Why the second round of stimulus won't be coming anytime soon

Yahoo Finance's Rick Newman joins The Final Round to discuss the latest developments regarding second stimulus talks in Washington and why you shouldn't expect a second stimulus check anytime soon.

Video Transcript

- Welcome back to "The Final Round." Let's talk about one thing that investors are watching very closely going on down in DC. And that is the stimulus talks. Now, negotiations have stalled down there, House Speaker Pelosi saying today that the Democrats and the White House are still miles apart in terms of potentially reaching a deal, or lack thereof. So Rick, what do you think is a realistic timeline, I guess if we can put a timeline on this? And do you think we are going to get some sort of a deal anytime soon?

RICK NEWMAN: You know, the analysis I've been looking at has basically reset expectations to now look toward probably mid-September before there's actually a deal. And I will acknowledge I got this one wrong on this program just a couple of weeks ago. I said I thought we would have a deal by now. And I'm actually surprised we don't, because the August recess was coming up, and that usually serves a really good forcing function.

I guess it turns out Republicans and Democrats are just so far apart on a few key issues that they are not going to get this done anytime soon. And Mark Meadows, the White House chief of staff, who actually is leading the negotiations, he's not even in town this week. He-- I don't know if he's on vacation or out doing something else, but he's not even there. So that suggests the White House does not see any particular urgency to get this done. And I guess both parties think they can afford to wait until mid-September. So I think we still are going to have to get a deal done, but the outlook now is maybe not for another month.

- Yeah, I mean, Rick, what's the calculation on that? I mean, that seems so surprising, largely because we've got an election in November. You would think that either side, if they could come ahead of this, would certainly benefit. They can go to voters and say we passed another bill to provide additional support. You've talked about the Republican side. On the Democratic side, I mean, what's the calculation for the holdup?

RICK NEWMAN: I think neither side yet believes that it is going to get punished by voters for this impasse. And I've talked about this before. So once one side or the other really starts to feel like it's in a losing position in terms of the PR war-- in other words, they're not able to effectively blame the other side and voters are going to punish them, possibly-- that's when this stuff gets done. But you know, maybe it's because we're seeing some improving economic numbers. Trump did sign these four executive actions last week, which will bring at least a little bit of relief, in lieu of Congress doing something big.

And a third factor here is, if they do finally get something done in September, they can make it retroactive. So for example, the extra unemployment aid, the federal unemployment aid, which was $600 a week and is now zero, you know, nobody is getting those checks anymore, but Congress can say we're going to make it retroactive to where we left off at the end of July, and then people will get a lump sum payment. So maybe people who are getting kind of ticked off at Congress, they'll get that check and they'll say, oh, now I feel better. But at this point, I suppose the odds are rising that they're-- I think the odds are still small there will be no deal, but they're probably rising.

- Well, Rick, along those lines, you were mentioning the fact that maybe neither side, at least at this point, is feeling the pressure to kind of cave into what the other wants, but who do you think-- or who has most on the line in this gamble at this point? Do you think it is the Democrats, or do you think it's the Republicans and President Trump?

RICK NEWMAN: I guess it's the Republicans, simply because there's a Republican president. I don't think most voters pay close attention to the inner workings of Congress as it-- even as it negotiates a bill that's this important, but they do look to the White House. And you know, the president, whoever he or she is-- and it's always been a he, obviously, up till now-- he gets credit when things go right and he gets the blame when things go wrong, whether he deserves it or not. So Trump does have a lot riding on this, and we all know how desperately he wants some good economic news within the next two or three months. So I suppose if we really do stretch into September, Trump is going to press a lot harder to get something.

- All right, well it certainly will be interesting to see. But again, for now, looks like the talks are still stalled.