Democrats are getting Chuck GrassleyedBreaking News
tags: Economic Policy, Legislation, COVID-19, stimulus, US Senate
The country is in dire straits, with the pandemic continuing to rage and the economy stalling out — so you'll never guess what moderate Senate Democrats are doing. That's right: dithering. They are proposing to help Senate Republicans cut away at President Biden's pandemic relief package in return for bipartisan support that will not materialize.
What Democrats are falling for is exactly the same routine that Sen. Chuck Grassley (R-Iowa) pulled during the negotiation of ObamaCare a decade ago, when he dragged out negotiations for months and demanded many compromises to make the bill worse, only to vote against it in the end. Trying to appease the right is bad policy and worse politics. The cult of bipartisanship will destroy Biden's presidency if it can't be overcome.
Let me first address the substance of their worries. A bipartisan group of 16 senators, eight Republicans and eight Democrats, pressed Biden adviser Brian Deese on a video call to slice down the size of the pandemic rescue package. They fretted that $1,400 checks aren't means-tested enough (somehow they never mention that they're already heavily means-tested), and worried that states and schools might be getting too much money. How "did the administration come up with $1.9 trillion dollars required?" wondered Susan Collins (R-Maine). Angus King (I-Maine.) echoed the complaint: "Part of what we’re asking for is more data — where did you get the number?" He went on to fret about the deficit: "Every dollar that we’re talking about here is being borrowed from our grandchildren. We have a responsibility to be stewards."
On the merits, this is profoundly idiotic. There isn't some overall estimate of why the package needs to be this size because it's just something Biden's team slapped together to deal with the immediate emergency. Every item in the package is vitally needed. More importantly, the negative consequences of going too small here are much, much larger than going too big. In the immediate future, what, are we to worry that Americans will be vaccinated too quickly? And once the pandemic has passed, the last 12 years of economic history have taught us that undershooting is by far the bigger risk.
This lesson is thanks to the disastrous negotiations around the Recovery Act in early 2009, when the economy was collapsing thanks to the financial crisis, and Democrats made exactly this mistake in exactly the same way. At the time Obama's economic adviser Christy Romer estimated the economy would need perhaps $1.8 trillion to recover, only for Larry Summers and Rahm Emanuel to argue that number must be cut down based on nothing but their gut-check guesses about what could be got through Congress. Then when they presented the bill, moderate senators naturally lopped off yet more tens of billions so they could prove their "moderate" bona fides.
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