As another five million people flood the unemployment system, the country faces a classic whodunit: Who killed the U.S. economy?
The novel coronavirus must bear some of the blame. Social distancing has pushed millions of consumers and producers into their homes. A temporary societal shutdown means a temporary economic contraction.
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But the length of the recession—whether the economy bounces back post-shutdown, or whether we lose another decade of growth—is as much about government as the conditions on the ground. Unlike the 2008 crisis, the current contraction is not a correction for malinvestment but the product of a nationwide decision to combat a deadly disease. That effort is led, and in many cases imposed, by government; it makes sense for the feds to pick up the tab.
With a few exceptions, congressional Republicans have agreed with this analysis, working swiftly and aggressively to staunch the bleeding. Not an economic conservative to begin with, President Donald Trump has been particularly gung-ho, calling for another $2 trillion in stimulus spending before the ink on the first $2 trillion bill had dried.
If you want to know how congressional Democrats are thinking about the crisis, though, just ask House Majority Whip Jim Clyburn (S.C.). Brainstorming with over 200 members of the Democratic caucus, Clyburn admonished his colleagues with a line we suspect will become infamous: "This is a tremendous opportunity to restructure things to fit our vision."
His fellow Democrats were obviously listening. Few have been more unwilling to not let the crisis go to waste than Speaker of the House Nancy Pelosi (D., Calif.). She delayed passage of the last bailout bill by more than a week, floating a 1,400-page counter-proposal jam-packed with special handouts and diversity mandates. She has pushed tax cuts for blue-state billionaires and commended her colleagues for delaying Republican efforts to shore up the economy.
Following her lead, Pelosi’s colleagues demanded bailouts be tied to a $15 minimum wage, a universal post-crisis paid family leave program implemented, and poured millions into patronage favorites like the Kennedy Center—which laid off its employees anyway, only to reverse course when it received backlash from the news media.
Now, it’s deja vu all over again. Last week, Republicans tried to pour another $250 billion into the $350 billion Paycheck Protection Program, a keystone of the coronavirus stimulus that gives small businesses forgivable loans to cover their payrolls. The program has been among the crisis's most successful and most heavily in demand—and was then in danger of running out.
Democrats demanded another $250 billion for hospitals and state and local government. When Republicans argued the details would take too long to sort out, Democrats blocked the clean bill. Pelosi even claimed there was "no data as to why we need" the added money.
A week later, the PPP fund has officially run dry. Hundreds of thousands of small business owners now can't pay their employees, the first domino in a chain of economic disaster.
This sort of brinksmanship has costs, as small business owners across the country are learning. In a crisis, time is money—and lives—lost.
There is still time to avert the impending mass closures. But even if Democrats finally concede on the PPP, this is unlikely to be their last stunt. Pelosi has made clear that she has no problem gambling with the livelihoods of the American people.
Over the next seven months, Joe Biden and congressional Democrats will work to pin the all-but-ensured economic downturn on President Trump. It might work—a recession can sink even a popular president's chances at reelection. But maybe voters will remember that for Democrats, their failing businesses and lost jobs represented not a tragedy, but an opportunity. Maybe it won't be remembered as Donald Trump's recession, but Nancy Pelosi's.