Unsanitized: Republicans Must Choose Between Stimulus or Their Supreme Court Power Grab

Plus, Wall Street landlords are back. This is The COVID-19 Daily Report for October 9, 2020.

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First Response

We’ve been whipsawed from the cancellation of talks on stimulus before the election to talks resuming within 48 hours. President Trump, high on steroids, has furiously backpedaled from his initial announcement, and Politico’s Jake Sherman touts that the White House “is now completely set on striking a COVID stimulus deal.”

But Sherman’s throw-in line, “No guarantees it goes anywhere in senate,” kind of nullifies the whole thing, doesn’t it? Even if I believed that Trump would agree to work with Nancy Pelosi, who is publicly floating a bill to have the presidency stripped from him due to lack of mental competency, why am I to believe that Mitch McConnell is involved with or interested in this in any way?

Indeed, McConnell is out this morning calling hopes for a deal “unlikely.”

Nothing has changed this week for McConnell, who hasn’t been at the White House in two months and told Trump by phone days ago that he couldn’t pass any deal struck between Pelosi and Steven Mnuchin through the Senate. His members still are wary of large fiscal spending, and if he passes a bill with mostly Democrats, that would be the one thing to possibly get him in trouble with his own re-election in a few weeks.

All the national election indicators still point to McConnell playing for 2022 rather than 2020. Heck, Trump’s erratic behavior has the party on the verge of losing Kansas, Missouri, and Montana, according to internal polling, to say nothing of Arizona, Texas, and Georgia. McConnell likely doesn’t think a stimulus bill will revive electoral fortunes, though it may give a runway to a President Biden. And that would not please the Senate Majority Leader.

You could maybe see McConnell agreeing to certain targeted relief, as long as it was targeted at the corporate sector. But Pelosi rejected a standalone airline package, even after readying the legislation last week. She’s still pressing for a comprehensive deal. But that’s where McConnell and his caucus have consistently drawn the line for months. Even the $1.6 trillion White House offer from a week ago includes measures that I’d think McConnell would have no interest in passing, including $250 billion in a “blue state bailout” (read: vitally necessary state and local government relief).

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What Trump has done with his “save my re-election” lunge is a couple things. First, it’s operated as a stock-pumping scheme. Trump was worried about the market reaction to his calling off the talks, but just the resumption has put Wall Street on track for its best week since August. If you keep talking about stimulus without actually doing it, investor expectations grow and grow, and the market goes up. I don’t know if there’s a dump to this pump and dump scheme, but this is what the pump looks like.

But Trump has fumbled his way into handing Senate Democrats an excellent closing argument. The question every Republican needs to answer now is this: who should get priority from Republicans, Amy Coney Barrett, or millions of unemployed and suffering Americans?

McConnell has two weeks left in the Senate calendar before the election, and he wants to spend that time on the Barrett confirmation. There’s a world where a stimulus bill is ready on the 19th and dispensed with before Barrett hits the Senate floor on the 26th, but that presumes a very quick agreement on the top lines (it’ll take a week to translate that into legislative language) and the creation of a bill that McConnell and Senate Republicans actually want to pass.

More likely, if the Pelosi/Mnuchin talks bear fruit, is a situation with limited floor time and Senate Republicans with two options: plow forward with Barrett, or pass stimulus. That’s a fight that Democrats can win big politically, even if they can’t get McConnell to alter his course. I could see Barrett herself being asked this question in confirmation hearings: who do you think is more important, you or the 2.4 million Americans and rising that have been unemployed for more than 27 weeks?

Trump should be asked the question as well, as should every Republican. Should economic stimulus come first, or confirming a Supreme Court justice? Everyone from the local dog catcher to the president should be forced to choose between their generational stamp on the high court and aid for the American people. I see no evidence to alter my initial conclusion that time and Mitch McConnell will prevent the people from getting that aid. But there remains political value in laying bare GOP priorities.

Wall Street Landlord Redux

Back in the last global economic crisis, there was a particularly galling course of events. Wall Street financiers scooped up single-family homes at a discount, in many cases renting them back to the very victims of foreclosure who took the hit at the hands of other financiers who ripped them off in the housing bubble. These home rentals were predictably fraught, with serious deficiencies, jacked-up rents, property managers who did no repairs, quickie evictions, and so on. There’s a chapter about this in my new book Monopolized, as the main practitioners of the Wall Street rental scheme were giant private equity firms.

Well look who’s back. Invitation Homes, then a division of private equity leader Blackstone and now a publicly traded company, just got a cash infusion of $1 billion to go out and find more discount properties. They’ve already been buying about $200 million worth of homes per quarter since the pandemic began, adding to their stock of 80,000 homes nationwide.

What’s interesting here is that the housing market is actually over-performing right now, as city dwellers seek refuge in the suburbs. That has meant low inventory, which is good for the home rental market. There has been “record occupancy and rising rents” in single-family rentals since the crisis began, as they offer something that families without a down payment can afford. Stocks in these companies have beaten the market, and unlike the financial crisis, they’re not starting from scratch. These are professionalized operations that can acquire capital and find homes for their portfolios quickly. Some companies have moved into building their own housing stock.

That’s all bad news for renters. The stories of price-gouging and bad conduct are legion. The pandemic has accelerated all sorts of economic trends, and I fear absentee slumlords is another.

Days Without a Bailout Oversight Chair

197.

Today I Learned

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