Pelosi and Mnuchin: Strange (but Surprisingly Successful) Bedfellows

Prior to coronavirus, few would’ve pegged House Speaker Nancy Pelosi — the stalwart Democrat who has represented California on Capitol Hill since 1987 — and Steven Mnuchin — President Trump’s treasury secretary and a wealthy investor — as effective political partners.

But they have proven to be just that during the pandemic. Perhaps more than any other U.S. policymakers, Pelosi and Mnuchin helped shepherd three major stimulus packages totaling well over $2.2 trillion through a polarized Congress in a bid to prop up America’s withering economy, which most experts say is plunging to depths not seen since the Great Depression.

To recap, the main “phase three” stimulus package — the largest of its kind in U.S. history — included $350 billion in forgivable loans to small businesses and a $500 billion government lending program for larger companies (which also allowed the administration to take equity stakes in airlines that received aid to help compensate taxpayers — a key demand by Mnuchin).

The package also approved $100 billion for hospitals, $150 billion for state and local governments (key Pelosi demands), $290 billion in unemployment benefits and checks of up to $1,200 for individual Americans and $500 per child.

The rescue package came together in lightening speed in late March as legislators on both sides of the aisle and the administration grasped the severity of the fast-moving crisis. Senate Majority Leader Mitch McConnell (R-Ky.) and Senate Minority Leader Chuck Schumer (D-N.Y.) also played key roles in ironing out the final package. Among the hangups were GOP concerns that the unemployment program would give some workers more money than their original salaries (objections that were ultimately overridden) and Democratic concerns about oversight of the corporate lending program (which were addressed in the final bill, although Trump has since tried to dilute that oversight). But arguably, it was Pelosi and Mnuchin who laid much of the groundwork for the $2.2 trillion package.

Even before it was passed, Pelosi said it would not be the last stimulus package and indeed, Congress is now in the process of finalizing a fourth iteration that would replenish the small business loan program, which has already run dry.

Again, Pelosi and Mnuchin seem to recognize that time is of the essence. And it’s not the first time the unlikely duo have overcome political gridlock to move the legislative needle.

“The bond Pelosi and Mnuchin have developed to tackle sensitive, high-profile legislation — requiring a combination of trust, frankness and hardball negotiating — was built before the coronavirus outbreak,” wrote Jeremy Herb, Lauren Fox and Vivian Salama in a March 19 CNN article.

“A senior Treasury official said the President has entrusted Mnuchin with some of the most critical deals of Trump’s presidency — and several had been the product of negotiations with Pelosi. Over the past year, Mnuchin took part in negotiations with Pelosi on several key agreements, including a leading role on last year’s budget deal that raised the debt ceiling,” according to the article, which noted that the two have forged common ground through a pragmatic, “all-business” approach.

But some Republicans are increasingly wary that Mnuchin — who has been Trump’s point man in the stimulus negotiations — is giving away too much to Democrats.

“Top Republicans had steadfastly refused to discuss a deal with Democrats on their demands to couple an infusion for the small-business program — the Paycheck Protection Program — with more money for states, cities and hospitals to combat the virus,” wrote Emily Cochrane and Alan Rappeport in an April 17 article for The New York Times.

“In private conversations, top Republican officials said that Mr. Mnuchin’s concessions during previous negotiations on coronavirus legislation — in particular, an agreement he struck with Speaker Nancy Pelosi to significantly expand federal paid sick leave, and a subsequent deal with Senate Democrats to substantially increase jobless aid — had intensified skepticism about whether he could strike a deal that all Republican senators could support,” Cochrane and Rappeport wrote, noting that Mnuchin is seen by some as “essentially a Democrat.”

To Trump’s credit, however, delegating one primary interlocutor to represent the White House’s position (while largely removing himself from the intricacies) has helped to keep the negotiations focused.

Moreover, pursuing compromise in a time of crisis is a smart strategy that benefits both sides and actually gets things done — a concept Mnuchin clearly understands.

And Republican complaints about Mnuchin not driving a hard-enough bargain overlook the fact that the administration does not hold all the cards.

An April 11 article in Politico Magazine argues that Democrats have yet to use all of their leverage in playing hardball during the talks. “Trump needs another rescue package far more than Democrats do. The economy he loves to brag about has shed more than 16 million jobs,” wrote Michael Grunwald. “Trump doesn’t want to run for reelection during a full-blown depression, so he desperately needs more legislation.”

Grunwald also contends that Pelosi “does not seem eager to use the leverage of Democratic control of the House in any way that could delay emergency help for the free-falling Trump economy,” and that she is willing to do what it takes even if Trump eventually gets credit for resuscitating the economy.

At the same time, Democrats fear being painted as obstructionists and want to protect their own re-election changes, meaning they have just as much at stake in preventing an economic collapse.

That mutual self-preservation will probably push through this latest stimulus package. With a whopping 22 million Americans filing for unemployment in the last four weeks, I suspect Republicans will recognize the urgency of the crisis — especially among battered small businesses — and ultimately go along with the roughly $500 billion blueprint that Mnuchin helped hammer out.

Indeed, at the time of this writing, both sides seemed close to a deal that would provide $300 billion in small business lending. In addition, Democrats appeared set to receive three big asks: $60 billion reserved for small businesses without access to large financial institutions; $75 billion for hospitals; and $25 billion for coronavirus testing (although they failed to secure any new funding for state and local governments).

One of the biggest stumbling blocks has been testing, which the U.S. has struggled to implement — and which experts say is key to eventually reopening the economy. Democrats want a centralized, federal testing system; Republicans want states and the private sector to take charge of testing.

Both approaches have merit. The pandemic has played out very differently state by state, so it makes sense for states to take an individual approach. In addition, the private sector has often proved more efficient in dispersing much-needed tests. At the same time, the pandemic does not recognize borders and the disjointed, at times contradictory response by the Trump administration has caused confusion, unequal access to testing, supply chain problems and a state-by-state scramble for medical supplies.

Moreover, the countries that have had successes tackling the virus also have one thing in common: They employed aggressive, nationwide testing.

Trump, however, insists the country has enough tests. Governors (notably Maryland’s Larry Hogan) disagree. Similarly, in issuing general guidelines for reopening the economy, the president essentially punted responsibility to the states. Critics say this allows Trump to deflect blame if the reopening backfires. Supporters say states should be able to tailor policies based on their individual circumstances.

Meanwhile, protests against stay-at-home orders have broken out in several states. Yet a recent poll by the Pew Research Center showed that two-thirds of Americans are worried that state governments will lift restrictions on public activity too quickly (66%) versus that not happening quickly enough (32%). One reason for the discrepancy is that those protesting the restrictions, largely Republicans, are more concerned about government overreach than about measures such as social distancing or wearing masks, whereas those who support the restrictions aren’t exactly likely to demonstrate among packed crowds — creating the false impression that the protesters represent the majority.

Further complicating matters is the fact that testing is not a cure-all: Other measures such as social distancing will need to remain in place to reopen businesses without triggering another major outbreak.

That means the debate over how to revive American’s economy is far from over. It also means that Pelosi and Mnuchin may be called upon again to continue their unlikely partnership.


Photo: Secretary of the Treasury Steven Mnuchin joins President Donald J. Trump and Vice President Mike Pence as he addresses his remarks on aspects of the stimulus package currently before Congress, during the coronavirus (COVID-19) update briefing Wednesday, March 25, 2020, in the James S. Brady Press Briefing Room of the White House. (Official White House Photo by Tia Dufour)