Odds are rising around a last-minute breakthrough on a stimulus agreement between the White House and Democrats — but Senate GOP support is 'the trillion-dollar question'

  • Hopes rose on the emergence of a bipartisan stimulus deal between Democrats and the White House on Friday.
  • Pelosi suggested Trump's coronavirus diagnosis "changes the dynamics" among lawmakers and adds another layer of urgency to pass an economic aid package.
  • Steve Moore, an outside economic adviser to the White House, said Trump needed a political victory to bolster his argument for re-election and a stimulus deal could possibly provide it.
  • Another conservative economist said any plan needs to draw support among GOP senators, calling it "the trillion-dollar question."
  • Visit Business Insider's homepage for more stories.

There were fresh hopes on Friday around a bipartisan stimulus deal to pump cash into every part of the American economy.

The striking level of optimism came after negotiations between the White House and Democrats crawled along for the past week with little sign of an immediate breakthrough. Treasury Secretary Steven Mnuchin and Speaker Nancy Pelosi remained $700 billion apart on their economic aid proposals, even as House Democrats a day earlier approved a $2.2 trillion stimulus proposal to send aid to individuals and businesses.

Then President Donald Trump tested positive for coronavirus, throwing the nation into uncharted territory in its battle against a pandemic that's already killed 207,000 Americans and demolished the economy.

It may scramble the calculus around a big economic aid package on Capitol Hill, as Pelosi suggested it could speed up agreement between both parties.

"This kind of changes the dynamic, because here they see the reality of what we have been saying all along: This is a vicious virus," she said on MSNBC.

Stephen Moore, an outside economic adviser to the White House, told Business Insider in an interview the White House and Democrats appeared to be closing in on a compromise, though he believed the president's diagnosis had changed little. He said both sides are narrowing their differences on state aid and federal unemployment benefits, two areas of major friction.

"I think you could get a deal soon, even sooner than 10 days," Moore said. "I'd say right now the odds are a 65% chance there will be a deal in the next two weeks."

Moore, a visiting fellow at the conservative-leaning Heritage Foundation, said he advised Trump almost two weeks ago against a stimulus package, arguing its benefits wouldn't materialize until early next year after the election. But he said Trump would likely search for a "pick-me-up" in the next month to bolster his case for re-election.

"He needs a victory here and a deal, he thinks it'll help the country but also help him politically," Moore said.

Larry Kudlow, the White House National Economic Council director, struck an optimistic tone on the idea of a  compromise, saying any measure needs to include aid to small businesses and the unemployed.

"Would you rather have zero or would you rather have everything you want? There has to be compromise in life," Kudlow said on Fox News.

Whether Senate Republicans back a stimulus deal is "the trillion-dollar question"

A potential deal between the White House and Democrats, however, still needs to gain enough Republican votes in the Senate so it reaches Trump's desk for his signature. That could prove a significant hurdle depending on a final price tag on a deal, which would range between $1.6 trillion to $2.2 trillion.

Brian Riedl, a conservative economist at the Manhattan Institute in touch with numerous congressional Republican offices, called it "the trillion-dollar question."

"Secretary Mnuchin can negotiate a deal with Democrats, but until Mitch McConnell and Senate Republicans sign off, it doesn't matter," he told Business Insider, referring to the Senate majority leader. "I have not heard whether Senate Republicans are onboard with such a deal."

McConnell held off his judgment on an emerging stimulus proposal between Pelosi and Mnuchin on Thursday. "If they can reach an agreement I will take a look at it and see whether I can sell that to Senate Republicans," he said.

Democrats have long insisted on a broad relief package with measures to aid the unemployed and cash-strapped states. Republicans say only a targeted plan is needed to address the crisis, with measures to help people return to work and provide aid to small businesses.

Some Republican senators previously balked at a $1 trillion coronavirus relief package earlier this summer, contending no additional federal spending was needed to prop up the economy.

Experts have long urged Congress to pass more economic aid as unemployed Americans struggle to afford groceries and pay their rent. Nearly 26.5 million Americans are receiving unemployment benefits.

Jason Furman, a top economist to President Barack Obama, said Mnuchin's deal was "better than nothing."

"Worth Dems fighting for more but making sure the country gets something, especially after today's news. And then can add more next year," he wrote on Twitter.

Without further aid, experts say, the threat of another wave of layoffs or furloughs also looms as businesses struggle with lower demand and revenue losses. Airlines and restaurants in particular have been calling for another infusion of federal money.

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