Is Joe Biden Still a Deficit Hawk?

Is Joe Biden Still a Deficit Hawk?

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Plus, Pelosi hints at narrower coronavirus aid deal
Wednesday, August 19, 2020

Pelosi, White House Eye Smaller Coronavirus Aid Deal

Glimmers of hope emerged Wednesday for progress on a new coronavirus relief package. Negotiations have been deadlocked for nearly two weeks, with Democratic and Republican negotiators still at least $1 trillion apart in their proposals.

With House Democrats returning to Washington from their summer break for a vote Saturday on a $25 billion bill that would boost funding for the U.S. Postal Service and beef up delivery of first-class mail, including the millions of ballots that will be sent by mail in the upcoming election, House Speaker Nancy Pelosi (D-CA) indicated that Democrats might be willing to pare back their demands in order to cut a deal now and then consider another package after the November elections.

The Trump administration, meanwhile, is saying it would be open to a narrower deal.

“I think the outlook for a skinny deal is better than it’s ever been, and yet we are still not there,” White House Chief of Staff Mark Meadows told reporters on Wednesday. “If Speaker Pelosi moves forward a single bill on postal ... let’s add in the things we can agree upon.”

Democrats looking to expand Postal Service bill:
Led by members of the moderate New Democrat Coalition, a group of 117 House Democrats sent a letter to Pelosi and Majority Leader Steny Hoyer (D-MD) requesting that the post office bill include new funding for unemployment benefits. The letter calls for the House to consider the Worker Relief and Security Act, which would extend a $600 per week federal boost to jobless benefits for the duration of the coronavirus crisis, and revise the unemployment system by linking it to national and local unemployment rates.

The White House said Wednesday that it would consider the Democrats’ bill, as long as additional relief provisions are included. “We’re certainly open to looking at the $25 billion, but we want included in there relief for the American people,” White House spokesperson Kayleigh McEnany said.

A new Republican bill.
Senate Majority Leader Mitch McConnell (R-KY) expressed doubts Tuesday about the House plan for the post office. "I don't think we’ll pass, in the Senate, a Postal-only bill," he told the Louisville Courier Journal.

But Republicans are reportedly working on a “skinny” coronavirus relief bill that would cost about $500 billion and would omit some provisions that negotiators have been unable to agree on, such as student loan relief and aid to states and cities. A draft bill circulated by Senate Republicans would provide enhanced unemployment benefits of $300 per week through December, more aid for small businesses and protections for businesses from Covid-related lawsuits. It would also provide $10 billion for the Postal Service by converting an existing loan into a grant.

Pelosi may alter her stance.
The draft Republican bill is far smaller than the $3.5 trillion package passed by the House in May, and well below the $2 trillion that Democratic leaders have cited as a minimum during the negotiations. But Pelosi suggested Tuesday that she might agree to a smaller relief package in order to get funds for the Postal Service and a new round of unemployment payments, while postponing other major parts of the relief package until January, after the election.

Saying she didn’t want the relief package to clash with potentially contentious government funding negotiations in September, Pelosi told Politico that, “We have to try to come to that agreement now. We’re willing to cut our bill in half to meet the needs right now. We’ll take it up again in January. We’ll see them again in January. But for now, we can cut the bill in half.”

Is Joe Biden Still a Deficit Hawk?

As Joe Biden prepares to formally accept the Democratic presidential nomination Thursday, he’ll be looking to convince Americans that he, not President Trump, is best prepared to meet this moment in history and tackle a public health crisis, the economic devastation it has wrought and the financial, racial and social inequities that existing long before anyone had heard of Covid-19.

Biden has unveiled what his campaign has labeled a “Build Back Better” agenda calling for investments in U.S. manufacturing; infrastructure and green energy; child and elder care; and addressing the racial wealth divide. But the Democratic convention, as is typical, has emphasized Biden’s personal story more than his policy vision. As Michelle Obama put it in her speech Monday night, he’s a “profoundly decent man.” The overarching message: He’s a good guy, caring and empathetic, who understands the struggles so many now face and can restore some sense of normalcy to our Trump-tattered country.

“His campaign may have produced mountains of policy plans, but Biden does not have what could be described as a unified policy vision around which he is trying to unite the public,” The Washington Post’s Paul Waldman writes.

The policy fights are coming, though, and as he seeks to unite Democrats and connect with a broad swath of the voting public, Biden may still need to do more than convince people that he’s a genuinely nice guy. He will need to lay out some sense of what a Biden presidency would look like and what it would mean for Americans worried about their own lives as much as they are about the “soul of the country.”

The answer to what a Biden presidency would look like is inextricably linked to another question, one that underlies the lingering reservations many on the left wing of the Democratic Party still harbor about their nominee based on his years in office: Is Joe Biden still a deficit hawk?

As Vox’s Dylan Matthews points out, Biden’s campaign may be talking about an ambitious, “FDR-sized” administration, but “there is a tension between this ambition and the man himself”:

“For all of the avowed boldness of an agenda shaped by Covid-19, the man pitching it remains … Joe Biden. He is a creature of the establishment, a product of a Democratic Party built for the (relative) boom times of the 1980s and ’90s, a Senate from a less polarized era, and an Obama administration that believed it could transcend Washington (it could not).

“When you talk to his campaign, you can see glimpses of that Biden. Yes, he’s proposing these multitrillion-dollar plans — but his advisers insist he’s a deficit hawk at heart. …

“There are two visions of a Biden presidency. One involves sweeping investments in clean energy, new jobs, and a fast recovery from the Covid-19 pandemic and recession.

“The other involves McConnell forcing Biden into brutal, humiliating budget deals that usher in austerity and strangle the recovery in the crib.

“Therein lies the fundamental tension in Biden’s candidacy: To enact his promised agenda, President Biden will have to be bolder than Sen. Biden and Vice President Biden ever were.”

Bloomberg News’s Jeffery Taylor, Mike Dorning and Jennifer Epstein suggested this week that anyone looking to predict how Biden would try to tackle the coronavirus crisis and its economic effects can find clues in the way he responded to the financial crisis and its aftermath as vice president. Their conclusion: “As he did in 2009, Biden considers running up the deficit as an unfortunate but necessary side effect of pumping money into the economy.” Or as Bloomberg summarized it in a subheadline: “Biden won’t shy from taxes or deficit increase to meet goals.”

Read more at Vox or Bloomberg.

Supreme Court to Hear Obamacare Challenge a Week After Election

The Supreme Court announced on Wednesday that it will hear arguments in the case challenging the constitutionality of the Affordable Care Act on November 10, a week after Election Day.

Why it matters:
The case, brought by Republican state attorneys general and supported by the Trump administration, could invalidate the Obama health-care law and its protections for people with pre-existing conditions. It could create chaos in the health-care system, resulting in millions of Americans losing their coverage.

The announcement comes as Democrats have made health care a main focus of their election messaging, hitting President Trump for his response to the Covid-19 pandemic and his efforts to repeal Obamacare without proposing a plan to replace it even as millions of workers have lost their jobs and risk losing their insurance. But the hearing date means that arguments will come only after November’s ballots have been cast. A decision in the case is expected by June 2021.

Chart of the Day

The global economic rebound in the third quarter will be driven in part by “strong and enduring” government stimulus, says Jeffrey Kleintop, chief global investment strategist at Charles Schwab. That support varies by country, though, as the chart below indicates. “The combination of fiscal and monetary stimulus as a percentage of GDP ... suggests that recoveries in Europe are well supported,” Kleintop said in a recent market analysis. “On the other hand, the expected strong rebound in the U.K. is challenged by weak policy support and intense lockdowns. Similar circumstances apply to India, Mexico and other South American countries.”

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