The Fiscal Stimulus Gridlock
The Fiscal Stimulus Gridlock
The best can be said about a possible fiscal stimulus in the face of a renewed Covid-19 surge that is dragging the economy down as many areas shut down in various degrees is that at least a few hours ago the US Senate approved a one week continuing budget resolution to keep the fed govt functioning. In past years govt shutdown was a big deal, but with the current president threatening to seize power in a coup even in the face of the SCOTUS unanimously repudiating his final “Kraken” lawsuit, not to mention the positive drama of the FDA approving the Pfizer vaccine for US use, well, a govt shutdown right now does not look like such a big deal. But, hey, for at least the next week it will not happen, snore.
But we are facing a much more serious matter than the matter of just keeping the US fed govt going now, given that the US economy seems on the verge of possibly going into “double dip,” as cutbacks on economic activity spread as we see the coronavirus surging across the country. The House back in either April or May or thereabouts passed the HEROES bill that was a $3 trillion bill. Mitch McConnell in the Senate said no.
I do not precisely know when, but some months later, in an effort by House Speaker Pelosi, an attempted “compromise” bill was passed in the House of a bit over $2 trillion . This also led to no response from McConnell, and I note that it is not a matter of the Constitution that the Majority Leader of the Senate can single-handedly block for consideration bills passed by the House, much less presidential nominations for the Supreme Court as when in 2016 McConnell blocked even the consideration of Obama’s nomination of the clearly centrist nominee, Merrick Garland.
Which brings us to now, with the economy on the verge of a likely double dip decline, and the debate in Congress now reduced to an approximately $900 million deal, something put together by a bipartisan group of centrists, a deal that by now has dropped the obvious demand of handing out money directly to people as was done earlier this year and so many other nations have done, an approach now backed by the vast majority of professional economists, with Noah Smith recently arguing, arguably a bit over the top, that all of macroeconomics has simply become “Give them money.”
Anyway, it has looked like maybe this reduced proposal, that does not do what Noah and the vast majority of economists say should be done, has bogged down and is not being passed. It seems that the rarely seen bipartisan committee agreed upon a deal that had a temporary cover for McConnell’s demand that businesses not be liable for making their workers sick from Covid-19 and some reduced amount for state and local govts.
But McConnell has rejected this bipartisan proposal, already much reduced from the earlier bills passed by the House. Why he has done so is the question, although he has invoked both wanting a full liabitily protection along with a larger cutback for state and local aid. At this point we must note that much is up in the air. Yes, Joe Biden will indeed be inaugurated as the legal President of the United States at noon on 1/20/21. But many will be contesting that, with half of Trump voters so out of touch with reality to think that Trump will actually be taking that oath of office on Jan. 20.
So obviously McConnell is playing the long game, having just gotten reelected in Kentucky. I think he is planning to replay what he did in 2009 and after, simply oppose anything Biden proposes in an effort to gain against him in 2022 and then oust him in 2024. We have people like Ted Cruz saying the Senate should not approve any cabinet appointee of Biden. Presumably, Biden could imitate Trump and simply appoint his people on an “Acting” basis and proceed to govern.
Frankly the bottom line seems to be that he wants to reprise how he played things after 2008, complete opposition to any admin proposal with the hope that the economy will do badly so the GOP can do well in future elections, with an eye to bringing down the economy as the coronavirus worsens, thus bringing back a hope for Trump or some other Republican in 2024. Given all the immediate noncertainties in the political sphere, how this all turns out remains very much up in the air right now.
Barkley Rosser
I looked at the state and local budget sharing which failed, the 160 billion. In support of th philosophy of proportionality it was tilted all the way to the House/ Vermont ended up with less than a billion. Scrap the philosophy and tilt is slightly back to the Senate, and Vermont gets a billion. The latter approach results in passage but reduces the advantage to large states.
I doubt that passage was the issue. I think that Nancy rejects the revenue sharing concept altogether.
Won’t work. Covid has already peaked and will begin a seasonal decline in January. Business investment looks to explode in the 2nd quarter, with covid being in the rearview mirror.
State and local revenue looks like a pretty fast recovery.
Closer to the point. We will get either revenue sharing or earmark sharing, one or the other, and neither liked by philosophers on either side. Nancy is an earmark specialist, her original proposal was a one thousand page book of earmarks, in one huge bill.
The last time we liquified the earmarks was in the 70s, and it was Reagan the philosopher who cancelled them, I think. The revenue sharing would have the senate and house vote each year on that 150 billion. Nancy does not think she will get repeatability, she fears the appearance of another philosopher.
This is not a partisan issue.
Does the White House the Treasury and the Federal Reserve need Mitch McConnell’s approval to send new money directly into the economy where it is needed? Without issuing that stupid debt!
Sorry Barkley, it would appear your post has been taken over by imbeciles.
EMIke,
[Merry Christmas.]
“imbeciles?”
[MY, MY, but who else?
This time really is different, which is not the same as good. If and when Covid-19 gets out of the way, then financialization will proceed full steam ahead redistributing wealth upwards until the loose threads of structural imbalance get wrapped around the axle of aggregate demand and the bad ol’ good ol’ times come to an end. Whether a long slow strangling demise or jolting hard stop is the only uncertainty, but the rest is inevitable, baked in by decades of magical thinking.
…and oh, happy New Year too.]
Write “disaster relief” and not “stimulus”
Ron,
Can anybody consider a fundamental re-arrangement of the economic and political power in this country — an arrangement that should sell like Democratic hot cakes, across party lines too:
Dennis,
Another post of this thing in a totally inappropriate topic.
Also, the idea that Reps would ever vote to help labor in this country is beyond stupid.
The emerging deal, however, will not include $160 billion in new state and local aid or liability protection for businesses and other organizations — two of the most contentious issues of the talk.
The new round of stimulus checks cost approximately the same as the $160 billion in state and local aid that negotiators have set aside in hopes of reaching a deal by week’s end.
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They gave up on revenue sharing, passing that portion out to individuals. Good?Bad? It is better than anti-revenue sharing. This is all about the next least worse solution to the sharing problem.
… totally inappropriate?
” … financialization will proceed full steam ahead redistributing wealth upwards until the loose threads of structural imbalance get wrapped around the axle of aggregate demand and the bad ol’ good ol’ times come to an end. Whether a long slow strangling demise or jolting hard stop is the only uncertainty, but the rest is inevitable, baked in by decades of magical thinking.”
Nothing 50% union density could not quickly pull inside-out. Poll say 50% want a union — more like 5% in private firms have a union — thanks to voter strangulation over past two generations.
Missing labor unions is the hole at the bottom of the pyramid foundation of almost every American political issue. Mandated cert/recert/decert elections completely change political landscape — including what we talk about here on AB.
As usual, if I do a pro union comment at 3AM in the morning, EMichael will follow up with a denigrating comment by 3:30AM. :-O
I note that “NEROES” was corrected to “HEROES” in my original post on Econospeak a day ago or so.
EM,
None of the comments here as silly as John C. Halasz on Econospeak claiming that Nancy Pelosi is responsible for the failure of a stim bill to pass, not McConnell. Gag.
McConnell is known to fiddle his time away while the nation destructs.
McConnell getting much of what he wants in emerging relief deal
State and local funding was a top priority of Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles Schumer (D-N.Y.).
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Pelosi and Schumer were badly advised about revenue sharing. They missed the whole point, it was not meant to be proportional. No economic adviser sat down and explained it to them.
Dennis Drew,
I am not against you nor do I believe it inappropriate to provoke discussion of alternatives to the status quo political economic establishment. OTOH, despite EMike’s adherence to contemporary liberal dogma, he is not wrong either in his own mind nor in the effective reality under which we are forced to operate. No grand social change happens by legislation alone. The liberal miracle that we know as the New Deal was a brief reactionary movement to block revolutionary socialism during the Great Depression. Despite what Republicans say about him, FDR saved capitalism from its own excesses, for a while at least. History shows us what measures must be taken to get elites to relinquish authority.
So, it takes more than ideas to create change. Yes, unions would certainly be a convenient organizational platform if we had them, but even the labor groups that most enabled themselves via unions in the past are now greatly diminished. Unionizing the public sector did not have the same social consequences. Think about it. With whom are their values aligned, labor or management?
The establishment, economic and political acting together, has removed the threat of labor unions by removing labor as far from themselves as possible. There is not going to be an Uber union, but Amazon is vulnerable as is large retail in general and the fat end of the food service industry. The white collar workers are too close to management to bite that hand.
In any case, it is even harder for weaker disparate unions to move the bar on sector wide labor agreements and binding arbitration. Striking is not the best way to bring about change where workers can be scabbed and strikers cannot pay their essential bills. It does no good to unionize the homeless.