The stimulus negotiations

A good discussion of the current state of play is here.  The short version is Speaker Pelosi and Treasury Secretary Mnuchin are negotiating over a package of $2 trillion or so, McConnell plans to introduce a very limited $500 billion package that he may or may not actually have votes to pass (he may just be giving his members up for re-election a messaging opportunity), and Trump has declared that he wants Pelosi and Mnuchin to go bigger.

My take is that it is time for Pelosi to call Trump’s bluff.  She should pass a $2 trillion or so package, with or without final sign off from Mnuchin, making a nominal concession or two to Trump, and tell the truth:  “Everyone knows what is going on here.  The Democrats have been trying to get more relief to the American people and the Republicans in the Senate have been obstructing.  President Trump is the leader of the Republican Party.  He says he wants more stimulus.  He needs to show he is a leader and not just a television personality and get this bill through the Senate.”

The only possible downside here is political – passing the bill might benefit Trump and the Republicans.  But the election is the Democrats’ last leverage point until Biden takes office (assuming he does).  That’s a long time to wait, both in terms of individual suffering and aggregate macroeconomic damage.  And if Democrats don’t capture the Senate, there may never be another stimulus bill of any kind.  And it’s not even clear the bill would benefit Trump and the Republicans.  I say do it.

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