From Covid relief to big government

Jen Psaki defended the President’s stimulus plan as ‘carefully designed’ and focused on ‘pressing needs’. Picture: AFP

White House press secretary Jen Psaki was precise and pointed Monday as she dismissed efforts by 10 Republican senators to forge a compromise with President Joe Biden on his $US1.9 trillion Covid relief bill.

Following the senators’ meeting with Biden, she defended the President’s stimulus plan as “carefully designed” and focused on “pressing needs”. The President “will not settle for a package that fails to meet the moment,” she concluded.

The administration’s package was neither “carefully designed” nor focused only on “pressing needs”. It’s a mishmash of the good, the bad and the in-between, tilted toward delivering cash to blue states and putting in place permanent big-government programs under the guise of temporary emergency measures.

Take stimulus cheques. Mr Biden would spend $US465bn on $US1400 cheques, Republicans $US220bn on $US1000 cheques. Two-earner couples with lots of children making up to $US300,000 a year can get Biden cheques, as can college students, spouses who are illegal aliens, and other adult dependents excluded from previous rounds of checks.

Republicans would focus on the truly needy, phasing out cheques for individuals making more than $US50,000 a year and couples making more than $US100,000. Their approach recognises that most people added to savings or paid down debt with previous cheques and didn’t stimulate the economy by spending them.

In criticising the GOP approach, an unnamed “senior administration official” told Politico that Republicans will “get no credit” when the larger Democratic cheques pass, leaving them at a political disadvantage. That’s a bread-and-circuses rationale, not sound public policy.

There’s also disagreement over unemployment payments: Biden wants $US350bn, Republicans $US132bn. In December, congress added $US300 a week on top of what each state pays the unemployed through mid-March. Biden would up that to $US400 through September, while Republicans would extend the $US300 weekly top-up through June.

January’s unemployment rate was down to 6.7 per cent and the Congressional Budget Office forecasts that “real GDP expands rapidly” throughout 2021 and returns to its pre-pandemic peak mid-year, as unemployment “gradually declines”. So why give people an incentive not to work by making unemployment more financially attractive?

The biggest difference between the GOP compromise and Biden’s plan is aid to states and cities. The president wants $US350bn, Republicans none. The administration would reward big-spending blue states by pushing much of the aid through Medicaid with a formula that gives states that spend more per capita on the program a bigger slice of the aid.

Even so, Biden’s plan could leave fiscally conservative states — not New York — with piles of surplus cash. Texas Comptroller Glenn Hegar projects only $US6.3bn less revenue available for general-purpose spending in the coming two-year budget than it had for the last biennium. Meanwhile, New York Governor Andrew Cuomo released a budget demanding $US15bn from Washington to cover the next fiscal year’s red ink.

Then there’s the schools. To help them reopen, Biden wants $US130bn for public K-12 and $US35bn for public colleges and historically black colleges and universities, Republicans $US20bn for public K-12 and none for colleges. There are around 98,469 public K-12 schools, 1626 public colleges and 107 historically black colleges and universities. So how did the administration decide each school needed $US1.3m to reopen and each college $US20mn? Perhaps Biden wants big pots of money for teacher unions and college administrators who’ll give him “credit” for his largesse.

Biden also proposes things that cannot be created or ramped up anytime soon, including a new 100,000-man national public-health corps, more community healthcare centres, increased medical services for Native American tribes, and a new grant-and-loan program for entrepreneurs (think: more mini-Solyndras). This isn’t emergency relief. It is using a crisis to permanently expand big government, as is Biden’s $US120bn one-year expansion of the Child Tax Credit. Who thinks Democrats will let that lapse during the 2022 election campaign?

The White House appears to consider bipartisanship overrated, believing that the Obama-Biden administration wasted time negotiating with Republicans in 2009 over stimulus and health care. But in reality, Team Obama-Biden never negotiated on the 2009 stimulus (“I won,” said Barack Obama, justifying his my-way-or-the-highway approach), dismissed bipartisan Senate finance committee healthcare discussions, and then discovered that good 2009 poll numbers on their stimulus turned into lousy 2010 midterm results. If Biden uses reconciliation to push through his partisan Covid relief bill, Democrats could suffer a similar fate in 2022.

Karl Rove twice masterminded the election of George W. Bush.

The Wall Street Journal