Can Mitch McConnell do the right thing just once?

November 15, 2020

By E.J. Dionne Jr.,

Do we want our economy to recover, or do we want it to stagnate? Do we want suffering on a large scale, or do we want to alleviate pain? Do we want to spend all our time talking about President Trump rage tweeting about an election he lost, or do we want to move forward?

One more thing, directed toward those spinning happy tales about how President-elect Joe Biden should work closely with Republican senators: Are they ready to pressure GOP leaders into helping Biden by giving the economy the boost it needs?

There is a broad consensus among economists and businesspeople that a pandemic-battered economy, kept afloat by large-scale spending earlier in the year, needs another major boost.

But Senate Majority Leader Mitch McConnell (R-Ky.) is unwilling to budge on his original offer of $500 billion even as his Democratic counterparts, House Speaker Nancy Pelosi (Calif.) and Senate Minority Leader Charles E. Schumer (N.Y.), have already slashed their own opening bid by $1.2 trillion. The Democrats’ $2.2 trillion plan is much closer to what the economy needs. And it would be far better to get this done now, before Biden takes office, than to delay action for two months or more.

Yes, the economy is better than it was at the worst moments of the pandemic, but there is nothing healthy about a situation in which 21.2 million Americans are still receiving jobless benefits, covid-19 is resurging to dangerous levels and job creation is slowing. As the Financial Times noted, payrolls remain more than 10 million below their pre-pandemic levels.

I canvassed a group of mainstream economic thinkers I respect and, in some cases, have worked with. Their warnings against inaction should be taken seriously.

“There is a consensus among economists that more fiscal stimulus is needed,” said Isabel V. Sawhill, senior fellow at the Brookings Institution. “The reasons? Monetary policy has run out of gas with interest rates close to zero. State and local governments are on the front lines of the pandemic but their revenues are falling. They must balance their budgets and so will have to cut spending, which will exacerbate any downturn as well as make it much harder for them to fight the virus. They, along with the unemployed, essential workers and low-income families should be a priority.”

Michael R. Strain, director of Economic Policy Studies at the American Enterprise Institute, is a solid conservative. But when I emailed him to ask about the need for more stimulus, he replied quickly: “Yes, for sure.”

His estimate for what should be spent is lower than where I would put it — he said that “$1 trillion is both appropriate to the need and politically feasible” — but double what McConnell is offering.

The goals of new spending, Strain said, should involve “reducing the spread of the virus, safely opening schools, alleviating human suffering and keeping faith with our special obligation to the poor and vulnerable, and preserving the productive capacity of the economy.”

Harry J. Holzer, an economist at Georgetown’s McCourt School of Public Policy, has goals similar to Strain’s. But he argues that closing the “output gap” — the difference between actual and potential gross domestic product — would require a stimulus of between $1 trillion and $2 trillion for 2021, and $2 trillion to $3.5 trillion over the next two years. He adds: “A terrible winter might make us recover more slowly than forecasted.”

And Jacob Leibenluft, a senior fellow at the Center for American Progress, highlighted the social and human damage of just letting things ride. “Absent action,” he said, “we will see not only a drag on the overall economy, but deep, unaddressed pain for millions of families who — even as higher-income families may be largely unaffected — will struggle to afford food, shelter and basic necessities.”

What’s overlooked by the do-little crowd is that relief from previous stimulus is about to expire. “Millions of unemployed workers [are] set to lose all of their unemployment insurance at the end of the year,” Leibenluft noted, “and the eviction moratorium [is] set to end on December 31.”

Politics will offer us many occasions for contention over the next four years. But McConnell has an opportunity before Biden is inaugurated to reciprocate the offers of good will the president-elect has sent his way: by giving ground to Democratic demands that only echo what just about everyone who cares about economic growth thinks must happen.

Will the sentence I just wrote strike many as naive? Yes. In fact, it strikes me as naive. But just once, I would like McConnell and his GOP Senate to surprise us. If we can’t agree on the imperative of getting the country moving again, we won’t ever agree on anything.

Read more: Catherine Rampell: Stop romanticizing divided government. If McConnell is majority leader, there will be no progress. Henry Olsen: Another stimulus package is inevitable. Here’s what it should look like. E.J. Dionne: Of course Republicans are doing this. It’s who they are. Megan McArdle: No stimulus makes no sense Paul Waldman: Mitch McConnell’s Senate might be where the Biden presidency goes to die

Source: WP