Unsanitized: Progressives Split on Heroes Act Response

Plus, Biden and the pandemic, and merger mania. This is The COVID-19 Daily Report for May 13, 2020.

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First Response

On Tuesday the House Democratic leadership unveiled the Heroes Act, a $3 trillion swing at an economic response to the coronavirus Depression. Just writing that sentence violates my personal rule of not paying much attention to legislation that has no chance of becoming law. That’s not hostility but simply what Democrats say out loud: “Democrats acknowledge that their behemoth proposal, whose summary alone is 90 pages, is more of a talking point than legislation that they expect to become law.”

I should just stop there and give this kitchen sink wish list all the seriousness it deserves. The bill is modeled after all the pre-pandemic omnibus legislation that bundled together dozens of ideas (remember H.R.1?), sent over to Mitch McConnell’s legislative graveyard and immediately forgotten. It’s not a particularly good public relations strategy because there’s nothing to latch onto, just a jumble of ideas. And it hasn’t worked as a negotiating strategy either. It reflects the real incoherence of the Democratic position; they don’t have any organizing principle about how to fight the economic crisis other than to throw a bunch of words on a page.

Because it’s 1800 pages, there are good things and bad things in it. A trillion dollars for cities and states and maybe an additional $1,200 stimulus check will be the main things that survive if Republicans come back to the table, so I’m not going to spend much time on the rest. You want to read about the bad stuff, this rundown has you covered. The K Street bailout I mentioned yesterday is in there, as well as weird stuff like Federal Reserve backstops for landlords and debt collectors.

Read all of our Unsanitized reports

More important is the dynamic on the progressive side. Pramila Jayapal (D-WA), the Progressive Caucus co-chair, objected to the Heroes Act, mainly because her pet project, payroll support for all businesses, was left out. Jayapal does have a concept of the optimal response: keep people connected to their jobs, with the government footing the bill for paychecks. That also keeps people on health insurance and helps keep businesses out of bankruptcy. The pieces fit together, sort of.

The CARES Act didn’t do that. It essentially pushed people onto unemployment, where low-wage workers would earn more than their salary. It also had this Paycheck Protection Program for small businesses to keep people out of unemployment, with their paycheck covered for eight weeks. These programs are almost diametrically opposed. The interim bill extended PPP; in the Heroes Act, the unemployment piece is extended from July to the end of the year. To deal with the uninsured, the Heroes Act subsidizes COBRA, the costliest possible way to maintain insurance rates, really a bailout of that industry.

Jayapal would put any uninsured on emergency Medicare, and maintain employer coverage elsewhere. She also wants a more scaled-up response to help small business keep the doors open, and to tie states getting aid to maintaining public health guidelines that can beat the crisis and keep people alive. So the Pelosi vision, such that it is, pays people to stay home through unemployment. The Jayapal vision pays people to stay home with their job intact.

You can say that unemployment is better for low-wage workers and that’s what we should want. You can say that keeping people employed is what we should want. But Jayapal was really fighting about the lack of input. For two months, Pelosi has played one-woman Congress, giving members take it or leave it bills. Jayapal lined up support for her payroll bill from across the caucus, including New Democrats and others in the ideological center. “If so many members support it we should have a discussion on moving forward,” said Chris Evans, Jayapal’s spokesperson, to me last night.

Jayapal was told there was no legislative language for her bill, but that was by design—the office of lawyers who translate member desires into legislative text faces a backlog amid the D.C. shutdown. So they’re only writing up bills from the leadership. This is a total freeze-out that’s been going on for months. And Jayapal and her co-chair of the Progressive Caucus Mark Pocan finally called Pelosi on it. They asked for a delay in the bill, scheduled for a vote Friday, to allow for discussion and amendments.

But at the same time, a dozen progressive D.C. groups that previously stood with Jayapal, including on payroll support, jumped in to back Pelosi’s bill. This eliminated whatever support Jayapal might have had for her efforts; her ideological backers weren’t even on board. Pelosi found it easy to dismiss the request for delay.

This is inexplicable, and while I tried, none of these groups could explain to me why they would undercut the left flank. The bill is a wish list anyway, not something real. It represents the left pole in an upcoming debate. Progressives in Congress wanted to have the conversation about what that looks like, so it’s not pre-compromised before negotiations begin. And for whatever reason—access, credibility—the D.C. groups sold the Progressive Caucus out.

So as incoherent as the general Democratic strategy is, without a core idea of what is to be done, the strategy on the broad left is just as barren.

Jayapal and Pocan still have a card to play. No Republican will vote for this bill. Pelosi will need most of her caucus to support it. The Progressive Caucus is advising members to be “undecided” on the bill. If enough hold together Pelosi won’t have the votes. This showdown could get interesting.

The Biden Campaign

Today at the Prospect we have a series on Joe Biden’s presidential bid, amid the backdrop of the coronavirus crisis. What might have been a sleepwalk of a presidency is now forced by circumstance to be at least different in focus and scope. And that brings with it promise and peril.

I did a deep dive into the Biden campaign, talking to people within it and those in discussions with it. It’s completely unclear which way a Biden presidency will go. But we know what Depression-type moments can do to politics, turning small people into giants. That’s the possibility here: Dr. Jekyll, or Mr. Biden.

Jacob Hacker also weighed in on where the Biden campaign might go, and how he will need a vision to remake a broken system and the people willing to actually carry it out.

Bob Kuttner does some real-time reporting on that front, focusing on trade and China policy. It’s a decidedly mixed picture. He notes something potentially important, however.

We last saw Larry Summers protégé and Biden economic adviser Natasha Sarin on Unsanitized promoting a scheme to have people pull out a portion of future Social Security benefits to use now during the pandemic crisis. The White House started murmuring about a similar policy put together by two right-wing think tanks. Biden solidly rejected the concept of robbing from Social Security, but he had a problem: his own adviser co-authored an academic paper on the same subject. So on Tuesday, she came out with a Bloomberg op-ed renouncing her position, trying to play it off as a political error rather than a policy one. Regardless, that her position became untenable and she had to do damage control reveals the rapid shifts of real-world conditions and outside pressure that can lead to different policy.

I hope you check these stories out. You can find all three of them here.

Ready Set Merge

We know that the aftermath of the crisis will occasion a big game of musical chairs, with the surviving companies feasting on sick rivals. One of the more high-profile efforts was revealed yesterday, with talks between Uber and Grubhub to merge. Both, in their own way, have been buoyed by the crisis because everyone is doing food delivery. Uber’s core taxi business has tanked with everyone sheltering in place. But Uber/Grubhub would control 55 percent of the food delivery market, which is soaring. DoorDash is at about 35 percent and the rest is not meaningful.

So this would effectively move us from three delivery services to two. These services overcharge restaurants that don’t have the personnel to do their own deliveries, and with fewer of them, that will only expand. This also could harm workers by giving them fewer choices of employers; exploitation of gig workers is well-established at this point.

Rep. David Cicilline (D-RI), chair of the House Antitrust Subcommittee, has called for a merger moratorium during the pandemic, and he came out hard against this deal, saying it “marks a new low in pandemic profiteering… We cannot allow these corporations to monopolize food delivery, especially amid a crisis that is rendering American families and local restaurants more dependent than ever on these services.” How regulators respond to this tie-up will determine what kind of an economy we have after the crisis lifts.

Today I Learned

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