Are Fiscal Hawks Returning to Roost in Washington?

Are Fiscal Hawks Returning to Roost in Washington?

After years of relative quiet under a Republican president who slashed taxes and ramped up spending, fiscal conservatives are pushing back against a GOP proposal to spend more than $1 trillion to aid individuals and businesses still reeling from the coronavirus pandemic.

Senate Republicans kept the total cost of their recently released coronavirus relief bill close to $1 trillion, offering a sharp contrast to the House Democratic proposal to spend more than $3 trillion. But even the smaller bill is raising hackles among a group of Republicans who seem to be rediscovering their fiscal conservative roots.

“There is significant resistance to yet another trillion dollars,” said Texas Senator Ted Cruz (R-TX) said this week. “The answer to these challenges will not simply be shoveling cash out of Washington.”

Sen. Ben Sasse (R-NE) accused both Democrats and the Trump administration of ignoring the deficit in pursuit of political ends. “The White House is trying to solve bad polling by agreeing to indefensibly bad debt,” Sasse said. “This proposal is not targeted to fix precise problems — it’s about Democrats and Trumpers competing to outspend each other.”

Some investors are expressing concerns, as well. Goldman Sachs warned Tuesday that high levels of debt-fueled spending is generating “debasement fears” about the U.S. dollar.

Tricky politics: The renewed interest in fiscal hawkery “couldn’t be coming at a worse time for the GOP,” says Bloomberg’s Steven Dennis. The push to limit the next stimulus package could backfire by failing to provide the stimulus that many economists say the U.S. desperately needs. Among other things, it promises to sharply reduce the level of federal support provided to millions of unemployed workers – a reduction that is unlikely to help either the economy or Republicans heading into the fall election.

But if the GOP does lose the White House and perhaps even the Senate, the return of fiscal conservativism points toward a role for at least some Republicans to play, Dennis says. The GOP was sometimes described as “the party of no” during the Obama administration in reference to conservative lawmakers’ resistance to federal spending on recession relief and health care, a role that could see a reprise during a potential Biden administration. “That could position Republicans like Cruz, who was the runner-up to Trump in the GOP nomination race four years ago, for 2024 presidential campaigns based on fiscal discipline,” Dennis says.