By Matt Egan | CNN
If he wants to get reelected, President Donald Trump needs the economic recovery to continue. That’s why his decision to unilaterally abandon talks over a bold stimulus package is so bizarre.
The economy is screaming out for more help. The unemployment rate has never been this high heading into a presidential election. Airlines are cutting tens of thousands of jobs. Restaurants and retailers are going bankrupt. And small businesses are closing for good.
Markets tanked Tuesday after Trump shocked Wall Street by rejecting Democrats’ stimulus offers and halting talks over a major package.
Not only is stimulus needed, it’s very popular with voters, some of whom have recently soured on Trump’s economic track record. Long his signature issue, Trump’s lead over Biden on the economy has vanished in recent polling.
Trump knows all of this. That’s why just last month the president was pushing Republicans in Congress for more, not less, fiscal stimulus.
The risk for Trump is that his sudden reversal could backfire by derailing the fragile recovery. At a minimum, it guarantees a slower, more painful recovery.
“It was an unforced, egregious error that puts the economy at substantial and needless extra risk,” said Larry Summers, former US Treasury Secretary for President Bill Clinton. “The last thing we need to do is cancel our recession insurance at a moment like this.”
Double-dip recession risk is rising
Perhaps that’s why Trump seems to have backtracked a bit. He sent out tweets late Tuesday and early Wednesday that expressed support not for a major stimulus package, but for standalone legislation on airline relief, small business support and stimulus checks.
Still, it’s not clear whether Congress will support one-off measures. And the fact that comprehensive stimulus talks are dead is a negative for the economy.