Desire to Reach a Deal and Doing It are Two Different Things

Mish

In the US, Pelosi and McConnel struggle to reach a deal both sides want. The EU and UK provide another example. Let's discuss the drop dead dates.

Partisan Standoff

Yesterday I noted Gold Jumps as Bipartisan Stimulus Talks Resume.

But the talks have started and stopped a half dozen times since September. 

In the EU, deals never happen until the last moment. The EK and EU have been working on a Brexit deal since January. 

Drop Dead Dates

  • In Europe, the legal drop dead date for a post-Brexit deal is the end of the month. In the EU, deals never happen until drop dead dates, and often those drop dead dates get extended.
  • In the US, the drop dead date appears to be Christmas. That's a political deadline, not a legal one, but expect a deal.

Good Faith 

  • In Europe, as talks dragged on, the UK accused the EU of lack of good faith. The EU accused the UK of the same thing. For 11 months, both sides accused the other of the same thing.
  • In the US, talks between Senate majority leader Mitch McConnell and House Speaker Nancy Pelosi broke down repeatedly over alleged lack of good faith.

Momentum on Good Faith

The closer one gets to drop dead dates, the more likely discussions get serious. Today we learn, Republicans and Democrats signal a desire to reach a deal soon.

There was an alleged desire to reach a deal in September, but only if both sides got exactly what they wanted. 

The Wall Street Journal reports Coronavirus Stimulus Efforts Show Momentum.

Senate Majority Leader Mitch McConnell (R., Ky.) said Wednesday that Democratic leaders had “signaled a new willingness to engage in good faith.” On Monday night, House Speaker Nancy Pelosi (D., Calif.) and Senate Minority Leader Chuck Schumer (D., N.Y.) sent Mr. McConnell a new Covid-19 relief proposal, whose contents they have declined to disclose.

House Majority Leader Steny Hoyer (D., Md.) said Wednesday that he was hopeful that in the next few days, “we will be able to come to an agreement on a bill that responds to these major crises, at least in the short term,” referencing the need to help state and local municipalities and small businesses, among other things.

Mr. Hoyer said he had spoken to Mr. McConnell and the two agreed that legislation should come up before the end of next week.

“Finally, this week we’re seeing cracks starting to form in the Democratic leaders’ stonewall,” Mr. McConnell said.

Sen. Chris Murphy (D., Conn.) said Tuesday on CNN. “We should not and cannot go home for Christmas unless we have delivered relief to the millions of desperate families out there who are running out of money.”

“The president will sign the McConnell proposal that he put forward yesterday,” Mr. Mnuchin told reporters Wednesday. “We look forward to making progress on that.”

For partisan reasons, both sides want a deal before Christmas but the Democrats want a deal more. 

Nearly the same deal was available to the Democrats in September but political reality set in: Biden's Progressive Agenda is Dead on Arrival. 

Democrats did not win the Senate and lost seats in the House. The best deal now is the one they could have had months ago..

In Europe, time is running out. For discussion please see Question of the Day: Bad Deal on Fish or No Deal on Fish?

Mish

Comments (25)
No. 1-15
Eddie_T
Eddie_T

Congress never gets motivated until some SHTF moment is looming....and somebody with real clout in the world of finance finally puts the fear of God in them by telling them they have to do something...or else the chickens are about to come home to roost.

I wonder which insiders and cronies and fat cats will suck all the juice out this bail-out. It’s pretty much a given that’s gonna happen.

Dodge Demon
Dodge Demon

The U.S. should have told the UK and Europe to drop dead in 1914 and stayed out of The Great War.

Six000mileyear
Six000mileyear

Deadlines are for commoners.

Mr. Purple
Mr. Purple

"Democrats did not win the Senate..."

Democrats have yet to win the Senate.

JonSellers
JonSellers

It would be in the Democrats best interest to demand a massive bailout for the unemployed commoners that McConnell couldn't possibly accept. Take no deal and go into Christmas telling poor Georgians that the Republican Senate is the reason they couldn't buy Christmas presents for their kids. Georgians vote in two shiny new Dem Senators and McConnell gets a swift punch in the mouth.

Of course McConnell should do the same thing, throwing in a blanket exemption for businesses that got their employees infected with COVID and blame the Dems for refusing to help out those poor Georgians. But I think this is much harder for McConnell because he has to maintain that "army of the unemployed".

BobSmith
BobSmith

The GOP will be the party of fiscal discipline for the next 4 years.

njbr
njbr

From my reading of Brexit progress (or lack) is that the UK is woefully unprepared for the transition and fallout. To what end does the EU feel "pressure" to come to an agreement? Approximately 20 working days from now, the UK leaves the EU. All of a sudden there are enormous and inescapable changes that will have to be made in the UK. They have no process for becoming an outsider trying to live with their closest but gigantic neighbor.

As with any modern negotiation between countries, there is recognition that absolute national sovereignty is necessarily traded away to develope common standards and laws that make an agreement possible. Britain is still in the "we're an absolutely sovereign country" phase, and is only now discovering the shit-show coming January 1.

Sure some agreement may be made in the next few weeks, but the absolute fact is that Britain will have to shake out a lot of the new-found sovreignty to live in somewhat familiar ways with its neighbor. Chaos will still ensue with an agreement.

On the other hand, in the US, agreement is possible and is necessary.

Greggg
Greggg

Political deadlock is a blessing in disguise. There's nothing worse than a bipartisan bill.

Dodge Demon
Dodge Demon

Where’s the $200,000,000,000 for Illinois and the rest of the lower government entities and their pension funds?

“We’re all is this together” ©

Rippletum
Rippletum

We are going to get a stimulus bill. All of those business owners are demanding it and the Republicans cannot turn their back on them. Covid is now causing about 3,000 deaths per day which is 5 to 6 times worse than a month ago. The economy will not pick up until the vaccine is out and available. Like the soldiers at the end of the war, people are going to lay low to avoid getting Covid right before they can be vaccinated. Expect many more months of bad economic news. Fairly soon the general public will start to realize that the debt can never be paid back and is at bankruptcy levels. Another trillion might do it but even if things pick up in about 4 months we are still going to have a lot of deficit spending and other countries are already avoiding buying US debt. The 10 year interest rate is rising and the Fed can't let it get too high so expect the dollar to lose value. The dollar already buys less than .9 Swiss Francs. The dollar to Swiss Franc was 1 to 1 not too long ago. You should be buying gold and possibly some bitcoin.

Sechel
Sechel

Pelosi clearly was over-confident going into the 2020 election and decided she'd get a better deal after November 3rd and that reality proved false. McConnell believes it helps his members to not agree to a big deal with Pelosi now. Good for his party, not necessarily good for the country but like Pelosi being an effective House leader McConnell has served Senate Republicans well. Now if only these two could work for the benefit of the country

Eddie_T
Eddie_T

Saw this graphic while reading John Mauldin’s blog of several day’s back, comparing COVID stimulus by various countries...hope it’s okay to post this...and a link.

Skiddnee
Skiddnee

Our tax $s provide even the lowest paid of the 535 members of Congress $174k yr/12= $14,500 a month, they're given a congressional allowance for expenses, We cover 75% of their healthcare, & provide a cushy retirement. None of these things were interrupted or even paused during this crisis. They passed a $2.2 trillion relief bill of which the People got a whole $1200pp IRS reported having sent $4b into People's accounts. SBA allowed large corporations to apply for & suck up $1.8t meant for Mom&Pop's many of whom had to shut down permanently for it.
We the People have basically been out of work since March. Aside from bonused unemployment, for those who qualified, the People were given a whole $1200 in May, already 2mns behind, or later, if at all. It's been 8 months since then. 8x30=240 days $1200/240=$5 a day & dwindling.
They have the audacity to have screwed up the 1st relief bill for lack of oversight & consequence, then spend the next 6mons, w/o worry on their next meal, arguing & being stingy w Our $ while the virus runs amok & will reach 300k by Christmas, charity food lines get longer, & 1/3 of the population falls further into mounting crushing debt, bad credit & possible homelessness. Congresspeople & Senators should understand what going hungry really feels like so they'll STFU & do their damn job.
McConnell has been holding this country hostage for over a decade now & he needs to stop being stingy w Our tax $s &
Give Us back Our money.

Working Stiff
Working Stiff

Another $1200 stimulus check should only be given to those that get vaccinated.


Global Economics

FEATURED
COMMUNITY