CT delegation has ideas on deficit from massive coronavirus spending

WASHINGTON — To battle an unprecedented pandemic, Congress has already given the administration more than half the money it appropriated for all government spending in fiscal year 2019.

That enormous spending is expected to deepen the federal deficit to levels not seen since 1945, when the U.S. was emerging from World War II. Meanwhile, Congress is now planning another coronavirus recovery bill that is likely to include billions more in spending.

For some Republicans in Congress, the accumulating red ink is a worrisome trend. But many policy experts say a national emergency is not the time to fret the deficit — dramatic spending now could help the country avoid a more devastating recession than the economic mess now enveloping the nation, the presidents of four policy think tanks wrote. It’s absolutely needed to save lives and save the economy, they say.

“There are questions about the debt that we are incurring and it generally troubles me. But we are in a crisis unprecedented in my lifetime,” said U.S. Sen. Richard Blumenthal, DConn., “The choice is whether to pay now or pay a lot more later, if we fail to save the basic fabric of our communities.”

In less than three months, Congress has appropriated a whopping sum, about $2.5 trillion for coronavirus relief, across four legislative packages. That includes the largest stimulus package in U.S. history.

While Congress usually spends months poring over budget requests, it drafted and approved these coronavirus appropriations in a matter of weeks, or sometimes days.

As a result of the coronavirus spending, the Congressional Budget Office forecasted in April that the federal deficit will widen to $3.7 trillion in 2020 and $2.1 trillion in 2021. That means the 2020 deficit will be about 18 percent of the nation’s gross domestic product, said James Capretta, resident fellow at the American Enterprise Institute.

But with unemployment veering toward Great Depression levels while GDP declines, it’s likely to be a while before Congress gets around to cutting down the national debt. It’s also an election year making tax increases or spending cuts even less likely as politicians seek to win votes.

“This is something that is going to have to be attended to maybe in two years time depending on how we are recovering at that point,” said Capretta. “This is something that needs to be attended to, but it can’t be attended to in the midst of the current crisis.”

Talking of containing the deficit has been scant, for the most part, at the U.S. Capitol as lawmakers scramble to contain the coronavirus and mitigate its economic fall-out. Some lawmakers also believe that concerns about borrowing are unnecessary at a time when interest rates are so low.

But other lawmakers may push to rein in spending a bit in the coronavirus bill.

“You've seen the talk from both sides about acting, but my goal from the beginning of this, given the extraordinary numbers that we're racking up to the national debt, is that we need to be as cautious as we can be," said Senate Majority Leader Mitch McConnell, R-Ky., recently.

Connecticut Democrats have varying ideas about how to tackle the growing deficit. Rep. John Larson, D-1, proposed creating bonds to fund the coronavirus response, similar to the “victory bonds” the U.S. used to pay for its World War II efforts. He pitched the idea to the White House, he said.

“Many Americans feel like they want to do somesaid thing and they want to do something that they know is patriotic,” said Larson in an interview. “With all the needs that we know exist out there, to direct the money into the bonds and then have that money directed to help with the medical emergency and the small business emergency — it just seems to make an awful lot of sense.”

But the U.S. also has other options — like foreign countries — to buy U.S. debt without relying on individual Americans to purchase it.

Rep. Rosa DeLauro, D-3, she wanted to reverse tax cuts for corporations and upper-income individuals made in the 2017 Republican tax package.

“Let’s start first and foremost with a tax bill that has benefited .0001 percent of the people in this country,” said DeLauro. “That we ought to repeal.”

The law actually resulted in a tax cut for most Americans in 2019. It also added to the federal deficit.

SAUL LOEB / AFP via Getty Images U.S. Senate Majority Leader Mitch McConnell (R-Ky.) wears a mask to protect himself and others from COVID-19, known as coronavirus, as he arrives to bring the Senate into session at the U.S. Capitol in Washington on Monday.