Mnuchin says he’ll give ground on virus testing in stimulus negotiations with Pelosi

US Treasury Secretary Steve Mnuchin walks out of Senate Majority Leader Mitch McConnell’s office at the US Capitol in Washington, DC, on September 30, 2020.

Nicholas Kamm | AFP | Getty Images

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Treasury Secretary Steven Mnuchin said Thursday that the White House won’t let differences over funding targets for Covid-19 testing interrupt stimulus talks with top Democrats.

“That issue is getting overblown,” Mnuchin said. “We’ve agreed to $178 billion overall for health. It’s an extraordinary amount of money. We’d agreed with the Democrats with $75 billion going to testing, contact tracing.”

“What we have been focused on is the language around testing,” he added. “When I speak to Pelosi today, I’m going to tell her that we’re not going to let the testing issue stand in the way. We’ll fundamentally agree with their testing language subject to some minor issues. This issue is being overblown.”

His comments to CNBC’s “Squawk Box” came minutes after the Labor Department’s jobless report added to concerns that the recovery U.S. labor market may be slowing.

The department reported that the number of first-time applicants for state unemployment insurance rose to 898,000 during the week ended Oct. 10. That total was the highest number since Aug. 22.

Still, Mnuchin’s comments clarifying the White House’s thoughts on funding for testing could provide some hope for the talks.

Negotiations between the White House and Congress have been deadlocked for weeks, but the prospects for a deal before the 2020 election appeared to dim on Wednesday after a spokesman for House Speaker Nancy Pelosi highlighted testing as a key difference between the two sides.

“One major area of disagreement continues to be that the White House lacks an understanding of the need for a national strategic testing plan,” spokesman Drew Hammill wrote on Twitter. “The Speaker believes we must reopen our economy & schools safely & soon, & scientists agree we must have a strategic testing plan.”

Pelosi, whose party passed a $2.2 trillion relief bill in the House, has criticized the White House’s latest $1.8 trillion proposal as insufficient.

The comments from the Treasury secretary and the speaker earlier in the week weighed on equities on Wednesday, when the Dow lost 160 points and the S&P 500 shed 0.7%. U.S. stocks appeared set for their third straight day of losses Thursday morning as Dow futures sunk nearly 300 points and S&P 500 contracts lost 1%.

President Donald Trump said he had scrapped stimulus talks earlier this month until after the election, but he later reversed course and called for a big relief package as his Democratic challenger, Joe Biden, extended his lead in national polls.

Meanwhile, the White House and Senate Republicans appear more out of sync over fiscal support. Senate Majority Leader Mitch McConnell, R-Ky., has said he favors a far smaller deal than either the White House or Democrats advocate.