On October 7th, President Trump tweeted, “I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business”.
To be fair to the President, at the time, Speaker Nancy Pelosi was pushing a larger $2.2 trillion relief bill which would also provide controversial relief to state and local governments, in addition to providing stimulus and outlining a national testing strategy. And Senate Republicans, whom President Trump would have to rely upon to pass any relief package, voiced their concerns of and objections to a new stimulus package. Senator Pat Toomey (R-PA) said to Politico, “It would divide Republicans if it’s anything like the kind of contours we hear about.” Senator Ron Johnson (R-WI) simply said that even a $1.8 trillion package would be “too high.”
Almost eight hours after he apparently walked away from the negotiation table, however, President Trump appeared to reverse course, tweeting, “If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now. Are you listening Nancy?” Senate Majority Leader, Mitch McConnell reacted less than enthusiastically to the news, telling reporters, “He’s talking about a much larger amount than I can sell to my members.”
Republicans do have a reason to worry about voting for a $1.8 trillion or $2.2 trillion stimulus. After all, they were the party that promised to restrain government spending as recently as 2016. However, it is unwise for the “party of fiscal conservatism” to outright reject a stimulus package negotiated between the Democrats and the Trump administration.
Voting for stimulus is a winning electoral strategy. An October Pew Research poll found that 79% of voters are concerned about the economy and 62% are concerned about the coronavirus outbreak. With the National Conference of State Legislatures reporting that, as of September, the national unemployment rate was 7.9% and millions of Americans relying upon food stamps, negotiating in good faith to provide needed relief could put Republicans in a better electoral position with many voters who elected President Trump to office in 2016. In fact, according to a CNBC/Change Research poll, as many as two-thirds of voters want the Senate to focus on passing more coronavirus aid than confirming Judge Amy Coney Barrett. On an issue that matters to voters on both sides of the political spectrum, it would serve Republicans’ best electoral interests to at least show willingness to bargain in good faith.
Some principled conservatives have legitimate reservations about the injection of more government funds into the economy, arguing that such actions might incentivize irresponsible behavior, like some firms using Troubled Asset Relief Program (TARP) funds to provide “TARP bonuses”. However, unlike the circumstances surrounding the automobile bailout and the Troubled Asset Relief Program (TARP) in 2008, it is important to remember that COVID-19, at least from the perspective of the American people, was unforeseen and unexpected. Additionally, state and local lockdowns responding to the pandemic have likely contributed to the slowdown of one of the greatest economic periods in America’s history. In other words, government intervention likely created the negative externality effects we see today. Americans should not be forced to effectively “foot the bill” for externalities created by shutdowns that were recently even discouraged by the World Health Organization.
Furthermore, the long-term effects of not approving further stimulus bills would be devastating to the economy. In August, the Peterson Institute for International Economics estimated that a failure to pass further coronavirus stimulus would lead to an estimated $1 trillion loss in household income and a GDP loss of up to $940 billion. Additionally, the Federal Reserve believes that a lack of further stimulus would disproportionately hurt the most vulnerable Americans. In a recent speech to the National Association of Business Economics, Federal Reserve Chairman, Jerome Powell said, ““Too little support would lead to a weak recovery, creating unnecessary hardship for households and businesses… 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.”
If the Republican Party does truly wish to shift towards a more populist, America-first agenda, as well as better securing its electoral gains, it should consider negotiating with Speaker Pelosi to pass more stimulus for the American people. The COVID-19 pandemic, not the fault of the American people, will do lasting damage to the American economy. Republicans should step up and put their country, not party, first.
