President Trump just announced an end to all negotiations with Democrats over another stimulus package, insisting that he and Congress will enact a big one “immediately after I win.”
One person who does not agree with Trump: Federal Reserve Chair Jerome H. Powell.
Powell was an unusual appointment for Trump, since somehow the president’s aides prevailed upon him to appoint someone sane and qualified to an important position. And unlike some previous Fed chairs (most notably Alan Greenspan), Powell does not bother communicating with cryptic pronouncements; to at least some degree, he’s forthright about the present and the future.
And for a leader of the central bank, the plea for more stimulus spending Powell just delivered is about as subtle as a kick in the shins:
Federal Reserve Chair Jerome H. Powell warned on Tuesday of ongoing risks to the economy and the consequences of insufficient support from policymakers, offering a sharp reminder that the economic recovery remains fragile and has a long way to go.Speaking at the annual meeting of the National Association for Business Economics, Powell emphasized that a rise in coronavirus cases could weigh on economic activity. Public health officials have warned about an uptick of cases during the upcoming flu season this winter. [...]“Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses,” Powell said. “Over time, household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy, and holding back wage growth. By contrast, the risks of overdoing it seem, for now, to be smaller. Even if policy actions ultimately prove to be greater than needed, they will not go to waste.”
As the de facto deadline for more stimulus spending — Election Day — approaches, this is a bracing message. Powell is reminding us that despite insincere Republican deficit scoldery, we have almost nothing to lose by pouring more money into the economy, and a great deal to gain.
That’s particularly true given the fact that the $4 trillion the government has already spent was insufficient to the task. As a team of business journalists from The Post recently described it:
By failing to focus on containing the virus and the particular harms of the pandemic, the relief packages distributed money to those with little need for it while allowing the illness, which is now more widespread than when the bills passed, to outstrip the aid.
That’s not to say the stimulus already passed hasn’t done a tremendous amount of good, for all its shortcomings. But now we’re at a moment of peril, when enhanced unemployment benefits have expired, small businesses worry their Paycheck Protection Program loans won’t be forgiven, and we face the potential of a wave of evictions.
From the beginning of the crisis, a politically bizarre situation characterized negotiations over the stimulus, with Democrats demanding more help to shore up the economy and Republicans seeking less, despite the fact that every additional dollar we spend makes it more likely that Trump will get reelected.
That is still the case today. Senate Majority Leader Mitch McConnell (R-Ky.) seems completely indifferent to whether there’s a stimulus bill or not; he may have decided that Trump is going to lose anyway, so he wants to make life as difficult as possible for President Biden, and too much economic recovery would hamper that effort.
So the negotiations had been taking place between House Speaker Nancy Pelosi (D-Calif.) and Treasury Secretary Steven Mnuchin, and even so they were at an impasse. The House passed yet another stimulus bill last week; Republicans object that it gives too much help to state and local governments.
And Trump? Officially, he supported more stimulus, until out of nowhere he put the kibosh on the negotiations. But the truth is that it’s safe to say he had few strong opinions about it one way or another.
And now it’s clearer than ever that Trump has lost whatever concern he may previously have had for the substance of the issue. With four weeks until the election, all that matters to him now is public appearances and photo ops. More to the point, what matters is PR centered on him as an individual, a heroic leader, the embodiment of strength and majesty and awesomeness (or so he wants people to believe). He could hold a signing event for a stimulus bill, but the benefits would take some time to become visible as the money was distributed. So he doesn’t really care.
The same is true on almost any issue. So rather than, say, improving his administration’s management of the coronavirus pandemic (a crazy idea, I know), he stages a series of photo ops to show him beating the virus and returning to “work,” which, if it’s anything like the work he was doing while at Walter Reed National Military Medical Center, will consist of things like signing his name to blank pieces of paper for the cameras.
In other words, real policymaking is essentially over for him. And if he should lose the election on Nov. 3, there’s no way Republicans in a lame-duck Congress would pass a stimulus bill, since it would help the economy improve under Joe Biden.
So we may have to wait until January — by which time, more damage will have been done.
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