“Easy Choice” To Abandon Unity

In remarks delivered on Friday, President Biden claimed it was an “easy choice” to pursue a massive stimulus package that’s entirely partisan.

The fact is, the Administration and Congressional Democrats never even seriously attempted to work with Republicans or negotiate legislation that could garner bipartisan support. This is a complete abandonment of the “unity” that President Biden talked about in his inaugural address, and proves that he was never serious about trying to bring the country together. Instead, he and his allies would rather use the pandemic as an opportunity to advance a bill that’s more focused on enacting far-left priorities that radicals in their party have been working to pass for years than actually addressing the challenges that the country faces.

  • The Wall Street Journal (Editorial): “Biden Goes Party Line on $1.9 Trillion”
    • When George W. Bush took office in 2001 with a Senate divided 50-50, he negotiated his first tax cut with Democrats that passed with 58 votes, including 11 Democrats. Democrats won tax-rebate checks and a delay in the tax-rate cuts for their efforts. This made the bill worse as economic policy, but Mr. Bush made the concessions rather than jam his bill through with only GOP votes.That isn’t how President Biden is playing the politics of his $1.9 trillion spending bill in the current 50-50 Senate.
    • Last week he made a show of listening at the White House to 10 GOP Senators who made an initial counteroffer of $618 billion. Mr. Biden and Democrats on Capitol Hill then ignored the GOP and rammed a budget resolution for the $1.9 trillion through the Senate and House on a partisan vote. So much for bipartisanship. The truth is that the Democrats refused even to negotiate. Instead they moved to pass the bill through a process known as budget reconciliation that skirts the 60-vote filibuster rule and requires only 50 votes plus Vice President Kamala Harris to pass.
    • The partisan process shows Democrats are determined to pass nearly all of what Mr. Biden has proposed whether they have GOP votes or not. Any change from the $1.9 trillion will now depend on what Democrats like Mr. Manchin or swing-district House Members are willing to insist on. Keep this in mind when you read that Republicans haven’t been willing to cooperate with Mr. Biden. The President is the one setting a partisan template for governing as he follows Speaker Nancy Pelosi and Majority Leader Chuck Schumer’s lead. This follows the Barack Obama model from 2009, and we know how that turned out in the 2010 midterms.

Even prominent Democrats are cautioning against this approach, not just because of the message it sends but because of the bad policy approach that the $1.9T stimulus package represents. In a column published in The Washington Post last week, economist Lawrence Summers, who served in the Cabinets of both President Clinton and President Obama, explained that the current stimulus package supported by President Biden is too risky and could threaten our nation’s financial stability.

  • The Washington Post (Larry Summers)The Biden stimulus is admirably ambitious. But it brings some big risks, too.
    • President Biden’s $1.9 trillion covid-19 relief plan, added to the stimulus measure Congress passed in December with the incoming administration’s strong support, would represent the boldest act of macroeconomic stabilization policy in U.S. history. Its ambition, its rejection of austerity orthodoxy and its commitment to reducing economic inequality are all admirable. It is imperative that safety-net measures for those suffering and investments in vaccination and testing be undertaken rapidly after the indefensible delays of the last months of the Trump administration. Yet bold measures need to be accompanied by careful consideration of risks and how they can be mitigated. While the arguments for providing relief to those hurt by the economic fallout of the pandemic, investing in controlling the virus and supporting consumer demand are compelling, much of the policy discussion has not fully reckoned with the magnitude of what is being debated.
    • In contrast, recent Congressional Budget Office estimates suggest that with the already enacted $900 billion package — but without any new stimulus — the gap between actual and potential output will decline from about $50 billion a month at the beginning of the year to $20 billion a month at its end. The proposed stimulus will total in the neighborhood of $150 billion a month, even before consideration of any follow-on measures. That is at least three times the size of the output shortfall. In other words, whereas the Obama stimulus was about half as large as the output shortfall, the proposed Biden stimulus is three times as large as the projected shortfall. Relative to the size of the gap being addressed, it is six times as large.
    • First, unemployment is falling, rather than skyrocketing as it was in 2009, and the economy is likely before too long to receive a major boost as covid-19 comes under control. Second, monetary conditions are far looser today than in 2009 given extraordinary Federal Reserve policies, the booming stock and corporate bond markets, and the weakness of the dollar. Third, there is likely to be further strengthening of demand as consumers spend down the approximately $1.5 trillion they accumulated last year as the pandemic curtailed their ability to spend and as promised further fiscal measures are undertaken.
    • Yet as a massive program moves toward enactment and implementation, policymakers need to ensure that they have plans in place to address two possible, and quite serious, problems. 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, with consequences for the value of the dollar and financial stability. This will be manageable if monetary and fiscal policy can be rapidly adjusted to address the problem. But given the commitments the Fed has made, administration officials’ dismissal of even the possibility of inflation, and the difficulties in mobilizing congressional support for tax increases or spending cuts, there is the risk of inflation expectations rising sharply. Stimulus measures of the magnitude contemplated are steps into the unknown. For credibility, they need to be accompanied by clear statements that the consequences will be monitored closely and, if necessary, there will be the capacity and will to adjust policy quickly.
    • The Biden plan is a vital step forward, but we must make sure that it is enacted in a way that neither threatens future inflation and financial stability nor our ability to build back better through public investment.

Rather than working with Republicans to address these legitimate concerns, President Biden go-at-it-alone approach not only walks away from the promises he made on the campaign trail to the American people, but threatens to put in place policies that could weaken our nation.