A massive stimulus package needed to prop up an economy reeling from the coronavirus outbreak is making its way through Congress to President Trump’s desk. I spoke with political columnists Jonathan Chait and Eric Levitz about whether it takes the correct approach, and what it means for both parties.
Ben: The White House and both houses of Congress seem close to aligning on an enormous coronavirus bailout package — possibly over $1 trillion — that would involve cash payments of a thousand dollars or more to every American, as well as considerable help for some troubled industries — though the details aren’t all in yet on which ones. Generally speaking, does the imminent passage of this bill make you feel any better about the federal government’s so-far ineffectual response to the crisis?
Jon: Yes. Whatever initial complacent instinct the GOP had is gone now.
Jon: They were oddly slow to jump aboard the stimulus train but then they did quickly.
Eric: There are still some GOP stragglers. But Donald Trump has finally realized that, for once, his own interests (even sociopathically defined) are aligned with the general interests of the American public. Containing a virus while cushioning the economic consequences is good for the country and for his odds of reelection.
Jon: Or, he realized that denial is not going to work and has to move on to working toward a rebound.
Eric: Same difference.
Ben: It is obviously extremely unlike some if not all of these Republicans to be onboard with this massive injection of cash into the economy. It’s even more unlike them to endorse what is basically a temporary version of universal basic income, the central platform of one Andrew Yang. Crises this big can create new political realities, but does this say anything about whether the GOP might be closer to embracing the kind of big-spending populism that its right-wing brethren in Europe prefer?
Jon: I think there is and will remain a massive split between how the GOP behaves in power and in opposition. “Big government conservatism” was the theory under George W. Bush, too. They just believe in opportunistic, partisan Keynesianism: expansionary policy under GOP presidents, and contractionary policy under Democrats. I don’t see any recent change to that.
Eric: I think the fact that some Republicans got ahead of the House Democratic leadership on cash assistance may reflect the heterodox ideological currents that have emerged over the Trump era. Although they could just as easily be interpreted as products of a mere instinct for political survival. In today’s extraordinary context, the necessity of supplying Americans with an infusion of non-market income is difficult to deny. The alternative is letting millions of workers lose their homes or ability to feed themselves. According to a 2019 Fed report, roughly 40 percent of Americans can’t afford a surprise $400 expense. A sudden and indefinite loss of income would presumably be unaffordable for an even larger share of Americans absent state intervention.
So yeah, I think Jon’s point that the GOP is Keynesian while in power (and remain military Keynesians, even when out of power; the degree to which our giant Pentagon budget is a low-key industrial policy of epic proportions gets habitually elided in the discourse imo) is right. That, plus the bizarre proximate conditions of a pandemic — and the background condition of persistently low inflation and near-zero interest rates — makes direct cash handouts the path of least resistance.
Ben: Even if the GOP is outflanking Democrats on positions that should be in the latter party’s wheelhouse, does it ultimately matter much politically?
Jon: What will matter is the effect of the legislation. Now that creates a huge dilemma for Democrats: The better things are, the worse it is politically for them. But Trump will politically own whatever passes. There is no world where Democrats get the credit for thinking of the bill that saved the economy.
Eric: They aren’t outflanking Democrats per se. I believe the cash assistance idea was reintroduced into the debate by Democratic economist Jason Furman, and Congress members Ro Khana and Tim Ryan. But Nancy Pelosi specifically chose to withhold the idea from the House bill after Furman pitched her caucus on it. That, combined with her insistence on doing paid leave as an employer mandate (rather than through federal financing) — and her subsequent decision to champion a proposal that covered 20 percent of workers unequivocally — has diminished my estimation of her political judgement.
Jon: Yeah, those decisions are puzzling and weak. But I think the problem is that they weaken the ultimate product. And that ultimately benefits them politically. I don’t think surrendering the chance to own the credit is the problem.
Eric: I agree that it probably doesn’t matter in the sense of impacting the party’s vote share come November.
Ben: Just that they’re not being as forceful as they could be?
Jon: They’re not using all the leverage to get the best/most liberal policy. But again, that is a substance problem. If they succeeded, it would just help Trump more. I think I just talked myself into the view that Pelosi is going to get Biden elected by being a bad negotiator.
Ben: But on the whole, you’re saying that there’s not that much of a political risk one way or another for Democrats, since Trump will get the credit for whatever happens. But is there a risk in holding up the bill to make it more generous? To get better sick leave measures in there, or prevent the airline industry from being bailed out with no questions asked, etc., etc.? Republicans seem to have no problems holding the economy hostage when they need to, but it’s not in Democrats’ DNA. Should it be?
Jon: That’s a good question. Imagine a world where Democrats are refusing to accept some provisions, and Trump is hammering them for holding up needed relief. In that world they probably crumble. But could they actually hold out if they wanted to? … I think the answer is yes?
Eric: We need to fund testing ASAP. I think there might be a case for refusing to bail out powerful constituencies (like airlines) until less powerful ones get theirs too (like tipped workers). But at the moment, it’s not clear that Republicans are that opposed to getting relief into the hands of ordinary folks.
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