Republicans set to care about deficit again as Biden unveils hefty COVID bill

The bill should pass but needs modifications

Prepare for evasive action! After four years of profligate spending under Donald Trump, Republicans are once again finding their long-lost fiscal restraint.

You might think that it would be difficult to switch gears from borrowing-and-spending habits that rivaled Barack Obama’s worst years, but you’d be wrong. The Republicans have already started to become fiscal hawks once again without missing a beat as pandemic relief payments were debated last month.

Photo credit: Blogging Guide/unsplash.com

Now, President-elect Joe Biden has proposed a new pandemic relief bill with a $1.9 trillion price tag. Cue the outraged soundbites.

Biden’s plan includes:

• Direct payments of $1,400 to most Americans ($2,000 total after the December payments)

• $400 per week in extra unemployment benefits through September

• Federal minimum wage of $15 per hour

• Moratoriums on eviction and foreclosure through September

• $350 billion to state and local governments

• $170 billion for schools and colleges

• $50 billion for COVID testing

• $20 billion for national vaccine program

• Making the Child Tax Credit fully refundable for one year and increasing the credit to $3,000 per child ($3,600 for children under six)

If we are honest, there are good items on the list as well as wasteful items. In particular, the money for COVID testing and vaccinations is a high priority. I’ve said from the beginning that if we want to get the country back to normal, defeating the Coronavirus and ending the pandemic is a must. It is not enough to simply pretend that COVID-19 is no worse than the flu and that we can go about business as usual.

I’ve also advocated payments to affected Americans as well. If we want to end the pandemic, we must give people an incentive to stay home when they show symptoms, test positive, or need to quarantine, but I don’t think lump-sum checks to every American is the way to do that.

I want to stress that even though people call these payments a “stimulus,” that isn’t what they are. A better term would be “relief” or “subsistence payments. They aren’t intended to stimulate the economy but to prevent it from crashing. As the winter surge worsens, the economy is slowing and unemployment is rising. Both businesses and individuals need a cash infusion to get them through to the end of the pandemic.

Having said that, I’d prefer to see the aid targeted to those who need it than distributed via the shotgun approach (although I won’t turn it down). Federal Reserve Governor Lael Brainard recently said that the unemployment rate for the lowest-income workers may be 20 percent, but higher-wage earners, many of whom can work from home, are faring much better. Although it is not without adverse incentives, the extra unemployment money at least goes to people who need it.

I’d also like to see the government fund sick leave for people who need to quarantine, have symptoms, or have tested positive. Right now, too many people are breaking quarantine or going to work sick because they either need the money or are afraid that they will lose their jobs. This is getting people killed.

Other items are needed as well. State and local governments have taken a hit to tax revenues as the economy slowed. Schools need funds for COVID mitigation strategies and virtual classrooms. If landlords are not allowed to evict non-paying tenants, they need to be compensated as well. The Child Tax Credit increase will likely be popular conservatives.

There is one item, however, that is starkly out of place. That, of course, would be the $15 minimum wage.

Increasing the minimum wage is one of those ideas that reminds me of H.L. Mencken’s observation that, “For every complex problem there is an answer that is clear, simple, and wrong.”

On the surface, raising the minimum wage would seem to be a boon to lower-income workers, but in reality, there is a lot of research that shows higher minimum wages hurt many of the same people that they are intended to help. The reason is that as wages go up, employers can afford to hire fewer workers. Some low-income workers end up making $15 per hour, but others end up unemployed. The Congressional Budget Office has a handy simulation that shows how raising the minimum wage would affect employment.

Getting back to my original point, however, Republicans are already attacking the bill even though the GOP was fine with budgets that increased both spending and deficits for every year of Donald Trump’s presidency. The government was spending too much even before COVID hit and made deficit spending even worse. The difference is that the COVID spending increases were a necessary priority that benefited the whole nation where much of the Trump-era spending that preceded the pandemic was an expensive wish list for Republicans. (If you’re grinning because I said “Republicans,” don’t. Overspending is a bipartisan affliction.)

One of the more amusing things that we will have had the chance to see in recent months is going to be the abrupt about-face of the many Republicans who supported Donald Trump’s $2,000 relief payments, but who are now about to line up to oppose Joe Biden’s plan that gives Americans the same amount. I’m not going to say they’re wrong to do so, but I will say they are hypocrites.

I agree that the debt and deficit are YUGE problems that are getting more YUGE all the time. Where I disagree, however, is that the middle of a pandemic is the time to tighten the purse strings. This is especially true after the wasteful spending that we have seen over the past few years.

I predict that another COVID relief bill will be passed. It is clearly needed and the voters want it. I wouldn’t be surprised if the minimum wage provisions get dropped along the way to help bring Republicans on board, however (much to the chagrin of my teenage minimum-wage-earning son).

We can always start cutting spending in the future, but right now we have an urgent need for more COVID testing and vaccines. In the past, Republican congresses and Democratic presidents seem to be the best combination for fiscal restraint. That might give Republican deficit hawks something to look forward to in the future.

If you haven’t subscribed to the Racket yet, click the button below to do so while it’s still free. And remember, with the Racket you get MORE than what you pay for!

You can also find us on Twitter and Facebook. We are not on Parler, and, from what we understand, no one else is anymore either. We aren’t expecting to be banned, but click that subscribe button just in case!

As always, we appreciate shares. If you see something here that you like, please send it to your friends and tell them that all the cool kids read the Racket!