As of this moment (late Monday morning), there is still no deal on an economic stimulus/bailout bill in the U.S. Senate. Whenever a deal goes through, the result will be deeply flawed and almost certainly inadequate to the moment. That means that we will go through this again, probably very soon. What should senators who mean to do good (that is, not Republicans) do in the current situation to minimize the damage and maximize the positive impact?
In my new Verdict column today, "What Should Democrats Do About Republicans’ Insistence on Lining Their Own Pockets With the Stimulus Plan?" my advice for Democrats (in the form of more than two thousands words) boils down to this: Fold. Give up. Feel good about trying to make the bill less of a money-grab for Republicans and their backers, but get it over with. Something is better than nothing.
Allow me to elaborate.
The Republicans' response to finding themselves in a situation where they feel pressured to spend a lot of government money is a familiar one: Take as much of it for themselves as they can. New York Times columnist David Leonhardt summarizes just how bad the Senate Republicans' bill is (with his list edited by me):
-- The bill contained no guaranteed aid to state governments.That is pretty bad. No, that is unconscionably bad. And I truly am glad that Democrats were willing and able to make a stink about this and possibly even get a better bill by voting this one down. But now what?
-- Small businesses would be shortchanged.
-- Corporate bailout money is not conditioned on keeping employees employed.
-- Republicans do not provide aid to many nonprofit institutions like nursing homes and group homes for the disabled.
-- There is essentially nothing in the bill to make it possible to hold the November elections.
-- The bill included a $425 billion fund for businesses that Treasury Secretary Steven Mnuchin could dole out to his cronies.
My take on this is that the Republicans have basically revealed their asking price for being willing to do something: roughly a half trillion dollar bribe for themselves and their friends. Democrats responded by saying -- correctly -- that this is not the time for Republicans to be grasping for even more money. Republicans responded: "What? I don't even understand what that means. It's always money-making time!"
And because Republicans have the votes in the Senate -- not sixty votes, but more then forty -- they will have to be bought off. We are now only dickering over the price tag of their shamelessness.
During the debt-ceiling battles of 2011-16, I frequently used the term "hostage-taking" to describe what Republicans were doing. They said again and again that they were willing to hold the global economy hostage in order to get the Obama Administration to agree to cut spending that benefits non-rich people. "Give us what we want, or we'll let the debt ceiling become binding, and then all hell will break loose when the government can't meet its legal obligations."
It is not easy, however, to describe exactly where hard bargaining ends and hostage-taking begins. In the past few days, the Democrats have said in essence that they are willing to allow the economic damage to continue to pile up unless Republicans agree to stop being greedy bastards. The headlines then painted the Democrats as standing in the way of a bill, not mentioning the immoral approach that Republicans have adopted.
Were the Democrats the ones taking hostages this time? No, because they were trying to help the people who were temporarily being hurt by the delay, not making a separate demand for their own benefit or to serve their ideological agenda. Even that is an excruciatingly difficult stand to take -- "Hold tight, everyone! We know you're hurting, but if you can wait a bit longer, things will get much better soon." -- and at some point it becomes necessary to face the inevitability of the deal that Republicans have put in front of Democrats.
The good news, as I noted above, is that there will be more bites at this apple. (Admittedly, that is good news within bad news, because it means that there will be more pain to come for people who cannot take much more pain.) And Democrats will surely have learned some lessons from this public relations mistake so that they handle the next go-rounds better.
So what should the Democrats do now? My suggestion is that they simply let the Republicans enrich themselves -- not even trying to negotiate the price of the bribe downward -- and simply insist on adding the things that the bill needs. Honestly, it is not as if the Republicans have anything against state and local governments, small businesses, or nonprofits (other than Planned Parenthood). Allow Mnuchin to grease his buddies' palms, but also get enough money to the people and institutions that need it.
The one thing that Republicans' business-idolizing belief system would seem to find unacceptable -- even if they were otherwise fully "bribed up" -- is forcing corporations to keep people on their payrolls. Fine. It is actually easy to simply give people income supports in lieu of pay. And if that demand-side spending has the desired impact, businesses will want/need to lay off fewer people anyway.
As I describe at some length in today's Verdict column, we are in the bittersweet position of not having a budget constraint. The markets want a big spending plan. There is no risk of inflation (much less hyperinflation), because the problem right now is massive excess capacity as people and businesses are idled. World War II, which has now moved past 9/11 as the best analogy to the situation we face today, saw us spend and spend and spend until we won -- and that was when the economy actually was operating at (or even above) capacity.
Whatever the debt-to-GDP ratio is at the end of all this does not matter. Japan's ratio is currently about 200 percent, while ours is 80 percent. Even with the denominator falling by possibly one third (let us say to $14 trillion from almost $22 trillion before the pandemic hit), we could increase our current $17 trillion or so in publicly-held debt to $28 trillion and still be within the realm of what a large economy has proved possible. Japan did so without the excuse of COVID-19, and if we go big (and act quickly), then we will prevent our GDP from even dropping that far.
Should it be necessary to give the plutocrats and their Senate water-carriers half a trillion dollars or more? No. Is it necessary? Apparently, yes. But that need not be the end of the story.
First, if there is anything left of democracy after the Trump presidency and this public health crisis, Republicans have shown their true selves in a way that I would not have imagined they would. Every Republican incumbent this Fall will have to explain why they sided with Mnuchin's rich-get-richer scheme rather than the people.
Second, as in all emergencies, we do not forgive bad behavior even as we temporarily tolerate it. One important lesson that Democrats should have learned in recent years is that it looks very bad when -- as in the Great Recession -- corporate evildoers are never prosecuted. There will be a lot of bad behavior to prosecute on the other side of this, and if there is a functioning democracy under the rule of law in that after-time, we will then be able to render justice.
Third, even though the Republicans are trying to make their malfeasance legal (giving Mnuchin not only full legal discretion but 6 months of secrecy in which to exercise it), there are other ways to render justice than in the criminal and civil courts. A wealth tax was already very popular with a large swath of Americans, so we can only imagine what will happen when we say: "This guy's billions were all part of the Great Mnuchin Scrooge McDuck Giveaway of 2020." There is no way to argue that hard work and entrepreneurial genius led to their riches.
Admittedly, the probability is less than 100 percent that we will ever see one or more of those three political and legal upsides come to fruition. The point is, however, that not going all in on stimulus -- even with the Republican Bribe included -- we reduce our chances of saving the economy, preserving democracy, protecting the rule of law, and ultimately imposing accountability.
In movies depicting life in corrupt regimes ("The Lives of Others," "4 Months, 3 Weeks and 2 Days," and "Joanna" being three especially good films from this century), we see people taking it as part of normal day-to-day life that they must pay bribes to people who have been put in positions of power. Sometimes it is offering cigarettes to a bureaucrat, sometimes it is cash to a cop, and sometimes it is giving one's body to a corrupt commissar.
It is distasteful in the extreme, and it is certainly unjust. Obviously, however, our situation could be even worse.
So yes, Democrats should say that they will not try to bargain down the Republicans on the amount of the bribe (and, in fact, Democrats might even be willing to top up the bribe), because there is room for everyone to get what they want. In extreme times, a lot of sh*t goes down. The best path forward is to hope for justice later while pursuing distasteful-but-necessary compromises now.