Unsanitized: End to Stimulus Talks Is a Full-Spectrum, Foreseeable Disaster

How Mitch McConnell gave up on 2020, and how Democrats failed to recognize what was happening in March. This is The COVID-19 Daily Report for October 7, 2020.

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First Response

Since the inauguration of Unsanitized, this space has been insistent that Democrats were likely to only get one bite at the stimulus apple. This basic truth, informed by being alive during the financial crisis and early Obama administration, was my animating principle for everything that came afterward. If you believed there was only one shot, that first bill had to be negotiated like it was the last.

Of course, we know have confirmation that there was only one shot. I take no pleasure in being correct. Because there are millions of people who will be forced into economic ruin, with little or no help from their government, during a pandemic. This isn’t a time for gloating, it’s a tragedy. And it also provides some lessons.

What are we to make of Trump, for example, tweeting an end to the relief talks being held by Nancy Pelosi and Steve Mnuchin, only to apparently restart them last night? Being on a powerful steroid that makes you stay up all night is probably the culprit. But the biggest reason is that he’s not in control of the situation. Mitch McConnell is, and he rather brilliantly got Trump to take the fall for it.

Jeff Stein reported out the fact that the end of the talks came right after McConnell held a phone call with Trump, and “suggested… that Speaker Pelosi was stringing him along and no deal she cut with Mnuchin could pass the Senate.” People are wondering why Trump would commit political suicide by denying economic help weeks before an election, when it was McConnell who ended things all along.

Read all of our Unsanitized reports

Because Trump is so easily manipulable, he took McConnell’s statement that Pelosi was playing him at face value, and took ownership of walking away from the bargaining table, like The Art of the Deal tells him to do. Only later did he realize that, when you do that in public, you become the man who denied relief to the nation, and subsequently he frantically tried to backpedal, offering to sign standalone bills for a $25 billion airline bailout, a resumption of the PPP program for small businesses, and another $1,200 stimulus check.

That’s maybe fun to comment on (the $135 billion in PPP funding he offered was what was leftover in the program when it expired, they couldn’t give free money away last time, I don’t know why resuming it two or three months later to small businesses with no cash reserves would be any different), but it’s also useless. The important thing to understand is that this was McConnell’s plug to pull. He’s in charge now.

Some blame Nancy Pelosi for not taking a $1.6 trillion offer from the White House. But pay attention to McConnell’s statement above. “No deal she cut with Mnuchin could pass the Senate.” That includes the $1.6 trillion. McConnell barely got a caucus majority for a $300 billion package. Large numbers of his caucus are thinking about 2024 and adopting a Tea Party-style fiscal responsibility posture. So at one level, McConnell is just expressing reality. He can’t pass a bill with mostly Republicans, and he’s never been interested in passing one with mostly Democrats. (If there’s one thing that would hurt his re-election chances, it’s that.)

But there’s an even better explanation for why McConnell would destroy his party’s standing before the election. The answer is: Because he already thinks the election is over. McConnell doesn’t feel like any stimulus would help Trump, or even his endangered frontline members. They’re already done for, as the coronavirus is the most important issue in the election, and there’s a raging outbreak at the White House. There was a poll yesterday showing Joe Biden up 16 points, and another one showing a lead in the sample after Trump’s positive test of 22. Every Republican you think is not going to win, is not going to win.

McConnell, as pure a political animal as we have in America, is playing not for 2020 but 2022, and well beyond. His most important directive now is to get Amy Coney Barrett on the Supreme Court and lock in that strong conservative majority for decades. His second most-important directive is to deny Biden a half-decent economy propped up by stimulus, to make the beginning of his tenure difficult. Ordinary people, and not even his fellow Republican colleagues, don’t factor into the decision.

What looks like a political downside, in other words, is just McConnell banking on a future political upside. He’s plotting his comeback, using the same script as 2009-2010. “We thought—correctly, I think—that the only way the American people would know that a great debate was going on was if the measures were not bipartisan,” McConnell said about that time. “When you hang the ‘bipartisan’ tag on something, the perception is that differences have been worked out, and there’s a broad agreement that that’s the way forward.”

McConnell wanted and needed a corporate bailout and really nothing else. He waited for months to see what the political situation was going to be, not the economic one.  Now that he understands it, he will not cooperate with Democrats on things like assistance for the American people. We’re in a plutonomy now, so everyone McConnell cares about has already been helped. He will offer that great debate between now and the 2022 election. He will hope to win back his majority in the midterms. And even if he does not, he will have the Supreme Court for a generation. In fact that’s part of the plan: if they obstruct forward movement in Biden’s first two years, McConnell can blame him for lack of action.

All of this was foreseeable: this disaster for the economy, for public health (one of the funding measures in the stimulus was billions for the safe distribution of a coronavirus vaccine). There’s a theory that, in a month, after Democrats win resoundingly, they can announce several stimulus measures they will adopt, and this will stabilize things. But a lot of scarring can happen in the 78 days between the election and the inauguration. The risk of undershooting the recovery, as Fed chair Jay Powell said yesterday, far outstrips the risk of overshooting it.

If I could recognize this in March, without a giant staff and access to every economist on the planet, then the Democratic leadership could have known it too. Instead they arrogantly believed they could come back for more. People inside the Democratic caucus who warned of this are seething. “It’s emblematic of the total lack of urgency from the top, even now. What a tragic disaster,” said one House Democratic aide.

“Just calm down,” Pelosi said to Jake Tapper in April when asked if not getting state and local government relief might have been a mistake. I haven’t been calm since then. This was political malpractice of the highest order. Anyone could see that the CARES Act was not going to be enough. Just adding the words “for the duration of the national emergency” to every measure in that bill would have made a huge difference. Instead, here we are.

They say that victory has a hundred fathers but failure is an orphan. Not true in this case. A lot of people share the blame for this mess. It was what some of us mean by bipartisanship.

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