Another round of government aid for the beleaguered airline industry suffered a major setback Tuesday when President Trump told his negotiators to halt all talks with Democratic leadership on a new stimulus package.
It's a blow to U.S. carriers who needed an extension of the CARES Act from March in order to avoid layoffs. Instead, major airlines such as American and United have already started the furlough process, and Southwest Airlines CEO Gary Kelly said he will seek pay cuts from non-union workers and concessions from union employees in order to avoid layoffs in 2021.
Trump's decision came just hours after Federal Reserve Chair Jerome Powell called for greater spending to bolster the economic recovery from the devastating effects of the coronavirus pandemic, according to Bloomberg News Service.
"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," Trump said Tuesday in a tweet.
As is sometimes the case with spending bills, one side or the other tries to include line items that are unrelated to the bill itself, often referred to as 'pork.' Trump apparently feels that way about House Speaker Nancy Pelosi's requests in her negotiations with Treasury Secretary Steve Mnuchin.
"Nancy Pelosi is asking for $2.4 Trillion Dollars to bail out poorly run, high crime, Democrat States, money that is in no way related to COVID-19," Trump said. "We made a very generous offer of $1.6 Trillion Dollars and, as usual, she is not negotiating in good faith."
It is not clear whether Trump meant he would take action to get a bill passed next month after the election if he wins, or in late January after he is inaugurated.
Also not clear is what happens to any stimulus relief package if Democratic contender Joe Biden wins the election on Nov. 3.
Stocks took a huge fall this afternoon when the news broke. At 2:46 p.m., the Dow Jones was up 2,139 points from the opening bell; just 74 minutes later, at the closing bell, stocks made a stunning drop to down 377.88 points.
Trump conferred by telephone with Senate Majority Leader Mitch McConnell and House Republican leader Kevin McCarthy, along with Mnuchin, before his tweets put an end to talks for now.
Pelosi had said this weekend the Democrats wanted specific language from the Trump administration on how to spend new testing and contact tracing money to fight the coronavirus pandemic included in any new bill or extension of the CARES Act stimulus package.
According to The Washington Post, Democrats have pushed for months for a national testing strategy that the administration never produced.
Pelosi was asked on CBS News' "Face the Nation" on Sunday if President Trump's tweet - "WORK TOGETHER AND GET IT DONE" - meant that a deal was imminent, as she had said last week.
"No, it means that we want to see that they will agree on what we need to do to crush the virus so that we can open the economy and open our schools safely," Pelosi said.
In the meantime, airlines began laying off workers last week when the restrictions from the original CARES Act expired, although both United and American said they would reinstate any positions if the new aid package was passed.
Now it remains to be seen what course the carriers plot.
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