Pelosi Says Trump Is ‘Stealing’ Relief Funds

Plus - Do Dems really want Medicare for All?

Pelosi Says Trump Is ‘Stealing’ Relief Funds

House Speaker Nancy Pelosi said the Trump administration’s effort to shift $271 million within the Department of Homeland Security to support activities at the border is a “brazen assault” on the congressional power of the purse.

In a statement Wednesday, Pelosi urged the administration to reconsider its decision to reprogram the funds, which were originally appropriated for Federal Emergency Management Agency relief funds and the Coast Guard.

“Stealing from appropriated funds is always unacceptable, but to pick the pockets of disaster relief funding in order to fund an appalling, inhumane family incarceration plan is staggering,” Pelosi said, adding that “to do so on the eve of hurricane season is stunningly reckless.”

While Pelosi and other Democratic leaders expressed outrage at the Trump administration’s move, the Associated Press noted that “[i]t is not uncommon for unassigned funds to be transferred between agencies under the same department as the fiscal year ends.” Last year, roughly $10 million was shifted from FEMA to other uses, AP said, in a move that drew “major criticism from Democrats.”

Can This Divided Congress Step Up to Fight a Recession?

The Congressional Budget Office projected last week that the deficit for the current fiscal year will rise to $960 billion, or 4.5% of gross domestic product, up from $779 billion (3.9% of GDP) last year. CBO also said that deficits will average $1.2 trillion a year between 2020 and 2029 — and that’s assuming the economy slows but doesn’t fall into a recession over that time.

An economic downturn would drive the deficit even higher. In a note to clients, J.P.Morgan economist Jesse Edgerton says that, based on data since 1985, a mild recession that raises unemployment by 2 percentage points might be expected to raise the deficit by 3.6% of GDP as the result of automatic stabilizers and stimulus costs. That would lift the deficit to about 8% of GDP, which Edgerton notes is “very high by historical standards, although still below the 9.8% peak seen in 2009.”

Running deficits that large, even in response to a recession, would likely meet with some political resistance. “Projections like this would spark debate about the wisdom of providing stimulus, drawing comparisons to the struggles of highly-indebted European nations like Greece and Spain earlier this decade. Some would argue that the United States does not have the ‘fiscal space’ to provide stimulus when deficits and debt are already so high,” Edgerton writes.

But the economist says that those question of fiscal space wouldn’t necessarily be the most critical issue, arguing that “there is no bright line level of deficits or debt” that would limit a response to a possible recession. On the flip side, “[a]lthough it would not be entirely free of risk, there would be compelling arguments for the federal government to borrow money to provide stimulus, especially in a world of low interest rates and inflation that would likely coincide with a recession.”

Similarly, Gregory Daco, chief U.S. economist at Oxford Economics, told S&P Global Market Intelligence that high debt levels shouldn’t be a concern: “In a sense, you don't have to worry about fiscal space in the U.S. and certainly not worry about fiscal space in the case of an economic downturn," he said.

Rather than “fiscal space,” Edgerton argues, the big questions around a potential fiscal stimulus would be political ones: Would deficit hawks support a stimulus package? Would Democrats support one if it’s seen as benefitting President Trump? And could a divided Congress agree on the elements of a stimulus plan?

Edgerton points back to 2008, when 216 Democrats and 165 Republicans in the House passed the $152 billion Economic Stimulus Act, which was signed into law by President George W. Bush nine months before the 2008 election. “While such bipartisan cooperation may seem quaintly charming today,” Edgerton says, “it nonetheless failed to prevent the 2008 recession.”

That cooperation came as the economy was in the midst of the Great Recession. A milder downturn might not see the same bipartisanship, especially given how the political landscape has changed over the last decade. "If it's just kind of a run-of-the-mill couple quarters of contraction that's mild and short, then I don't think that policymakers will be galvanized to reach across the aisle and come up with something big," Megan Greene, a senior fellow at the Mossavar-Rahmani Center for Business and Government at Harvard University, told S&P. "If it's another financial crisis, which I don't expect at all, then I think policymakers would be more likely to do something."

Douglas Holtz-Eakin, a Republican economist and former CBO director who now leads the American Action Forum, a conservative think tank, had a take that was both more optimistic and more cynical: "In a downturn, I'm pretty sure [lawmakers] all panic. Their collective jobs are at stake," he told S&P. "They will then spend money, probably more of it and more inefficiently than otherwise we would need to."

Polls of the Day: Dems Want Medicare for All…or Maybe Not

A new Morning Consult/Politico poll finds support among Democrats rising for candidates that favor Medicare for All over building on the Affordable Care Act. The survey found a 52-point margin of support — the share of those who said they would be more likely to back a candidate minus the share who said they would be less likely — for a candidate that backs Medicare for All, up from 35 points in January.

The poll surveyed 1,987 registered voters, including 768 Democratic voters, and had an overall margin of error of 2 percentage points. The Democratic subsample has a margin of error of 4 percentage points.

The Morning Consult results are similar to the findings of a new Monmouth University poll in which 58% of Democratic voters say it is very important to them that the party nominate someone who supports “Medicare for All.” But the poll also found that most voters, 53%, say they want a system that allows people to opt in to Medicare while maintaining a private insurance market — what policy experts call a “public option.” Just 22% say they want to switch to a system where a government-run health plan replaces private insurance.

That may help explain why the Morning Consult poll finds that former vice president Joe Biden, who favors expanding the ACA by adding a public option, holds a 13-point advantage over Sen. Bernie Sanders (I-Vt.), who has championed Medicare for All.

Another explanation: Voters have other issues on their minds. Leslie Dach, campaign chair for health care advocacy group Protect Our Care, told Morning Consult that the latest poll results showing continued support for Biden demonstrate that Democratic voters are driven by a desire to remove President Trump from office more than by questions about health care. And on the issue of health care, they’re more responsive to pocketbook issues like drug costs and protections for people with pre-existing conditions than to broader questions about the future structure of the U.S. health care system.

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That's some citrus! A Louisiana couple grew a record-breaking 7 pound, 14.64 ounce grapefruit.

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