“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.”
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.
“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.”
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
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. refusing
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.”
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. see themselves
The CBO has no say here. The House Democrats do.