Coronavirus and Congress' likely response in coming months

Congress is a reactive body. It responds to events.

And here, with coronavirus, we have an “event.”

We’ve written about the late British Prime Minister Harold Macmillan in these spaces before. The story is somewhat apocryphal. But Macmillan is said to have proclaimed that “events” are the most important factor when setting the course of public policy.

Macmillan wasn’t wrong.

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And that means that Congress and the Trump Administration will likely craft a series of measures to react and respond to coronavirus in the coming months.

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The $8.3 billion measure okayed last week was mostly for health, readiness and vaccine development. Other measures will likely address everything else.

The easy word to bat around is a “stimulus” measure. In the most conventional sense, a “stimulus” is an infusion of government cash to jolt the economy. President Obama and Congressional Democrats modeled their 2009 stimulus plan to bolster the economy after the “New Deal” of the 1930s. President Franklin Delano Roosevelt and lawmakers authored a series of measures which changed fiscal regulations, created Social Security and launched a massive development of public works projects to respond to the Great Depression.

It’s too early to completely understand the scope of coronavrius and if a “stimulus” could be required here.  But we are hearing chatter on Capitol Hill about tax cuts. More government spending. Rebates for travel. But unlike in 2009, it’s doubtful any legislation will simply be an infusion of cash centered around economic recovery.

Infrastructure was a hallmark of the much-maligned 2009 stimulus plan engineered by Democrats. There are regular emanations from the Trump Administration about infrastructure. “Infrastructure week” is a running joke in Washington. Lawmakers from both sides of the aisle would love to pursue an infrastructure package. Yet nothing ever happens. The Trump Administration and some Republicans on Capitol Hill spoke about “tax reform 2.0” long before coronavirus hit. But those discussions largely went nowhere. That’s partly because Democrats now control the House.

There is also consternation in high tax states about how well voters received the new tax policy of a couple of years ago. There’s also a question whether Republicans really want to wade into the tax reform waters again.

So let’s review what Congress did the last time it faced a fiscal crisis.

In February, 2009, Congress approved what was initially billed as $787 billion economic stimulus package to shock the American economy into action after the Great Recession. The price tag of the measure eventually ballooned to $831 billion.

The Democratic House and Senate passed the plan in the first month of President Obama’s presidency. It consumed months to develop such a plan – and a new President. No Republicans in the House supported the bill. Only three GOP senators voted yea: Sens. Susan Collins (R-ME), Olympia Snowe (R-ME) and Arlen Specter (R-PA). Granted, Congress responded with a $700 billion relief measure to salvage the economy in the fall of 2008 to cover losses in the financial sector. After an epic, initial failure in the House of Representatives (costing the market what was then it’s biggest point drop in a single day, in synchronicity with the bill blowing up on the House floor), Congress finally approved Troubled Asset Relief Program (TARP) in October, 2008. That was an immediate response because the economy teetered on the brink of collapse that autumn. But, it took a new Congress, a new President and time to assemble a full-blown stimulus package.

Also, Congress and President Obama assembled a number of measures after the fiscal meltdown. There was the controversial “Dodd-Frank” financial re-regulation plan. There was also a federal rescue of the American auto industry.

A contemporary package to respond to coronavirus would likely be an amalgam of tax credits for small businesses and travel, loans or even “bailouts” for damaged sectors of the economy (airlines?) and health assistance. There could also be a reduction of the “payroll tax.”

If you go to the dictionary and look up the word “donnybrook,” you’ll see a picture of the internal fight waged between Congressional Republicans, over extending the payroll tax holiday in late 2011. This was a pitched, Christmastime battle royale. GOP fiscal hawks duked it out with fellow Republicans who wanted to trim taxes. And, it unfolded around the holidays because, as you know, only the zaniest worst-case scenarios unfold on Capitol Hill at Christmas.

In other words, it’s hard to have it both ways: keep taxes low yet reduce deficit spending.

So what are the politics with a possible stimulus measure for coronavirus?

Some Republicans are close to pushing for action – but up to a point.

Those same Republicans who balked at President Obama’s stimulus plan will likely excoriate Democrats who championed the one in 2009 – and vice versa. Still, some Congressional Republicans may be tentative to call for major action, worried it would send a message of desperation and undercut President Trump. The optics of this are going to be complicated. Congressional maneuvering sends a message that lawmakers are on the case. But it can also sound alarm.

At his briefing this week, House Majority Leader Steny Hoyer (D-MD) seemed cool to cutting taxes.

“I don’t know that talking about additional tax cuts now, other than for political purposes, is what we ought to be focused on,” said Hoyer. “What we ought to be focused on is what is our medical response to this.”

When pressed further, Hoyer introduced an additional factor which could complicate a stimulus: Obamacare.

The Maryland Democrat argued that the Trump Administration and Congressional Republicans are still trying to undo Obamacare. The Supreme Court will soon hear yet another case to overturn Obamacare.

“It is ironic,” said Hoyer “That the administration says it wants to fight a major health challenge that is keeping America healthy.”

Democrats are concerned that persons with “junk” health insurance plans won’t stay home from work because if they fall ill they lack adequate coverage. That could spread coronavrius.

So, there could be an opportunity for Republicans to finally undercut Obamacare and replace it with something else to help respond to coronavirus.

Or….

It could mean that Republicans have to halt their attacks on Obamacare amid coronavirus and Obamacare expands far beyond its current form. Or…it could mean that coronavirus prompts a major recalibration of the American health care system.

Public opinion - and the death toll - will play heavily in all of this. If people don’t think they have sufficient health care in the coronavirus era, other options could look good. That may not mean “Medicare for All.” But it may alter the GOP’s decade-plus crusade to repeal and replace Obamacare.

On Sunday night, House Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Chuck Schumer (D-NY) took issue with the administration offering “tax breaks for major corporations” to cope with coronavirus. Pelosi and Schumer outlined a different set of proposals: Paid sick leave. Enhanced unemployment insurance. An expansion of food “security programs,” such as the Supplemental Nutrition Assistance Program (SNAP) and the food initiative for Women, Infants and Children (WIC). Protections for frontline health care workers. Widespread testing for coronavirus. Reimbursements for non-covered coronavirus-related costs. And, measures to guard against price gouging.

“The administration must move more quickly and seriously to address the severe impacts of the coronavirus on the financial security of America’s families,” said Pelosi and Schumer.

These are all proposals which will cost money. They will all likely require legislation. And, to become law, they have to go through President Trump.

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The legislative response will take a while to sort out. Look at how long it took Congress to counter some aspects of the 2008 financial crisis. There may be immediate steps Congress takes as certain demands become evident. But the “big stuff” is likely a long way off.