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“The Senate early Friday passed a budget resolution that kicks off the special reconciliation process Democrats are using to pass a new round of Covid relief. The resolution passed in a 51-50 party-line vote just after 5:30 a.m. ET, with Vice President Kamala Harris casting one of her first two tie-breaking votes to help Democrats approve the measure.” NBC News
The right is critical of the stimulus proposal.
“The President’s $1.9 trillion proposal is clearly too large… It is commonly argued that the risk from spending too little is larger than the risk from spending too much. I agree. But this is not the same as arguing that the size of an additional stimulus package should be untethered to estimates of the underlying economic need…
“A bill that provided adequate funding for vaccine distribution, expanded testing capability, helped to reopen schools, strengthened the social safety net, and provided relief to state and local governments would be reasonable and advisable. It would cost under $750 billion, would be focused on current economic and social needs, and would be better scaled to the size of the output gap.”
Michael R. Strain, National Review
“Commerce Department data show total employee compensation in the second and third quarters of 2020 was down by $215 billion compared with the first quarter. Yet government personal transfers were up $893 billion—four times the compensation lost… real per capita disposable income in 2020 grew 5.5%—the highest growth rate since 1984, the peak of the Reagan recovery. All of this occurred before the $900 billion December stimulus took effect…
“Despite recent shutdowns, vigor is evident across the economy. Housing sales are at a 14-year high, private business investment is up 25%, the IHS manufacturing index hit a six-year high, and agricultural prices are at an eight-year high…
“Last year the average household in the bottom quintile of earners received more than $45,000 of government transfer payments from any combination of more than 100 programs and credits… Unless members of Congress are willing to spend no matter what the consequence, a new stimulus bill now is probably a risk not worth taking.”
Phil Gramm and Mike Solon, Wall Street Journal
“The Biden spending bill is the wrong remedy for an economy that is growing… Democrats compare the current moment to the recession of 2009 and Barack Obama’s $800 billion spending bill. They say this one needs to be larger. But that comparison works in the opposite direction because the current economy is far stronger than it was in February 2009. Then the economy was still in a recession that didn’t end until June 2009. The jobless rate was rising and would peak at 10% in October 2009. Today the economy has been growing for two quarters, including 4% in the fourth quarter…
“Personal savings soared as high as 33.7% in April following the Cares Act and were still a healthy 13.7% in December before Congress passed another $900 billion in Covid aid. This means that, unlike during the 2009 recession, households aren’t weighed down by debt. Personal bankruptcies, home foreclosures and loan delinquencies last fall were the lowest since at least 2003. The mortgage delinquency rate was 0.7% in the third quarter of 2020 compared to 7% in the first quarter of 2009…
“[Furthermore] According to a recent House Budget Committee estimate, $1 trillion from last year’s bills hasn’t been spent—including $59 billion for schools, $239 billion for health care and $452 billion in small business loans. State and local governments added 67,000 jobs in January. They don’t need more federal cash.”
Editorial Board, Wall Street Journal
“The most wasteful and unnecessary provision in the proposed budget is the $350 billion provided for state and local governments… Several states that are clamoring for more money have not only failed to use all funds prior to the Dec. 31, 2020 deadline, they are also in excellent financial condition. For example, the West Virginia state auditor’s office reported $668.5 million in unspent CARES Act funds as of Feb. 1, 2021, or 53.5 percent of the initial $1.25 billion. The state had a $28 million budget surplus in fiscal year 2020…
“In Wisconsin, Gov. Tony Evers (D) claimed in November that the state needed more help, even though there was a $1.2 billion positive balance in the general fund at the end of fiscal year 2020 and tax revenue was up by 50 percent in the first quarter of fiscal year 2021… And California, which was clamoring for more help from the federal government after Gov. Gavin Newsom claimed in May there would be a $54 billion deficit in fiscal year 2020, began fiscal year 2021 with a $15 billion surplus.”
Tom Schatz, The Hill
“Unity, unity and more unity — that’s what Joe Biden said he wanted and would deliver. Now he gets a great chance to prove it. All he has to do is say yes to the 10 Republican senators who came to the White House bearing gifts… That’s not to suggest Biden has to accept all the GOP’s terms. Rather, he should simply signal to Schumer that he wants to negotiate a package that will get at least 10 GOP votes in the Senate, and also some in the House…
“For Biden, a deal with the GOP would provide enormous benefits to his presidency that transcend the economy. He will have shown he meant what he said during the campaign and his inauguration about working for all Americans, including those who voted for Donald Trump…
“Partnering with the GOP would create a broad sense of national goodwill at a time when most Americans are frightened by the overheated and increasingly violent polarization. Moreover, one deal with the GOP would likely lead to others. The impact could be dramatic. In the early days of his administration, before everyone starts drawing battle lines around the 2022 midterms, Biden would have branded his administration as successful in bridging the left-right chasm.”
Michael Goodwin, New York Post
The left supports the stimulus proposal.
The left supports the stimulus proposal.
“The jobs deficit today remains greater than it was at even the worst point of the Great Recession… The headline unemployment rate fell to 6.3 percent, but that’s largely because 400,000 people dropped out of the labor force altogether and so are not officially counted as unemployed…
“Broader measures of underemployment — counting workers who’ve lost hours, given up looking for new jobs or have been misclassified due to data collection issues during the pandemic — suggest a rate nearly double the headline unemployment number. All this indicates that continued government help will be necessary to keep households and businesses afloat.”
Catherine Rampell, Washington Post
“During the Georgia runoff elections for the Senate in January, both Jon Ossoff and the Rev. Raphael Warnock campaigned on a promise to secure large stimulus checks for Americans… Both men were elected, handing Democrats narrow control of both chambers of Congress, along with a Democratic president. The party promised bold action: $2,000 stimulus checks now to help people survive the pandemic and a $15 minimum wage to raise living standards long afterward…
“About two-thirds of voters support not just a one-time $2,000 stimulus check but also monthly $2,000 installments until the pandemic is over—including, incredibly, half of Republicans…
“Democrats have the narrowest of majorities in the Senate and are at risk of losing their control of the House, too. The best way to convince voters it’s worth keeping Democrats in power is for them to address Americans’ economic needs. It can’t be done in a timid, piecemeal, or overly means-tested way. Voters want substantial relief, and Democrats promised to give it to them. Now they just have to follow through.”
Bryce Covert, The Nation
“A party doesn’t get to demand bipartisanship when many of its representatives still won’t acknowledge that Biden won legitimately… Complaints that it would be ‘divisive’ for Democrats to pass a relief bill on a party-line vote, using reconciliation to bypass the filibuster, are also pretty rich coming from a party that did exactly that in 2017, when it enacted a large tax cut — legislation that, unlike pandemic relief, wasn’t a response to any obvious crisis, but was simply part of a conservative wish list. Oh, and that tax cut was rammed through in the face of broad public opposition…
“Only 29 percent of Americans approved of the bill, while 56 percent disapproved. By contrast, the main provisions of the Biden plan are very popular: 79 percent of the public approve of new stimulus checks, and 69 percent approve of both expanded unemployment benefits and aid to state and local governments. So when one party is trying to pursue policies with overwhelming public support while the other offers lock-step opposition, who, exactly, is being divisive?”
Paul Krugman, New York Times
Some skeptics argue that “Bold measures need to be accompanied by careful consideration of risks and how they can be mitigated… First, while there are enormous uncertainties, there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation…
“Second, long before covid-19, the U.S. economy faced fundamental problems of economic injustice, slow growth and inadequate public investment in everything from infrastructure to preschool education to renewable energy. These are at the heart of Biden’s emphasis on building back better. If the stimulus proposal is enacted, Congress will have committed 15 percent of GDP with essentially no increase in public investment to address these challenges. After resolving the coronavirus crisis, how will political and economic space be found for the public investments that should be the nation’s highest priority?”
Lawrence H. Summers, Washington Post
Others posit that “Even if Democrats accidentally do go overboard, the consequences just aren’t worth losing sleep over. Worse comes to worst, inflation might jump a bit higher than Americans would like at some point down the line, and the Federal Reserve may have to raise interest rates a bit to nip it at the cost of some growth. (For now, the central bank’s leaders have said they would welcome somewhat higher inflation, which even before the crisis had been too low for years.) There’s no particular reason to think we’d see an out-of-control spiral of rising prices as Summers seems to fret, which is maybe why he barely tries to explain how it would happen…
“Is it conceivable Biden’s plan is a little oversized, compared to what we strictly need from a macroeconomic perspective? Maybe. But as [Federal Reserve Chair Jerome] Powell has argued, the biggest danger to the economy right now is that we might do too little, not too much. The Biden plan doesn’t take that risk; the GOP plan most certainly does.”
Jordan Weissmann, Slate
Yet others note that “Moderates in both parties have some good ideas: Limiting the direct payments was one; making future stimulus contingent on objective indicators, such as the unemployment rate, could be another. Giving them a genuine hearing — and exhausting the possibilities for compromise, even if it fails — would enhance the legitimacy of a party-line bill when and if that becomes unavoidable. This is the approach that got Mr. Biden elected, because voters, correctly, bet that it would be the healthiest one for the country.”
Editorial Board, Washington Post
