Trump puts off stimulus talks with Democrats till after election

WASHINGTON • US President Donald Trump on Tuesday called off talks on a new stimulus plan until after the election, accusing Democrats of not negotiating in good faith.

"I have instructed my representatives to stop negotiating until after the election," he wrote in a tweet.

The decision sent Wall Street stocks plunging and upended recent progress made in the long-stalled talks after Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi restarted negotiations last week.

The two sides were trying to reach an agreement on the size of the new stimulus package following the expiration of parts of the US$2.2 trillion (S$3 trillion) Cares Act passed as the coronavirus pandemic hit.

Markets that had been holding steady all day plunged into the red after Mr Trump's tweet.

Cetera Financial Group chief investment officer Gene Goldman said: "Over the past few trading sessions, the market had rallied around stimulus talks and now it's almost a slap in the face."

The Dow Jones Industrial Average shed 1.3 per cent to close at 27,772.76 on Tuesday.

Oil prices tumbled after Mr Trump's announcement, with investors worried about the impact on Americans' demand, while data showing a jump in US stockpiles added to the concerns. Asian markets fluctuated yesterday, before mounting a late recovery.

Mrs Pelosi's most recent proposal would cost US$2.2 trillion.

However, Mr Trump in his tweet cited the incorrect figure of US$2.4 trillion for the Bill and accused her of wanting "to bail out poorly run, high-crime Democrat states, money that is in no way related to Covid-19".

"We made a very generous offer of US$1.6 trillion and, as usual, she is not negotiating in good faith," he said.

He said he told Senate Majority Leader Mitch McConnell to focus the Republican-controlled chamber on confirming Judge Amy Coney Barrett to the Supreme Court seat vacated last month by the death of Justice Ruth Bader Ginsburg, which would give conservatives a solid six-to-three majority.

The announcement to torpedo any chance of new aid until after the election came just hours after Federal Reserve chairman Jerome Powell said the US economy would recover "stronger and faster" with more government stimulus to help workers and businesses.

"Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses," Mr Powell said in an address at an economics conference.

But Mr Trump later urged lawmakers to agree on handouts for struggling Americans and help for small businesses.

He tweeted that he would immediately sign a congressional Bill guaranteeing a second round of US$1,200 handouts and US$135 billion for small businesses - which were already included in the negotiations.

The President also urged lawmakers to approve US$25 billion to support the foundering aviation industry.

"So there is still some stimulus perhaps coming before the election," said Mr Ben Emons, managing director at Medley Global Advisers.

Wall Street futures rebounded after the latest tweets.

With presidential challenger Joe Biden well ahead in national and battleground polling, markets have been pricing in the likelihood he will take the White House, with Democrats possibly winning both houses of Congress.

Analysts said such a scenario could see a much bigger stimulus passed, albeit not until after January's inauguration.

AGENCE FRANCE-PRESSE