Trump’s Screechy Swan Song: Lining Up Ugly Ducklings for Biden
Donald Trump’s last-minute call for a $2,000 stimulus check — quickly passed by House Democrats, but blocked by Senate Republicans — speaks volumes about the dysfunctional state of American governance.
First, it was a cynical last-minute ploy, in which Trump once again pretended to play populist hero, after nine months of being AWOL, never having pushed for it before. He played hero just long enough to cost millions of Americans a week of uninsurance benefits before reversing himself and signing the stimulus package with the smaller $600 checks. Second, it was defeated by GOP lockstep intransigence — looking forward to opposing any Joe Biden efforts to restore the economy — despite massive bipartisan support, 87%, according to a Data for Progress poll. Finally, although seemingly substantial, the one-time $2,000 checks pale in comparison to the recurring payments that Democrats like Andrew Yang, Bernie Sanders and Alexandria Ocasio-Cortez have proposed in the past, payments that echo policies adopted by almost all other advanced industrial nations.
In Denmark, for example, the government initially subsidized 75% of employees’ salary costs in order to prevent massive layoffs. Subsidies continue for subsets of the economy most directly impacted by COVID, which reduces economicallydriven resistance to complying with public health measures. This, in turn, helps to account for Europe’s much greater success in recovering from the first wave, avoiding a summer wave completely, and limiting the severity of its ongoing second wave. While U.S. unemployment spiked to more than 14% in April 2020, it actually declined in the 19-member Eurozone, and though it’s since risen, it remains less than 1% above pre-COVID levels.
So, by prioritizing public health over the economy, Europe’s economy has done better, too. Here in the United States, prioritizing the economy has made everything worse. But not for everyone. We’re experiencing a k-shaped recovery: the investor class is recovering nicely, with Wall Street setting new highs and 56 new billionaires since the pandemic began, according to the Institute for Policy Studies, while Main Street continues its precipitous decline. More than 110,000 restaurants — one in six U.S. eateries — have closed permanently or long term, according to the latest survey from the National Restaurant Association.
For more than 100 years, the GOP has presented itself as the party of business, representing Wall Street and Main Street businesses alike. It’s always been a questionable proposition, given the fate of the American family farm as a shining example. But COVID-19 has shattered that illusion once and for all.
The drama began on Tuesday, Dec. 22, 2020, the day after Congress passed a $900 billion stimulus deal. In a speech posted to Twitter, Trump wrote:
“I am asking Congress to amend this bill and increase the ridiculously low $600 to $2,000 ... and to send me a suitable bill or else the next administration will have to deliver a Covid relief package.”
He didn’t explicitly threaten a veto, but that was clearly implied. In addition, the stimulus was attached to a $1.4 trillion omnibus government funding bill, which he had to sign by Dec. 28, 2020, or else the government would shut down.
House Speaker Nancy Pelosi immediately announced her support for the larger checks and introduced a bill authorizing them, seeking to pass it Dec. 24, 2020. But that was blocked by House Minority Leader Kevin McCarthy, so it was introduced and passed through the normal process on the 28, shortly after Trump relented and signed the stimulus and government funding bill. But by then, two federal jobless programs that expanded and extended benefits had expired two days earlier.
The drama then switched to the Senate. A number of GOP senators made noises about supporting Trump’s call, but it couldn’t come to a floor vote without Senate Majority Leader Mitch McConnell’s consent, which clearly wasn’t in the cards. At one point, he said the House bill, “has no realistic path to quickly
pass the Senate,” which is Mitchspeak for saying he would not allow a vote.
McConnell did, however, craft a perfect poison pill alternative: a bill that would increase the stimulus checks to $2,000 (but not increase the additional amount for children or allow additional payments for all dependents), repeal a law protecting internet companies from liability for posts on their websites, and set up an advisory committee to study the integrity and administration of the 2020 general election. These were all things Trump called for when he signed the bill, but Trump asked for them because he wanted all of them, McConnell put them all together because he wanted none. The proof was simple: it never got a vote.
Senate Minority Leader Chuck Schumer called it, “a cynical ploy” when McConnell introduced it on Tuesday, Dec. 29, 2020 and Bernie Sanders underscored its absurdity two days later, when he proposed a floor vote for both McConnell’s bill and the House stimulus — confident that only the later could get the necessary 60 votes. McConnell chose to allow neither.
In justifying their opposition, Senate Republicans made two main arguments. First — as long predicted — they’ve miraculously rediscovered their abhorrence of deficits, after passing Trump’s massive tax cut, and second, they’ve embraced a new horror: socialism for the rich, a charge rolled out because a small fraction of the $2,000 checks would go to people who don’t desperately need it.
“You want to talk about socialism for the rich and it’s not the bill that puts $2,000 into working class hands all over the country. That ain’t socialism for the rich,” Sen. Sanders said in a floor speech.
“I’m delighted that after talking on the floor of the senate for years about socialism for the rich, finally, that has gotten across to my Republican friends,” said Sanders in another floor speech. “Of course, it’s what we do every single day. That is why we have the incredible level of income and wealth inequality that exists in this country because decade after decade, we have used this money to provide massive tax breaks to the rich and provide corporate welfare to corporations who don’t need it. That is socialism to the rich.”
Sanders went on to note that “According to the Tax Policy Center, less than 1% of the benefits of the direct payments — that’s the $2,000 for the working class adults Senator Schumer and I am talking about — less than 1% will go to the top 5% of Americans. Virtually, nothing goes to the very, very rich. An overwhelming majority of those funds go to the middle class, the working class, lowincome people who in the midst of this pandemic are in desperate economic condition.”
In fact, if McConnell and his fellow Republicans were so concerned about socialism for the rich, they could have scrapped the original stimulus bill, which had “a provision that some tax experts call a $200 billion giveaway to the rich,” according to a Dec. 22 New York Times story. In the March 2020 stimulus bill, tens of thousands of businesses received government loans with forgiveness promised if they kept employees on payroll during the pandemic. What’s more, it would be tax-free. But businesses wanted more. “Not only should the forgiven loans not be taxed as income, but the expenditures used with those loans should be tax deductible,” The New York Times wrote.
And that’s exactly what they got. Compared to less than 1% going to the top 5%, in this case, they noted one expert’s estimate that 60% — $120 billion — would flow to the top 1%. So, if socialism for the rich really bothered Republicans, they’d never have passed the new stimulus bill — at least not as written now.
But their professed deficit concerns are no more believable, either.
Back in 2004, Vice President Dick Cheney told then-Treasury Secretary Paul O’Neill that “Reagan proved that deficits don’t matter,” a far more accurate reflection of what Republicans actually believe.
They only care about deficits when it involves spending money on folks who aren’t already comfortable, if not filthy rich. A “War on Poverty”? Horrors, you’ll bankrupt us! Mortgage our children’s future! Trickle-down tax cuts for the rich? No problem! In fact, they’ll pay for themselves. Or so Republicans say.
But both beliefs are false, and new evidence against them appeared shortly before Christmas.
On the tax side, a working paper from the London School of Economics reported on a study of 18 high-income countries over the last five decades “to estimate the causal effect of major tax cuts for the rich on income inequality, economic growth, and unemployment.” It found that “major reforms reducing taxes on the rich lead to higher income inequality as measured by the top 1% share of pretax national income,” but that “such reforms do not have any significant effect on economic growth and unemployment.”
So, not only do tax cuts not pay for themselves, they don’t produce any significant economic growth at all for the whole economy. They produce economic growth for the wealthy, but that just fuels growing income and wealth inequality. It doesn’t trickle down. This was the prime result of the Trump tax cuts: cutting business taxes gave them more money, which Trump promised would raise wages by $4,000. Instead, it went mostly to stock buybacks, driving up stock prices, making the rich even richer.
On the invest in people side, the day before Christmas, the National Bureau Of Economic Research published a working paper, Prep School For Poor Kids: The Long-Run Impacts Of Head Start On Human Capital And Economic Self-Sufficiency. That study found that “Head Start generated large increases in adult human capital and economic self-sufficiency, including a 0.65-year increase in schooling, a 2.7-percent increase in high-school completion, an 8.5-percent increase in college enrollment, and a 39-percent increase in college completion.”
In short, the impacts increased at higher levels of achievement, rather than diminishing, as some might expect.
“These estimates imply sizable, long-term returns to public investments in large-scale preschool programs,” the working paper concluded.
So, as the curtain closes on Trump’s time in office, Republicans are scrambling to change the rules for Biden to play by. But the rules they want him to follow are the ones that drove us off the cliff in the first place.