Washington Waste
With negotiations over a (yes!) fifth COVID rescue package at an impasse, President Trump took action on his own Saturday, signing executive orders on a number of “stimulus” measures. Whether his actions or Congress’ ultimately prevail, expect a pretty hefty price tag — and dubious economic benefits.
For starters, unilateral steps by a president, especially regarding the budget, are often legally and politically fraught. The Constitution gives Congress the power over the purse, and if there isn’t enough political will to act, it can be a stretch for presidents to simply use their “phone and pen” (as President Barack Obama put it when he issued his own EOs) and sidestep lawmakers.
Democrats have already questioned the legality of Trump’s move, and even he says he expects a lawsuit.
Besides that, some of his measures are questionable on the merits: His payrolltax cut, for example, won’t help people out of work, and those with jobs don’t really need it.
Yet the moves might’ve been meant mostly to light a fire under Dems and prompt concessions. As with past packages, Democrats have been slowing any agreement, demanding the moon and figuring they can blame Trump for any stalemate. They’ve resisted, for instance, narrow standalone measures, even those both sides agree on.
They started the bidding for a deal at a ridiculous $3.4 trillion, more than the entire GDP of any other country except Germany, Japan and China. (The GOP plan, at a still-sky-high $1 trillion, was modest in comparison.) And this, after Congress already set aside nearly $3 trillion in the four previous packages.
At week’s end, House Speaker Nancy Pelosi hinted that she might be willing to trim $1 trillion off her ask — but no more than that. (She clearly thinks she’s playing with Monopoly money.)
Then there’s the $600 unemployment bonus approved under the previous rescue plan. Those payments got added to state jobless benefits, leaving many unemployed workers with more money than they made on the job and creating perverse incentives to prolong the high jobless rates. Republicans were willing to agree to $200 or 70 percent of a workers’ lost wages — but Pelosi insisted on leaving it as is: “There’s no in between,” she said last week. Trump would allow for $400 a week.
Dems also pushed for a patently absurd $1 trillion to bail out (mostly Democratic-run) state and local governments that have spent recklessly and were ill-prepared for the pandemic.
Both sides also want to send out $1,200 “stimulus” checks. Yet Americans are clearly socking away money (the savings rate shot up to 25.7 percent in the second quarter), which they’ll spend once the pandemic begins to wane and the economy stabilizes. Of course, federal aid is vital for some things, such as the ailing mass-transit system that powers New York City, the nation’s most critical economy. Even the additional $4 billion the MTA seeks won’t likely be enough to keep it afloat, particularly if ridership remains low.
The best fix for governments and private citizens: an economic resurgence.
In 2001, Uncle Sam actually saw a surplus, thanks to a hot economy. Fact is, no “stimulus” can top beating COVID and letting the economy gear up. Washington should focus on that.