Huge Deficits Are Bad – the Alternative Is Worse

President Trump signed the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act in March.  Not one Democrat was invited for the signing, although they had more input on this bill than Republicans.  This legislation provided an extra $600 in unemployment benefits for millions of Americans who were out of a job and included a moratorium on evictions.  There were numerous other provisions in this bill but these two were designed to expire at the end of July. 

The U.S. House passed the $3.4 trillion Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act on May 15.  Democrats anticipated that the unemployed would need more financial help and so would those in danger of being forced out of their homes.  Conservatives railed against this bill as a liberal wish list and the Republican-controlled Senate ignored it for over two months.  Perhaps they believed the ridiculous – actually stupid – statement by Vice President Mike Pence that the virus would be gone after Memorial Day and the economy would come bouncing back.

Finally, Senate Republicans presented their $1+ trillion Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act in the last week of July, just days before the extra $600 unemployment benefits were due to expire.   Still, they appeared to be in total disarray.  In fact, Senate Majority Leader Mitch McConnell advised that 15 to 20 GOP Senators wouldn’t vote for any additional coronavirus relief legislation, whatsoever.

Democrats acted early and comprehensively to anticipate the pandemic effects that health professionals were predicting.  Republicans failed to act, perhaps based on Trump’s happy talk or an expectation that the virus would subside and a V-shaped recovery was in the offing. 

Now, July 2020 is behind us but it recorded more virus cases than any one of the previous five months and the pandemic is still staring us in the face with no end in sight.  All of this drama made me eager to compare the House and Senate bills; here’s what I discovered.

HEROES Act (Dems) v. HEALS (GOP):

1. One-time stimulus payment – Both bills provide $1,200 per adult but the Dem’s bill is much more generous for children, proposing $436 billion (b) v. $300b for the GOP.

2. Hazard pay for essential workers, including health care – Dems $190b v. GOP $0.

3. Extra federal unemployment benefit – Dems, $600 weekly, costing $437b v. GOP, $200 weekly through September and 70 percent of a worker’s former earnings after that, costing $110b.

4. Assistance for home owners and renters – Dems, $202b v. GOP, $3b.

5. Health care funding – Dems, $382b v. GOP, $111b.

6. State and local government aid – Dems, $1.1 trillion, including $81b for Medicaid and $90b for education v. GOP, $105b for education only. 

7. Additional small business aid – Dems, $0 v. GOP $200b.

8. Business tax cuts – Dems, $36b v. GOP, $203b.

9. Higher education funding – Dems, $169b v. GOP, $0.

10. Increase child tax credit benefits – Dems, $119b v. GOP, $0.

The GOP bill would shield businesses, universities, schools and hospitals from being sued over coronavirus-related damages for five years.  It also includes $1.75b to demolish and replace the FBI building in Washington instead of moving the headquarters to the suburbs.  Trump wants this money because he fears a flashy hotel would be built on the vacated property and compete with his hotel, which is across the street.   Democrats strongly object to these provisions. 

Dems want a two-year elimination of the 2017 tax law’s cap on state and local tax deductions, which would cost $137b and favor blue state tax payers.  This probably won’t fly with Republicans.

These two bills dramatically highlight the differences between Democratic and GOP philosophy.  Democrats are trying to help people remain in their homes or apartments, put food on their tables and pay their bills.  They are also trying to prevent massive additional layoffs in the public sector by giving significant aid to state and local governments whose tax revenues have cratered.  

Congressional Republicans are attempting to do the bare minimum for people and state and local governments, while favoring relief to businesses.  A significant number of them don’t even want to do that.

Virus cases are spiking all across the nation and our economy is reeling from the worse quarterly decline in the past 70 years, down 9.5 percent.  Economists are fearing a descending spiral where more workers lose jobs, leading to greatly lowered consumer spending, leading to more business closures, leading to….  Well, you get picture; they are worried about an out of control economic downturn that damages the economy for years to come.

Many economists advise going BIG on virus relief and even some right-leaning ones are not so worried about more debt now.  Still, a substantial number of Republicans in Congress will tenaciously cling to their deficit hawk ideology even if Americans lose their homes, people go hungry and the country goes to hell.

Sure, I’m concern about adding $6+ trillion to the deficit this year – but if it saves this nation from sliding into a bad depression, it will be well worth it.

About eeldav

I am a retired corporate attorney who has lived in both Europe and Asia. While working my responsibilities took me to over 40 countries in Europe, the Middle East, Africa and Asia.
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