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On Thursday, the White House NEC Kudlow said significant policy differences remain in CARES Act 2.0 talks over grants for state and local government and liability protections for businesses: “There are still significant policy differences between the two teams, and those two policy differences have not yet been resolved. The clock is ticking. At some point, you gotta ask yourself: Just to get legislative agreements and votes in two houses and committee print that take time. We've got like 12 days left...The clock is ticking."
On Friday, Kudlow again popped up and said he is neither optimistic nor pessimistic for a ‘grand’ deal on CARES Act 2.0 before the 3rd Nov election:
Well—I don’t want to predict—but there are still significant policy differences between the two sides---we bridged some gaps---one of the major issues is state funding---I think the President made it clear time & time again that he will not bail out those blue states for their economic mismanagement even before COVID---there is no relation with COVID crisis and state funding—that’s should not be any part of a deal---CARES Act 2.0 should be targeted like PPP loan, PUA extension, direct school funding, and airlines----so there is an ideological, political debate agenda—we don’t need so much huge bill with lots of grants unrelated to COVID----I don’t see any reason, why we should jump it now—we should just extend essential grants to help this ‘V’-shape recovery even more robust—I am neither optimistic nor pessimistic—I am just reporting to you about the current situation----
The ball’s not moving much right now--- We're probably closer than we were a week or two back—but it would be very difficult, even if you had a deal in the next few days. You’ve got to go through the committee print, and then you’ve got to have voted in the House and the Senate, so it’s not going to be easy--- the administration would be satisfied with votes on individual elements of a stimulus package, which would be expected to be in the neighborhood of $2 trillion if Speaker Pelosi and Secretary Mnuchin agreed on one---Instead of these 2,000-page bills with gargantuan numbers, why not have separate votes on specific items?”
Kudlow also appreciated Trump’s Thursday debate performance, especially over the economy but it seems that Kudlow is now not so much confident about his previous forecast of +20% GDP growths in Q3. Kudlow is now pointing out a blockbuster Q4 growth from the Q3 boost as he sees various green shoots and a huge improvement of economic indicators. Kudlow also blasted Biden for his proposal of a universal minimum pay of $15/hr. Kudlow said:
"You can't socialize health care, and you can't mandate wages around the country--President Trump has a good vision here. One of the things I liked last night, President Trump boldly and honestly said: 'Look, you want a $15 minimum wage, that will close down small businesses that cannot afford to pay right now, let the states do it--- not another Federal mandate---“.
On Friday, Pelosi said: “The Democrats and Republicans are capable of reaching an agreement CARES Act 2.0 before the November election if the president wants it. President Trump has to talk to the Senate Republicans to move forward towards reaching a deal. The President is delusional when he says we've turned a corner on this. We haven't. We have miles to go. We can't have less than keeping Americans healthy, address climate change, and crush the pandemic”
Further on CARES Act 2.0 political soap-opera, on Friday, Mnuchin confirmed Trump wants a good deal or no deal at all and there are still significant differences. Trump said he’s not going to bail out those mismanaged blue states. But the risk trade (Dow, Gold) also got some boost as Senate leaders McConnell (RNC) and Schumer (DNC) are in a rare closed-door meeting in an attempt for a last-minute deal.
Also, the White House Chief of Staff Meadows said: "Hopefully we can get a deal in the next day or so. We're still working through it, Secretary Mnuchin and I have talked and we're still working with her teams, but making adjustments and trying to look at language to reach a compromise."
In her Thursday presser, Pelosi mentioned the safety of schools/children almost 60-times in her 60-minutes speech/Q&A. Apart from the thorny issues of state & local governments’ funding, the school funding (expansion of existing infra and workforce) seems another tough issue between Pelosi and Trump. The other issues are the fight between Obamacare and Trumpcare Act, where Pelosi is apprehending adverse judgment if Trump’s Supreme Court Justice Nominee is eventually elected. There are some fundamental/ideological differences over CARES Act 2.0 between Trump and Pelosi. Trump is not ready to blink on the state funding issues.
Thus, although both sides are trying their best to secure a deal by some compromises, both are playing politics ahead of the 3rd Nov election. Both are looking for the actual election outcome for their next steps on CARES Act 2.0 as per their political compulsion and both are blaming each other to gain in the election.
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