A crisis with 30 million unemployed is no time for free-market purism, which is a sure path to defeat
WASHINGTON, DC – JULY 28: Senate Majority Leader Mitch McConnell (R-KY) arrives at the Senate Republican policy luncheon in the Hart Senate Office Building on Capitol Hill July 28, 2020 in Washington, DC. Treasury Secretary Steven Mnuchin and White House Chief of Staff Mark Meadows continue to lead the Trump administration’s coronavirus economic stimulus negotiations on Capitol Hill. (Photo by Drew Angerer/Getty Images)
It would be a fitting denouement for the Republican Party’s brief flirtation with populism to find itself chained to a bunch of supply-side dinosaurs and thrown out of office in five months by an American people whose demands for relief they failed, out of a sense of free-market purism, to adequately respond to. That’s the direction we’re heading at the moment.
The $600 unemployment insurance boost, which Republicans have claimed creates a situation in which people are being paid more not to work than to work, expires at the end of the month, and the federal eviction moratorium has already expired. There is still a lot of distance between the Republican Senate and the Democratic House—$2 trillion of distance, in fact—as well as substantial division within both Mitch McConnell’s caucus and the administration itself, with Steve Mnuchin favoring another big package without a payroll tax cut, while some of the president’s economic advisors suggested refusing to pass a package without one. McConnell is skeptical something can be passed before the unemployment boost runs out, raising the possibility of, according to one estimate, millions of renters being evicted three months before an election.
In reality, the UI boost is much more important than the eviction moratorium. The latter doesn’t apply to most renters in the United States, only ones in federal programs or who live in units with federally-backed mortgages. But from the standpoint of politics, it doesn’t really matter.
Unless something changes, this is a recipe for the GOP losing both the White House and Senate. Senators Cruz, Paul, and other critics of the Republican bill would do well to consider the fate of small-government priorities in a Biden administration with unified control of Congress. Criticizing a spendthrift government is often good politics for conservatives, but with your own party in the White House and an unemployment rate of 14.8, 13, and 10.9 percent in Michigan, Pennsylvania, and Ohio respectively, it’s a lot less likely to work.
The phrase “zombie Reaganism” gets thrown around a lot these days, but it’s hard to think of a better example than people who reach for a welfare cliff-style argument to argue against remediating hardship caused by the government throwing millions of people out of work. Surely the bigger problem requiring the attention of legislators is the millions of people who can’t go back to work instead of the much smaller number who decline to. As for the UI boost, fix it, if it indeed needs to be fixed, but for heaven’s sake don’t go on television and talk about it.
One also wonders if there is a bit of kayfabe going on here, in stories like this ABC news article from two months ago about a Maryland PPE manufacturer who worries about whether his lazy, chiseling employees are taking advantage of the system:
“It’s been very difficult to get some people to return to work,” Livesay, the vice president of operations for Maryland Thermoform Corporation, told ABC News. “In some cases, depending on what their compensation was, they make more money with unemployment and the federal stipend of $600 a week.”
“There are significant unintended consequences,” Livesay, who is also advising Maryland Gov. Larry Hogan on reopening the state’s economy, said of PPP. “I’m hoping that they give us some extra time to get up to full staff. We’re interviewing three to five people a day for jobs we have open, and we can’t even get them to show up for interviews.”
Legally, if someone is offered reemployment and turns it down, they’re likely to lose their unemployment insurance. But employers like Livesay are still finding it challenging to bring people back to work because of an unexpected decision: Should they rehire workers who stand to make more money on unemployment?
In other words, the problem of people declining to go back to their old jobs doesn’t really exist. It’s a notional ethical quandary for executives like this guy who seems to think, based on everything else he’s said, that the answer is yes, he should rehire them. And if they decline, they are supposed to lose the benefit. If that’s not being enforced, then perhaps it should be, which is a separate problem. Liberals talk about incentive structures, conservatives talk about enforcing the law.
In addition to the worry that we’re being too generous to the millions of people the government has thrown out of work, what else is in the Senate’s next COVID relief package? According to Axios, billions for schools, just in time for them to start teaching the 1619 Project in the fall, and liability protection to immunize corporations from COVID-related lawsuits, and another round of paycheck protection loans.
This is probably not going to be enough for Trump to win the messaging war over COVID relief, especially given the now widely-broadcast fears among some talking-heads that it’s being profligate. The administration needs to telegraph grave concern and readiness to spend to get the country back on track. Republicans should absolutely deny aid to states and localities, and that will not be a hard fight to win: Trump just needs to hammer on the fact that for the last two months, local and state politicians were perfectly happy to let their downtowns burn and let protestors flout quarantine restrictions. Why should the feds bail them out after that? Even better, if the administration suggested a plan to take the opportunity of a lull in commerce to employ people rebuilding our crumbling infrastructure, something McConnell himself is unwilling to consider. If Dems still reject it any that point, it will be clear to everyone that they view COVID relief as a means to direct money to their clients, not real economic recovery.
Running against a do-nothing Congress in the midst of a crisis, as Pat Buchanan pointed out recently, worked very well for Truman. The key is getting Trump on-message about this stuff and getting him to talk about it daily, which is, I think we can say now, by no means a sure thing.
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