Mitch McConnell Is Not as Clever as He Thinks He Is

https://www.nytimes.com/2020/04/24/opinion/mitch-mcconnell-states-bankruptcy.html

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When banks, corporations and wealthy individuals need bailouts, the Republican Party is there, pen in hand. The $2 trillion CARES Act reserved $500 billion for aid to large industries as well as $90 billion in tax breaks for owners of “pass-through” businesses — a benefit that overwhelmingly aids rich hedge fund investors and owners of real estate businesses. Even the small business fund ($350 billion for firms with fewer than 500 employees) has mostly benefited larger companies.

But when ordinary Americans need help to pay their bills, and when states — which can’t run deficits — need help to avoid fiscal collapse, the Republican Party is much less interested.

We saw the hostility to individual assistance play out last month; the CARES Act includes a one-time cash payment to most households, ranging from $1,200 to those earning less than $75,000 to $3,400 for a family of four earning less than $150,000. More substantial is a large expansion of unemployment insurance, with broader eligibility and increased benefits for recipients. Democrats fought to include the expansion; Republicans made a last-minute attempt to limit its scope, with almost every Senate Republican voting to cap benefits and keep workers from earning too much while under lockdown.

We’re seeing the hostility to state aid play out right now. The coronavirus crisis is pummeling state budgets, as tens of millions of Americans file for unemployment and states, in the absence of federal action or coordination, scramble to order the tests and supplies they need to combat the pandemic.

The solution is for Congress to backstop state governments by taking advantage of the federal government’s almost unlimited borrowing power, in order to save public sector jobs and prevent this recession — which has already wiped out the job gains of the past 11 years — from worsening into a depression.

Democrats want this direct aid to states to happen, but Mitch McConnell, the Senate majority leader, has balked. “I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” McConnell said in an interview on Wednesday with the conservative radio host Hugh Hewitt. “There’s not going to be any desire on the Republican side to bail out state pensions by borrowing money from future generations.” His office then made his partisan target even clearer, highlighting his interview with the heading “Stopping Blue State Bailouts,” as if Congress were responsible not for the entire country but only those states that support the Republican Party.

Instead of assistance, McConnell wants states to declare bankruptcy. This isn’t a good idea — it would undermine bond markets, push up interest rates and raise the cost of investment — but it would serve a purpose. Bankruptcy would potentially eliminate any obligations to public employee unions as well as force deep cuts to state services. For a conservative Republican partisan like McConnell, it’s a two-for-one special: shrinking government while undermining a key Democratic constituency.

It may be clever, but it is also a shocking abdication of responsibility in the service of extremist ideological goals. At the same time, it’s not a surprise, since McConnell and the Republican Party ran this exact play during the previous recession.

The Great Recession also thrashed state budgets, threatening hundreds of thousands of jobs and worsening the economic crisis. The American Recovery and Reinvestment Act in 2009 gave billions in fiscal aid and relief, but it wasn’t enough to offset the gap between revenues and expenditures, especially after Susan Collins — one of three Republicans to support the bill in the Senate — extracted nearly $80 billion in spending on education and additional infrastructure as the price for her vote.

By 2010, the stimulus had begun to run dry, and congressional Democrats were working to bring more water from the well. But while House Democrats could pass bills, their Senate counterparts were at the mercy of a Republican filibuster. In February alone, Senate Republicans filibustered a temporary extension of health insurance subsidies and stripped a $75 billion package of state aid and infrastructure investments down to $15 billion of tax incentives for hiring.

After Republicans won the House of Representatives in the 2010 midterm elections, conservative lawmakers went from trying to block aid to working to cut spending. Incoming House Speaker John Boehner promised to slash spending to pre-recession levels, and after a series of standoffs the following year over the debt ceiling, his House passed (and President Barack Obama signed) the Budget Control Act, which imposed deep cuts through tight caps on discretionary spending.

That same fall, not content with this attack on the recovery, congressional Republicans scuttled Obama’s American Jobs Act, a $447 billion package of infrastructure spending, unemployment benefits, state aid and tax cuts. Despite near-negative interest rates on public debt, Senate Republicans demanded that the White House offset additional stimulus with further spending cuts, including a plan to slash federal employment by hundreds of thousands of jobs — a move that would have weakened an already anemic recovery.

Without federal aid, state governments had to cut. Public sector employment dropped sharply as states slashed funds for education and public safety. In 2011, there were more than 220,000 fewer teachers than there were in 2009; by 2012, total federal, state and municipal employment had decreased by more than 580,000 jobs.

Looking back at this period in 2016, the left-leaning Economic Policy Institute concluded that even if other policymakers made serious mistakes, the sluggish recovery from the Great Recession could “be explained entirely by the fiscal austerity imposed by Republicans in Congress.” Austerity put hard limits on the economy’s ability to grow, leading to persistent, long-term unemployment for millions of people.

The big difference between now and then is that Republicans hold the White House. Their chances in November rest on their ability to successfully manage the crisis. And voters may frown on a party that doesn’t do enough to prevent a second Great Depression, or causes one outright. McConnell is clever, but he’s not so clever that he can save his majority from the political consequences of economic free fall.

Or maybe we’re simply watching a politician who has no trick other than obstruction, no political mode other than ceaseless partisan operator. Keeping states afloat and rescuing the economy could keep Republicans in office, but it might help Democrats too, so McConnell won’t do it. For this so-called public servant, the only thing that matters is beating the Democratic Party. As for the people of the United States? They’re an afterthought.

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