Devastated by the coronavirus and measures necessary to control it, the U.S. economy has recovered somewhat in recent weeks, but remains far from fully healed. The latest reminder of this fact was a Labor Department report Thursday documenting an uptick in new unemployment claims from 971,000 in the week ending Aug. 8 to 1.1 million in the week ending Aug. 15. Despite this sign of waning economic momentum, and others like it, talks over additional economic support between the Trump administration and Capitol Hill Democrats remain in limbo and probably will do so through this week’s Republican convention.
The country has already waited too long. A wide consensus among economists and business leaders recognizes that the U.S. government not only can afford to extend additional large-scale aid but cannot afford not to — unless our national leaders are prepared to see the incipient recovery wither, and to consign possibly millions of workers to long-term joblessness. Yet Republicans and Democrats are far apart on how much money to provide. The Republican-led Senate put forth a $1.1 trillion proposal, after the Democratic-led House offered a $3.4 trillion plan. House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., have said, as Pelosi repeated Aug. 13, “we’ll come down $1 trillion if you go up $1 trillion.” Yet Treasury Secretary Steven Mnuchin has said $2 trillion is too high.
We do not know what Mnuchin bases this position on, other than the resistance to more spending he’s getting from misguided (and selective) deficit hawks in the GOP ranks. But it is possible intelligently, and fairly objectively, to estimate the magnitude of new fiscal support needed, using guidelines that factor in the multiplying effect of federal spending. According to one such set of benchmarks, provided by the nonprofit bipartisan Committee for a Responsible Federal Budget, a $2 trillion package now would enable enough growth over the next two years to make up the gap in national output that would otherwise occur. Notice how close $2 trillion is to the midpoint Pelosi and Schumer suggested?
The politicians are really haggling over — what? To be sure, internal GOP feuds have not gone away, including the dispute between President Donald Trump, who advocates a payroll tax suspension, and Republican lawmakers, who understand that this would create costs for the government and administrative headaches for employers, outweighing potential benefits to households. Mostly, the disagreements are between the parties and have to do with policy priorities. Democrats insist on far more in aid to state and local governments than Republicans are willing to accept. Democrats also want to continue a $600 supplemental unemployment benefit that Republicans would renew only at a lower amount. Republicans are also resisting additional funds to help states carry out the November election safely.
In our view, only the latter should be a deal-breaker for Democrats. On the other points, the right answer for them, and the country, has to be that half a loaf is better than none. Of course, that is a purely academic point unless and until Trump’s negotiators budge. Americans will suffer avoidable hardship if they do not.