The president wants the US Congress to enact a massive economic stimulus package worth upwards of $850 billion. Don’t get me wrong. The United States government should step in during economic crises. But that brings me to ask: Is now that time?
For one thing, Donald Trump said during a primetime address last week that the coronavirus outbreak was a public health crisis, “not a financial crisis.” He said: “This is just a temporary moment of time that we will overcome together as a nation.”
For another, government intervention would seem necessary after banks stop lending, firms start shuttering (or filing for bankruptcy), and workers begin losing jobs. The time for action would be after economic indicators tell us to. Yes, Wall Street is in a dark mood, but Wall Street isn’t the real economy. That global equity markets are in a frenzy is insufficient reason to deepen an already historic $22 trillion national debt.
Trump’s stimulus package is similar to the one enacted in the last weeks of George W. Bush’s presidency. By then, the housing and credit crisis was just starting. Even then, however, it was clear the Congress had to act and fast or, as Bush said then, “this sucker could go down.” It didn’t go down, no thanks to the House Republicans. Not one of them voted in support of the bill. The House Democrats were forced to rescue Bush.
This is important to note, because the same House Republicans would later blame Barack Obama for the bank bailout the House Democrats voted for at the request of a Republican president. They did this by blurring the difference between the Troubled Asset Relief Program (its official name) and the $787 billion economic stimulus package that the new president signed into law soon after taking office in 2009.
Instead of uniting to face an emergency together as a nation, the House Republicans, led by John Boehner (who became House speaker after 2010), told Obama he was on his own—whatever happened was his fault. They could have helped put out the fire. Instead, they defamed Obama and the firefighters. This was entirely in keeping with the Republicans’ No. 1 “policy goal” then: ensuring that he was a one-term president.
To that end, the congressional Republicans would not even debate Obama’s proposed American Jobs Act of 2011, which might have ended sooner the suffering wrought by the Great Recession. The Republicans were not going to help Obama win reelection. Sure, Republican voters would suffer, but that was a small price to pay. And anyway, they said they wanted to help, but couldn’t, alas. “We’re broke,” Boehner shrugged.
We weren’t broke. Economists said so. They also said a recession is the best time for governments to cut taxes across the board, but especially for workaday Americans, and borrow money to juice the economy. (This is called Keynesian economics.) After the economy recovers, and after a period of sustained growth, time to raise taxes, especially on the most affluent, to pay down debts incurred during a contraction.
The Republicans have done everything backward—for political reasons.
They allowed massive suffering in an attempt to bring down Obama. By the time Trump was elected, the economy was going gangbusters despite Republican efforts to sabotage it. By 2017, there was was no need for tax cuts. Indeed, it was time for tax increases. No can do, said Trump and his party. They pushed for and got the cuts, thus enriching by orders of magnitude the obscenely rich, stealing local tax dollars from blue states in the process, and sending the national debt to the highest it’s ever been.
Now Trump wants his own stimulus—again for political reasons.
For one thing, there are no economic indicators telling us to act right now. For another, his proposal includes some $50 billion to bail out airlines suffering from lack of global demand during a pandemic. Moreover, a huge chunk of it is in the form of payroll tax cuts. That might be fine otherwise but if job loss is the bar for government intervention, payroll tax cuts won’t prevent it, and they’ll be meaningless after it.
Trump’s gambit seems to be pushing lots of cash into the economy, propping up demand and making Wall Street happy again. Don’t expect the Republicans to balk, though. If they weren’t concerned about debt when they enriched the obscenely rich, they aren’t going to be concerned this time. Debt, after all, is a Democratic problem.
It’s hard to see Trump doing anything in good faith. This new proposal is no exception. If he really wanted to prevent a recession—if he really wanted to aid and comfort workaday Americans rather than special interests close to the Republican Party and his business interests—he would take a look at what Chuck Schumer is doing.
The Senate minority leader is drafting his own $750 billion stimulus package to boost unemployment insurance, provide money for schools and public transportation, expand Medicaid funding, expand more investments in health care, provide loan assistance, and halt evictions and foreclosures, according to reporting by the Post.
To be sure, that’s not enough. The Democrats in both chambers should be demanding what Joe Biden is demanding: The passage of permanent paid sick leave. But at least Schumer’s proposal pushes money downward, where it does the most economic good.
And unlike the Republicans of 2010s, these Democrats really would unite to face an emergency together as a nation—even if a president they impeached got the credit. This isn’t because they don’t play politics. This is because their politics is better.