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The last time a Democratic administration tried to push through a major economic stimulus in a time of crisis, painstaking negotiations with Republicans resulted in a watered-down compromise. Now, President Biden and the Democratic Party are looking to go big — and potentially go it alone — on a massive stimulus package.
Biden has met with Republican senators and stated his desire to get their votes on his $1.9 trillion American Rescue Plan, meant to help battle both the COVID-19 pandemic and the economic damage it’s done to millions of Americans. However, both the new president and Democratic leaders in Congress are moving forward with a process called reconciliation that would allow them to pass much of the relief plan without a single Republican vote.
Both the size of the package and their approach to gaining GOP votes are departures from how the Obama White House and congressional Democrats handled the aftermath of the 2008 financial crisis.
“The way I see it, the biggest risk is not going too big, it’s if we go too small,” Biden said Friday. “We’ve been here before. When this nation hit the Great Recession that Barack and I inherited in 2009, I was asked to lead the effort on the economic recovery act to get it passed. It was a big recovery package, roughly $800 billion. I did everything I could to get it passed, including getting three Republicans to change their votes and vote for it. But it wasn’t enough. It wasn’t quite big enough. It stemmed the crisis, but the recovery could have been faster and even bigger. Today we need an answer that meets the challenge of this crisis, not one that falls short.”
At the start of Obama’s tenure, with the economy in tatters and large majorities in both chambers, Democrats sought Republican votes while attempting to appease the most conservative members of their own caucus. Obama and Biden did get three Republican votes in the Senate but none in the House, and the total cost — roughly $800 billion — was decried as too small by many economists at the time of its passage, leading to the slower recovery the current White House is hoping to avoid this time around. The price tag came down from $920 billion after negotiations between two Republican senators from Maine, Olympia Snowe and Susan Collins, and Sen. Ben Nelson, a moderate Democrat from Nebraska.
“These aren’t easy times, obviously, for America,” said Snowe when explaining her vote. “Given the gravity of the circumstances economically, I thought it was important to be part of a process that could yield a consensus-based solution.”
Despite concessions meant to earn Republican support that weakened the legislation, Obama was still criticized for not following through on his promises of bipartisanship and unity.
“That this is bipartisan legislation is simply not accurate,” Sen. John McCain said at the time. “We want to work with the other side, and this is not the example that I think the American people wanted.”
Sen. Chuck Grassley, R-Iowa, complained that Republicans “didn’t have a chance to negotiate,” while the GOP’s Senate leader, Mitch McConnell, decried the cost, saying, “Yesterday the Senate cast one of the most expensive votes in history. Americans are wondering how we’re going to pay for all this.”
Democrats were also displeased with the final package, with then-Sen. Tom Harkin of Iowa stating, “I am not happy with it. You are not looking at a happy camper. I mean, they took a lot of stuff out of education. They took it out of health, school construction, and they put it more into tax issues.”
The crises are different — a pandemic that has killed nearly 500,000 Americans while upending life for millions more versus a total economic collapse. But while today’s Republicans have also attempted to turn Biden’s calls for bipartisanship and unity against him by criticizing him for going it alone on COVID-19 relief, the White House has taken a broader view of bipartisanship.
White House press secretary Jen Psaki has repeatedly said that the relief legislation is bipartisan because of the wide support it shares in the country, even among Republicans, even if it doesn’t garner any GOP votes. A recent poll from Yahoo News and YouGov showed more Americans supporting than opposing all 20 pieces of Biden’s agenda, including 74 percent support for $2,000 checks and 58 percent support for a minimum wage increase.
“The president ran on unifying the country and putting forward ideas that would help address the crises we’re facing,” Psaki said Friday. “He didn’t run on a promise to unite the Democratic and Republican Party into one party in Washington. This package has the vast majority of support from the American public. This is something that people want. They want to see it passed. They want these checks to get into communities. They want this funding to go to schools. They want more money for vaccine distribution.”
Republicans have also attempted to criticize Biden for both the cost of the package and the process of using reconciliation, citing the deficit and national debt. But their use of reconciliation to pass a massive tax overhaul in 2017 primarily benefiting the wealthy has undercut their argument and earned a dismissal from the president.
“What Republicans have proposed is either to do nothing or not enough,” Biden said Friday. “All of a sudden, many of them have rediscovered fiscal restraint and the concern for the deficits. But don’t kid yourself: This approach will come with a cost. More pain for more people for longer than it has to be.”
The shift in Democratic strategy has a number of roots. There are the presidential campaigns of Sen. Bernie Sanders, the democratic socialist who now chairs the Budget Committee and will be a key figure in reconciliation, along with the rise of Rep. Alexandria Ocasio-Cortez, who has become a prominent figure in Democratic politics and an outspoken advocate for progressive positions.
There were also the actions of former President Donald Trump, who advocated for $2,000 checks and paid little attention to the deficit throughout his term, diminishing arguments from the right about fiscal concerns, in addition to the Federal Reserve changing its policies on inflation and unemployment. Finally, Democrats have dealt with over a decade of McConnell slowing the Senate to a crawl while in the minority and running roughshod while in the majority. Their frustrations finally boiled over when combined with the urgent crisis facing Americans.
This time around, even senators hailing from states Trump won easily aren’t balking at the 10-digit price tag on the legislation. Last week, Sen. Joe Manchin of West Virginia said he wasn’t opposed to the administration’s $1.9 trillion cost but wanted a bipartisan process. Manchin has expressed opposition to some details of the rescue plan, including a $15-per-hour minimum wage and eligibility for $1,400 checks, but he voted to advance the reconciliation process. Trump won the Mountain State by nearly 40 points in 2020.
Sen. Jon Tester of Montana, a state Trump won by 16 points, said earlier this month in a CNN interview, “I don't think $1.9 trillion, even though it is a boatload of money, is too much money. I think now is not the time to starve the economy.”
The Senate is key in these negotiations, as House Speaker Nancy Pelosi holds a narrow Democratic majority.
In addition to moderate Democrats being open to the large number, the White House has publicly rejected an economist who has previously had an outsize influence in the party. Larry Summers was treasury secretary under Bill Clinton and a key adviser for the Obama administration who pushed for the 2009 stimulus to be smaller. Last week, in a Washington Post op-ed, Summers made a similar argument, saying $1.9 trillion was too large and could open the door to a devastating inflationary cycle.
Speaking at the White House podium on Friday, Biden’s economic adviser called Summers’s assertion that Biden’s team wasn’t properly concerned with the potential for inflation “flat-out wrong.”
“I think that the idea now is that we have to hit back hard, we have to hit back strong if we’re going to finally put this dual crisis of the pandemic and the economic pain that it has engendered behind us,” Jared Bernstein said. “We’ve constantly argued that the risks of doing too little are far greater than the risks of going big, providing families and businesses with the relief they need to finally put this virus behind us.”
Sen. Brian Schatz of Hawaii summarized a popular Democratic response to Summers, writing, “Why would we listen to the economist who admits he went too small last time if he’s warning us to go small again? I swear this town is nuts. It’s like people can only remember thirty names and so they just keep going back to the same people.”
Cover thumbnail photo illustration; Yahoo News; photos: AP, Stefani Reynolds/Bloomberg via Getty Images, Getty Images.
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