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Trump unilaterally cuts off stimulus talks with Democrats: stocks tumble

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President Donald Trump has unilaterally cut off stimulus talks with Democrats — a move that caused the Dow Jones to immediately tumble 400 points.

It’s notable that in explaining why, Trump again frame it as an issue about “Democrat” states and Democrats asking for too much.

President Donald Trump effectively killed any chance at a new coronavirus relief package ahead of the presidential election when he tweeted Tuesday that he won’t agree to a deal until “after I win.”

“Nancy Pelosi is asking for $2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19,” Trump said of the aide package passed by House Democrats last week, which is actually for $2.2 trillion. “We made a very generous offer of $1.6 Trillion Dollars and, as usual, she is not negotiating in good faith. I am rejecting their request, and looking to the future of our Country.”

“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,” he continued. “I have asked Mitch McConnell not to delay, but to instead focus full time on approving my outstanding nominee to the United States Supreme Court, Amy Coney Barrett.”

The reaction to the cut-off was swift on Wall Street:

The stock market took a turn for the worse in afternoon trading after President Trump called off stimulus negotiations until after the election. The stock market wasn’t moving much in either direction before the Trump tweet. Apple (AAPL) lagged in the Dow Jones today, down more than 2.5%. Earlier in the session, Apple set an Oct. 13 date to introduce its latest iPhone.

The Washington Post:

His tweets sent the stock market suddenly lower, as many businesses, households, and investors had been hoping for a sudden jolt of fiscal stimulus amid signs the economy was beginning to soften. The Dow Jones Industrial Average fell by about 330 points, or by 1.2 percent. The Nasdaq and S&P 500 also fell.

The pronouncement came just hours after Federal Reserve Chair Jerome H. Powell said in a speech that more economic stimulus was needed.

Barring another unexpected development, Trump’s declaration kills any chance of new aid for millions of Americans who remain out work and at risk of eviction.

In the string of Twitter posts Tuesday afternoon, Trump misstated the health of the U.S. economy.

He wrote that “Our economy is doing very well. The stock market is at record levels. JOBS and unemployment…also coming back in record numbers.”

Even some of Trump’s top advisers have said the economy is not doing very well and that more assistance is needed. Further, the stock market is not at record levels, and it also doesn’t reflect the broader health of the economy. The unemployment rate has come down from its April peak of around 15 percent, but it is still at 8.4 percent and millions of Americans are struggling to pay their bills, afford food, and find jobs. The U.S. economy has barely recovered half of the jobs lost in March and April, and Trump is set to be the first president in modern history to end his first term with a net loss of American jobs.

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