sector.
"Washington's failure to enact additional Covid relief will be felt on Main Streets and at kitchen tables across the United States," US Chamber of Commerce executive vice-president and chief policy officer Neil Bradley said in a statement.
QUICK TURNAROUND IN JEOPARDY
Bradley said the failure was especially disappointing since the sides seemed to be nearing a compromise deal.
House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin had been working for weeks on a new package that would aid businesses, including airlines, help prevent bankruptcies, and extend unemployment benefits, although they had not agreed on the final size.
Optimism in recent days about the prospect of a Bill had cheered stock markets - one of Trump's favourite metrics of success.
The early rounds of stimulus are widely credited with softening the blow from the economic shutdown, and US businesses have recovered about half of the 20 million jobs lost in the early weeks of the pandemic.
But hiring gains have slowed, layoffs continue and economists agree the official unemployment rate of 7.9 per cent in September likely underestimates the real level of joblessness, especially as more people exit the workforce altogether.
State and local governments are especially vulnerable since they cannot run deficits, and without aid likely will be forced to cut teachers, police and firefighters.
But Trump accused Pelosi of inflating the pandemic relief package to "bailout poorly run, high crime, Democrat States."
He offered instead to immediately sign legislation guaranteeing a second round of US$1,200 stimulus cheques and US$135 billion for small businesses - steps that already were included in the broader package being negotiated.
Even apolitical Federal Reserve officials, including central bank chief Jerome Powell, have weighed in more and more stridently to urge more aid.
Powell on Tuesday warned that "Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses."
Neel Kashkari, head of the Minneapolis Fed, on Wednesday urged policymakers to "come together aggressively" to do whatever they can to help workers and businesses.
"It is vital they move quickly, whatever they do," to avoid a continuing wave of bankruptcies, he said on CNBC.
But White House officials acknowledged Wednesday that the latest developments have dimmed prospects for passing new stimulus before the election.
Both sides now will have a new issue to lob at each other in the home stretch before election day.
White House chief of staff Mark Meadows accused Pelosi of trying to block any aid before the election, and said on Fox "we're still willing to be engaged, but I'm not optimistic for a comprehensive deal."
Trump's Democratic rival for the White House, former vice-president Joe Biden, said on Tuesday that the president had "turned his back on every single worker whose job hasn't come back yet... He turned his back on families struggling to pay rent, put food on their table, and take care of their kids."