Congress Nears Stimulus Deal; Is It A Preview Of A New Normal?

For The Washington Post

Congressional negotiators are closing in on a deal for an economic rescue package that would total around $900 billion. That’s good news, except for one thing: What we’re seeing in these talks already demonstrates what things are going to look like next year.

And the emerging picture isn’t pretty.

Get ready for a grueling new normal. Starting early next year, we will repeatedly have to squeeze whatever drops of economic assistance and stimulus spending can be wrung out of congressional Republicans.

The amounts that are extracted from Republicans — if that even happens — will be far too paltry to address the economic carnage and misery we may well see going forward, on many levels.

Which is exactly how Republicans will want it to be.

Several sources familiar with the negotiations confirm that the talks are converging on an agreement that would remove two contentious items from the final package: It would not include a liability shield for businesses against lawsuits, which Republicans want and Democrats oppose, because it would leave workers exposed to coronavirus at workplaces with little recourse.

It also would not include badly needed financial aid to state and local governments, which Democrats want. That is opposed by most Republicans, particularly Senate Majority Leader Mitch McConnell.

However, the deal would include stimulus checks to individuals, which earlier iterations did not. And according to the sources, it will also include an extension of supplemental unemployment insurance, though it’s unclear how much or for how long.

All of this confirms a Politico report, which unfortunately notes that the stimulus check will be far smaller than the $1,200 payment that Congress passed as part of its big package last spring. It’s unclear how large the new payment will be.

What’s more, Politico confirms the total size of the new package — which is being negotiated by the offices of House Speaker Nancy Pelosi, Minority Leader Kevin McCarthy, Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer — will be nearly $900 billion.

This is certainly a good thing — the emerging deal is far better than nothing. But what we’re seeing here is a preview of all of the pathologies and malevolent designs that will afflict efforts to secure badly needed additional spending next year.

First, this confirms again that Republicans will try to cripple the Biden presidency by saddling him with the politics of a miserable recovery. Democrats want $2 trillion or more in stimulus spending, but this deal represents the outer limits of what Republicans are willing to do. Many of them would like to do even less.

And it likely isn’t nearly enough. As numerous analyses have found, we probably need two or three trillion in new spending to offset the big drop in demand that has resulted from the pandemic.

“The central problem facing the economy today is too little spending,” concludes a new report from the Roosevelt Institute.

That report notes that the lessons of the Great Recession are that the bigger risks come from too little spending, not too much. Insufficient spending means weak demand, which leads to flatter wages, stubbornly intractable unemployment (including long-term joblessness) and all sorts of associated social problems.

To be sure, an optimistic reading is that, with around $1 trillion in spending — which the current deal is close to producing — if the Biden administration successfully manages the taming of the virus and people snap back to spending again, the economy could rebound.

But if the underlying economic damage done to the economy is serious — and the recent jobs report suggests a whole lot of jobs aren’t coming back — we could see a long, brutal slog of a recovery, similar to the one during the Barack Obama presidency.

That, too, was in no small part the result of deliberate efforts by Republicans to starve the recovery with austerity. What we can be certain of now is that McConnell and Republicans — suddenly rediscovering their fake concerns about deficits and debt, which miraculously went dormant during the Trump presidency — hope to test their ability to duplicate this performance.

Meanwhile, Republicans have delighted in sneering that Democrats who are pushing for aid to state and local governments are demanding “blue state bailouts.”

In reality, of course, numerous red states are also facing serious fiscal shortfalls, which may be why some Republican senators were willing to make a deal last month that did include aid to state and local governments.

But it’s precisely because McConnell and so many other Republican senators oppose this aid that it is being removed from the current package (along with liability protections). The idea that only blue states are in need of aid — and that this is their own fault, when the cause is the pandemic’s drag on sales and income tax revenues everywhere, making this a crushing national disaster — is ugly enough on its own.

But it’s important to realize that GOP opposition to aid to states and local governments may grow even more intense in 2021 - precisely because less spending and big budget cuts and layoffs in states will also prove a drag on the recovery, further damaging the Biden presidency.

In short, what we’re seeing now is a preview of a story that is likely to get much more ugly and miserable next year. Greg Sargent is a Washington Post columnist.