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The vital missing piece of the Democrats’ stimulus bill

If the rule House Democrats followed doesn’t allow enough spending, what use is their rule?

House Speaker Nancy Pelosi at a news conference at the US Capitol on May 27 in Washington, DC.
Drew Angerer/Getty Images

At the end of No Country for Old Men, hitman Anton Chigurh arrives to murder Carla Jean, the wife of his dead nemesis. He offers her one chance to live: He’ll flip a coin, and if she guesses right, he’ll spare her life.

“Call it,” he says.

She refuses.

“Call it,” he says again.

“The coin don’t have no say,” she replies. “It’s just you.”

Which brings me to the House Democrats.

The House Democrats’ $3 trillion HEROES Act has much of what the economy needs. A trillion dollars in aid to state and local governments. Another round of stimulus checks. An expanded SNAP benefit. An extension of expanded unemployment benefits through January 31. But conspicuously absent is the policy that would do the most to guarantee — or at least support — ongoing recovery: automatic stabilizers.

The idea is simple, and backed by an array of economists. We’re in a depression. The support people need should be tied to the economic conditions they face, not arbitrary expiration dates.

Senate Minority Leader Chuck Schumer and Sen. Debbie Stabenow (D-MI) arrive to voice support for the House Democrats’ coronavirus relief package on May 12, 2020.
Tom Williams/CQ-Roll Call, Inc via Getty Images

There are various proposals for how to do it. Rep. Don Beyer’s (D-VA) Worker Relief and Security Act is a good place to start. It groups states into tiers based on their unemployment rates, and ties both extensions and expansions of unemployment insurance to those tiers. The support doesn’t end until the economic emergency ends.

“Peter Drucker wrote years ago that the best leaders make the fewest decisions,” Beyer told me, referencing the famed business author. “Let’s make the decision now and let things play out.”

In the runup to the HEROES Act, House Democrats seemed united around automatic stabilizers. The progressives supported them. But the moderates did, too.

“We’ve been pushing it,” says Rep. Derek Kilmer (D-WA), chair of the New Democrat Coalition, which is both the House Democrats’ largest internal caucus and the one that represents most of its moderates. “We’ve been arguing we should look past the upfront cost. These investments will be made eventually. Let’s get it right the first time, give people certainty, and avoid brinksmanship.”

Surveys showed the idea was popular. Polling by Data for Progress from May found that 73 percent of all voters — including 69 percent of Republicans — would support “a policy that would increase government spending on unemployment benefits whenever the average unemployment rate increases above 5 percent.”

Data for Progress

So what happened?

At a May 14 press conference, House Speaker Nancy Pelosi laid it out. “I’m a big supporter of having stabilizers in the bill,” she said. She blamed their absence on the Congressional Budget Office (CBO), which estimates the costs of legislation, because under CBO’s rules, the likely cost of the stabilizers “counts in the bill today.”

What Pelosi is saying happened is this: House Democrats sent CBO a version of the bill that included automatic stabilizers. CBO estimated how high unemployment would be over the next few years to project how much the automatic stabilizers would cost. I’m told that for the unemployment insurance, CBO’s estimate was in the $1-2 trillion range. When Pelosi saw the price tag, she decided the sticker shock could kill the bill. So she cut the stabilizers.

“If we put every good idea people wanted in the bill, it would be an $8 trillion bill,” a senior House Democratic staffer told me. $3 trillion was simply the biggest bill Pelosi thought could pass. “It’s called political reality,” the staffer said, with some exasperation.

I’m not in a position to argue with Pelosi over how big a bill House Democrats will or will not support. She knows them better than I do. But this is a terrible indictment of House Democrats. They are choosing, in effect, to spend more, and permit far more economic suffering, so they don’t have to look at the entire price tag at once.

This is fiscal irresponsibility masquerading as fiscal responsibility.

The CBO didn’t write this bill. House Democrats did.

We’re used to policy debates over how much the federal government should spend. But that’s not the issue here.

“We couldn’t do [stabilizers], but I do think that everybody should know that the actions taken by Congress are predicated on the needs of the American people,” Pelosi said in that same press conference. “And should there be reason later to do that, we will be there.”

Pelosi, in other words, is saying that House Democrats are committed to providing as much economic support as the country needs, for as long as it needs it. If that’s true, then stabilizers don’t increase the actual amount the federal government will spend. After all, if the economy recovers rapidly, and the money doesn’t need to be spent, the automatic stabilizers cut the spending automatically.

House Democrats are, to paraphrase the old spiritual teaching, mistaking the finger for the moon. The price tag of the bill isn’t what should scare them. The massive economic suffering that price tag reflects is what should scare them. And what it should scare them into doing is insisting on automatic stabilizers.

Large Crowd Comes Out For Community Food Distribution During Coronavirus COVID-19 Outbreak
Volunteer Haylee Edwards distributes food at the Hope Rescue Mission in Reading, Pennsylvania, on April 25, 2020.
Ben Hasty/MediaNews Group/Reading Eagle via Getty Images

“CBO’s initial estimate shows just how deep an economic hole the country will be climbing out of,” says Oregon Sen. Ron Wyden, the ranking Democrat on the Senate Finance Committee. “The score wouldn’t be that high if there wasn’t an unprecedented need.”

Even the most committed budget hawks think it’s shortsighted for Democrats to worry about the price tag rather than the actual economic needs. “I don’t think people should be dissuaded by the cost if it is just capturing the costs that would otherwise be recognized over time,” says Maya MacGuineas, president of the Committee for a Responsible Federal Budget.

Automatic stabilizers are, if anything, cheaper than the alternative. They ensure the money is spent as soon as it’s needed. “The faster you act, the more effective the relief will be at fighting the recession,” says Claudia Sahm, the director of macroeconomic policy at the Washington Center for Equitable Growth.

The political economy of obstruction

There is an alternative to automatic stabilizers. We saw it in 2009 and 2010. It’s brinksmanship and sabotage.

The political economy of this moment is distinct. Republicans control the White House and the Senate. Though they are ideologically and temperamentally opposed to the kinds of economic support Democrats are seeking, President Trump’s reelection, and McConnell’s Senate majority, depend upon its passage.

That means Democrats have leverage. But if they win in November, that leverage evaporates. Even if Democrats exceed expectations in the polls, they’ll still only control a narrow majority in the Senate — well short of the 60 votes they’d need to get anything big done.

“If we don’t get these triggers now, Republicans will fight us every single day when we try to get a fair shake for workers when we win in November,” says Wyden. “And then they will say it’s the Democrats’ fault.”

Senate Majority Leader Mitch McConnell wearing a face mask
Senate Majority Leader Mitch McConnell might give grudging support to economic stimulus now. He won’t if Democrats win in November.
Drew Angerer/Getty Images

This is, as Wyden says, a movie we have seen before. In 2009, facing the Great Recession, Democrats passed a too-small stimulus, believing they could come back for more if they needed it. They were wrong. The recession was longer and nastier than necessary because Republicans, freed from the responsibilities of governance, fought tooth and nail against further stimulus. The result was economic pain that Republicans weaponized into midterm gains in 2010.

“A lot of newer members aren’t really familiar with a lot of the Republican economic sabotage we’ve seen,” Wyden says with a sigh.

If Democrats win the White House and the Senate in November, but they don’t lock in automatic stabilizers now, this will be the reality of Joe Biden’s presidency: endless, brutal fights to reauthorize support the economy badly needs, against a Republican Party ideologically and strategically opposed to further stimulus. Biden’s agenda will be a dead letter, overwhelmed by the same dynamics that undermined Obama.

House Democratic leaders dismiss this as tomorrow’s problem. McConnell is Senate majority leader now, and he’s not going to accept a $5 trillion bill. He’s refusing to even take up House Democrats’ $3 trillion bill. “What we were trying to do was put a reasonable first step out there,” says the Democratic staffer.

And Democrats do have their demands. In a call with reporters, House Majority Leader Steny Hoyer (D-MA) said the state and local aid and a new round of stimulus checks were the House Democrats’ “red lines.” They will refuse to pass any bill without those policies.

But those are policies that Republicans need as much or more than Democrats do. For Republicans to oppose state and local aid and further stimulus checks is for them to hold a gun to their own heads and threaten to shoot. Those are the programs that pump blood through the economy between now and November, the only programs that give Republicans a bare shot at retaining power.

By contrast, Republicans actually don’t want automatic stabilizers: Many of them believe Trump will lose in November, and the absence of automatic stabilizers will let them mire Biden’s presidency in economic misery. You can’t pass a Green New Deal if you have to spend all your time fighting over unemployment insurance.

What the country needs is stimulus that sustains no matter what happens in November. It would be nice if that wasn’t just the Democrats’ job, but it is. And right now, they’re failing at it.

“We’re all hoping we Democrats take back the Senate and have Joe Biden as president,” says Rep. Beyer. “But what if we don’t? Or what if Biden wins and we don’t take back the Senate? We’re trying to thread a fairly narrow passage.”

Democrats see themselves as the responsible governing party, even though they’re in the minority. But the responsible thing to do, in this case, is insist on the right policy, the popular policy. The right thing to do is refuse to pass a bill without automatic stabilizers, and let Republicans try to explain why unemployment insurance should be untethered from the unemployment rate amid a generational economic crisis.

The CBO has no say here. The House Democrats do.

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