The case for Democrats caving on the terms of a stimulus deal is straightforward: An ounce of recession prevention is worth a pound of cure. EricLevitz writes
America’s vulnerable can’t wait two more months for relief. And half measures today don’t rule out further stimulus tomorrow.
In other words: America is witnessing an exponential growth in infections, which will be difficult (if not impossible) to curb in the absence of aggressive, nationwide containment measures. And such measures are not in the offing. On the contrary, Americans are poised to accelerate the virus’s spread this week, as millions take public transit to large, indoor Thanksgiving celebrations. Last Friday alone, more than 1 million people frequented U.S. airports. If precedent is any guide, the number of daily air passengers will increase markedly in the days ahead.
Weeks ago, when COVID-19 was less prevalent than it is today (let alone than it will be tomorrow), the pandemic’s resurgence was already stymieing the fledgling economic recovery. More Americans applied for unemployment benefits in the second week of November than had the week before. The rate of monthly job growth in the U.S. has fallen continuously since mid-summer.
Photo: ZipRecruiter/Wall Street Journal As of October, America’s poverty rate sat at 11.3 percent, according to a new study, 2 percentage points higher than it had been before Congress allowed the CARES Act’s enhanced unemployment benefits to abruptly expire. As falling temperatures and rising infection rates make life even harder for brick-and-mortar retail firms and restaurants, small business bankruptcies and job losses are likely to surge above their already elevated levels. Absent further government aid, this will leave many Americans without the means to keep their families housed and well-fed during a cold and plague-riddled winter. As the ranks of the dispossessed expand, their acute suffering could trickle up. Many sectors of the U.S. economy are invulnerable to the direct effects of the pandemic. But few are invulnerable to a broad collapse in consumer spending. And a growing number of economists say that there is a real risk America will see such a drop-off in demand this winter — and with it, a double-dip recession. headtopics.com
This is the context for the latest negotiations over another round of stimulus on Capitol Hill. And that context has Joe Biden’s economic advisers imploring Democrats to take a quick deal on COVID relief over a comprehensive one (assuming they can’t get one that is both). Or so a report in the New York Times suggests:
Advisers to President-elect Joseph R. Biden Jr. are planning for the increasing likelihood that the United States economy is headed for a “double-dip” recession early next year. They are pushing for Democratic leaders in Congress to reach a quick stimulus deal with Senate Republicans, even if it falls short of the larger package Democrats have been seeking, according to people familiar with the discussions.
… “There needs to be emergency assistance and aid during the lame-duck session to help families, to help small business,” Jen Psaki, a Biden transition aide, said on Friday before a meeting with Mr. Biden, Vice President-elect Kamala Harris, Ms. Pelosi and Mr. Schumer. “There’s no more room for delay, and we need to move forward as quickly as possible.”
A readout from the meeting said Mr. Biden and the other Democrats “agreed that Congress needed to pass a bipartisan emergency aid package in the lame-duck session” but did not indicate what size package was warranted. Shortly after that story was published, Biden’s team officially disavowed any intention of nudging his party to pare back its ambitions for the sake of a rapid deal. headtopics.com
Still, if Biden were indeed lobbying for a quick compromise behind the scenes, he would have every reason to deny that in public. Generally speaking, informing your adversaries that you are desperate for a deal — and prepared to cave on some of your top demands in the interest of securing one — is not a wise approach to negotiation. Nevertheless, Democrats should be prepared to accept a stimulus deal that’s closer to McConnell’s $500 billion offer than their own $2.4 trillion one during the lame duck session.
The case for caving is straightforward: An ounce of recession prevention is worth a pound of cure. If America enters a recessionary spiral — with job losses leading to lower consumer spending, leading to more job losses — the fiscal cost of helping every constituency that Democrats wish to aid will rise substantially. Fiscal aid to states and cities is vital, and Republicans have, to this point, been offering little to nothing on that score. But the longer Democrats hold out for better terms on such aid, the larger the municipal budget holes are going to get. Meanwhile, even if one believes that fears of a recession are overblown, there is no question that millions of individual Americans need financial help now. It does not take long for homelessness and hunger to burden a child with irreversible traumas, or for the stress of sudden economic dislocation to exhaust a desperate person’s will to live. According to the CDC, 11 percent of U.S. adults have “seriously considered” suicide in the last 30 days; in 2018, that figure was just 4.3 percent. Among Americans between the ages of 18 and 24, 25.5 percent have recently contemplated ending their lives.
McConnell’s $500 billion package is grossly inadequate. Its exclusion of any fiscal aid to states does not merely contradict House Democrats’ wishes, but the advice of staunchly conservative economists like Glenn Hubbard and Douglas Holtz-Eakin, and the stated preferences of some Senate Republicans. And yet, as Slate’s Jordan Weissmann noted Monday, with a small increase in the size of McConnell’s bill, and a few changes to the composition of its spending, Democrats could do an awful lot of good, even while meeting the Senate GOP far more than halfway.
To be sure, one could look at all the grim statistics I’ve cited above and conclude that over two weeks from now, Republicans will be desperate for a deal. Many deep-red areas are seeing COVID overwhelm their hospital systems. Small business owners — a core GOP constituency — are starving for federal help. Mitch McConnell’s Kentucky has seen a sharper rise in unemployment over the past two months than any state in the union. The Democratic Party’s $2 trillion plan is popular, and filled with line items that boast bipartisan support. So there is a case for standing firm in hopes of calling McConnell’s bluff. headtopics.com
But no one ever went broke overestimating the Republican Party’s callous indifference to the well-being of its constituents. And if McConnell does not fold, the consequences for America’s economy and public health could be dire (the less support Congress provides to states and small businesses, the more politically difficult it will be for mayors and governors to enact responsible public-health measures).
In all likelihood, there is only way for Democrats to pass the kind of stimulus that Chuck Schumer and Nancy Pelosi have been insisting upon: The party needs to sweep the Georgia Senate runoffs and secure full control of Congress. If that happens, a lame-duck stimulus compromise should be no obstacle to a second, larger, climate-focused stimulus along the lines of Biden’s campaign plan. Conversely, if Democrats fail to secure Senate control, their bargaining position come next February is likely to be weaker than it is now. The need for aid will be so profound by that point, it will be immensely difficult for Nancy Pelosi to turn down a deal like McConnell’s current offer, especially since (1) her majority will be smaller next year, and (2) small business lobbies in every congressional district will be clamoring for more federal help, and (3) President Biden will be desperate to avoid a recession during his presidential honeymoon.
Congress has few days left on its legislative calendar, and much of its limited time will be consumed by wrangling over annual spending bills, which must be passed by December 11 in order to avert a government shutdown. Given this reality, and the Republican Party’s penchant for putting the sabotage of Democratic presidents above the well-being of its own voters, it’s possible that there is no half loaf for Pelosi to accept on stimulus.Read more: New York Magazine »
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EricLevitz The bills need regular order & to be brought to the floor for debate. No one knows really what is in them. Blanket liability protections? No OSHA standards? Who knows? Blank checks to biz are anti labor. Imagine Tyson not being held accountable? And trump won’t sign anything. EricLevitz Nope. Please stop pushing nonsense. If the Senate wanted to pass a stimulus bill, they could do it without Democratic votes and force the house to take it up. It’s wholly ridiculous to suggest it is the Dems who are being difficult now.
EricLevitz You can make all the arguments in the world, but you (and the rest of us) do not have all the information. I won't go so far as to say I trust Pelosi, but I think she is the closest thing we have to someone to trust, who actually knows the secrets. EricLevitz ...but the GOP shouldn't? Come on.
EricLevitz Of course, you could make this EXACT same case for the GOP. EricLevitz McConnell won't pass anything that doesn't indemnify corporations from liability for unsafe working conditions.