His colleague Sen. Rob Portman (R-Ohio) likewise carped that U.S. deficit levels are “frightening.” Sen. James Lankford (R-Okla.) piled on, saying that waiting for interest rates to rise to indicate that debts are unsustainable would be “too late.”
And so Republicans laid the groundwork for blocking the Biden administration’s request for more covid-19 fiscal relief, on the grounds that further spending is not merely unnecessary but also irresponsible. Despite ongoing economic and public health needs.
These foul-weather fiscal hawks neglect to mention, of course, that the GOP’s prized 2017 tax cuts added nearly $2 trillion to deficits — back when the economy was doing okay.
Nor did they note that — again, before the coronavirus pandemic — the Republican-controlled Senate passed and President Donald Trump signed spending bills that added another $2 trillion to deficits. That was on top of what the country had already been expected to borrow over a decade, according to estimates from the Committee for a Responsible Federal Budget.
The nation does indeed face long-term structural budgetary problems. (Exactly when those problems will become painful remains a matter of ongoing debate.) But the time to repair the roof is when the sun is shining, as budget-watchers and economists repeatedly reminded developed countries in the years between the last recession and the current one.
The United States, unlike some other advanced economies, refused to listen. Instead of getting our fiscal house in order, we let the roof rot further.
Now the U.S. economy actually needs more federal spending, and President Biden has proposed a $1.9 trillion plan to provide it. Biden has asked Congress for more money for vaccines; child-care facilities; state and local aid; unemployment benefit extensions; food stamps; and other aid for the needy, hungry and near-homeless.
The proposal is not perfect, to be sure. Some elements could be better targeted (e.g., the proposed phaseout of expanded stimulus checks should be more tailored to assist those who actually need the money). But the greater risk now, as Federal Reserve Chair Jerome H. Powell and others have warned in recent months, is that policymakers will do too little, rather than too much, to prevent permanent damage to the country’s productive capacity.
And in any event, Republicans objecting to Biden’s proposal are not making narrow critiques about technical design. They seem to be writing off the need for more relief entirely, at least now that a Democrat is president.
This is, not coincidentally, almost exactly what they did about a decade ago. After years of spilling red ink on George W. Bush’s tax cuts, Republicans suddenly demanded to turn off fiscal (and monetary) spigots once Barack Obama was elected.
No matter that the economy, then as now, was in the throes of a historic economic catastrophe.
For her part, Yellen chose not to chide Republicans for their hypocrisy (as the more flappable among us might have been tempted to do, especially when they implored her to maintain the 2017 tax cuts). She instead took their newfound concerns about deficits in good faith, and she used her bona fides as an accomplished economist and a “voice of fiscal sanity” to explain why a large, well-designed spending bill now is ultimately, if somewhat counterintuitively, fiscally responsible.
At least in the long run.
“Senator, I agree with you that it’s essential that we put the federal budget on a path that is sustainable,” she told Thune. “But the most important thing, in my view, that we can do today to put us on a path of fiscal sustainability is to defeat the pandemic, to provide relief to American people and then to make long-term investments that will help the economy grow and benefit future generations.”
Failing to do enough to “address the pandemic and the economic damage that it is causing would likely leave us in a worse place fiscally,” Yellen added. The time to rethink the nation’s long-term budgetary problems, she indicated, is when the sun is once again peeking through the clouds.
But for now, Yellen told senators, “the smartest thing we can do is act big.” If Republicans have genuinely relocated their fiscal consciences, they’ll listen.