Will a relief bill emerge before the election after all? On Tuesday, Donald Trump walked away from negotiations over Phase 4 COVID-19 funding, claiming that Nancy Pelosi refused to discuss compromise in good faith. The news upended the markets, and frustrated lawmakers on both sides who had hoped to show voters that they could produce more money out of thin air after more than two months of fighting over the pretend cash.

And maybe they can after all. The big news from Trump’s interview with Fox Business Network’s Maria Bartiromo was his refusal to accept a virtual debate with Joe Biden, but this nugget might mean more to voters than another crankfest between septuagenarians. The talks are back on, Trump revealed, and bigger than ever:

Two days after calling off coronavirus relief talks with Democrats, President Trump did a full 180-degree turn and said Thursday that he was now negotiating a “bigger deal” than a narrowly focused package to rescue airlines.

But there was no evidence that the two sides had restarted talks on a broader, trillion-plus-dollar stimulus package, and the timing of Trump’s bullish remarks came on the Fox Business Network just before the markets opened.

“I shut down talks two days ago because they weren’t working out. Now they’re starting to work out,” Trump said in the phone interview with Fox Business host Maria Bartiromo.

“We’re talking about airlines and we’re talking about a bigger deal than airlines,” he said.

So why make the splashy withdrawal from the talks at all? Apparently no one read The Art of the Deal, or forgot entirely how Trump operates. He uses walkouts as bargaining maneuvers; Trump’s done this in the past, most notably in my recollection on immigration reform efforts a couple of years ago. Trump also threatened to do it in budget talks. It didn’t work in either instance, but when he feels his opponents have more to lose than he does, Trump keeps that option at hand.

That doesn’t make it a wise choice, especially so close to the election and in an economic crisis where voters had finally prioritized pocketbook issues. It’s an awfully cavalier look to project at such a time. As Politico’s Michael Grunwald notes, however, both sides had been stuck in irrational behavior at that moment:

While the president’s erratic gyrations have been the hardest to explain, nobody in Washington seems to be making a ton of political sense. Republicans have said they’re concerned another massive short-term stimulus bill would cause the deficit to spiral out of control. But they’ve already signed on to five Covid relief bills worth $3.6 trillion, and their concern about fiscal responsibility, to put it mildly, has not been apparent throughout the Trump era. Democrats say they’re concerned victims of the Covid economy will suffer if they don’t pass another massive stimulus. But if Trump’s reelection would be as calamitous as they say, and the Republican half-loaves as inadequate as they say, it’s not clear why they haven’t just held firm on their original plan, hoping to get a full loaf for those victims and the economy in a Joe Biden administration.

It certainly isn’t unusual to see Washington paralyzed by partisan strife. It’s just odd to see the partisanship so apparently detached from electoral self-interest.

Note well that it’s not yet so irrational that talks have actually ended. However, Grunwald’s correct about the status quo and its irrationality. Senate Republicans abandoned fiscal conservatism and backed trillion-dollar deficits over the last three years, embracing Trump’s populist appeal, especially when they controlled the entire budget process. Why worry about imaginary money at this stage, when it arguably is more needed in a crisis created by government intervention in the markets? And why are Democrats arguing over half a loaf when they control the House and can keep passing bills for the other half to pressure the Senate and set up the election arguments they want?

Or maybe the talks aren’t taking place at all, despite Trump’s comments. Larry Kudlow told Fox News that the administration wants to sign off on stand-alone bills, not a comprehensive Phase 4 package:

“The president believes we should shift into stand-alone bills to get the key points through,” Kudlow said. “The big package had way too much spending for state and local bailouts, ended the Hyde amendment, federal funding for abortion, additional health care for illegal immigrants. There’s a whole bunch of things in there that had nothing to do with COVID or economic recovery.” …

He said they need Congress to pass legislation that extends the Paycheck Protection Program, small business loans and unemployment assistance checks, and helps kids get back to school as safely as possible.

“Those are just vital targeted assistance areas that would strengthen the economy, deal with COVID, and help [unemployed Americans],” Kudlow said.

First off, no one can think Democrats will roll over for a component approach. They ended up losing their leverage in the CARES Act and PPP replenishment votes, and they’re not going to give it up again just to pass Trump’s preferred priorities by themselves. To get anything across the finish line, it will have to include some of the priorities of House Democrats. Insisting on a component approach is only a way to provide a little political cover for the walk-away. If they’re really talking, it’s about Phase 4 in the context of the HEROES Act.

The clock is ticking either way, too. Kudlow takes heart in the fact that today’s initial jobless claims report shows paid claims dropped by just over a million last week, even though the topline on first-time claims only dropped by 9,000 to 840K. He argues that the economy is recovering faster than anyone expected, which is true, but it’s also true that the topline shows the momentum on recovery is flattening out. The churn is just too high for people to feel comfortable with the jobs market and the economy, so the government is still on the Pottery Barn Rule hook: they broke it, they bought it. And that’s especially the case less than four weeks out from a national election.