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 the 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 (R-Ky.).
However, the deal would include stimulus checks to individuals, which earlier iterations did not. But Politico reports that the checks will be far smaller than the $1,200 payments that Congress passed as part of its big package last spring, probably about $600.
Meanwhile, according to the sources, the emerging deal will also include an extension of supplemental unemployment insurance. But HuffPost reports that it will be only $300 weekly, half of the amount in the last round, and it’s unclear for how long.
The total size of the new package — which is being negotiated by the offices of House Speaker Nancy Pelosi (D-Calif.), Minority Leader Kevin McCarthy (R-Calif.), McConnell and Minority Leader Charles E. Schumer (D-N.Y.) — 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.
Crippling the Biden presidency with austerity
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 probably isn’t nearly enough. As numerous analyses have found — see this one from the Economic Policy Institute or another one from two economists sponsored by the Groundwork Collaborative — we probably need at least $2 trillion in new spending on top of this package 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 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.
The ‘blue state bailout’ pathology
In reality, of course, numerous red states are also facing serious fiscal shortfalls, which might 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.