Policy

Cash-for-Coronavirus Reveals a Philosophical Divide in the GOP

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As the Senate works to shore up an economy decimated by the coronavirus, a surprising fight has emerged among Republicans: Is the government spending enough?

Spurning payroll tax cuts and universal sick leave as insufficient, a trio of Republican senators—Mitt Romney (Utah), Tom Cotton (Ark.), and Josh Hawley (Mo.)—have floated plans to directly pay American families thousands of dollars. The trio has the support of the White House, which has come out swinging for fiscal stimulus. They face resistance, however, from libertarian-leaning opponents like Sen. Lindsey Graham (R., S.C.), right-leaning economists, and the Wall Street Journal‘s editorial board, for whom their plans represent a dangerously liberal approach.

While the disagreement is prompted by the coronavirus crisis, it has roots in an ongoing dispute in the GOP. For decades, Republicans have been skeptical of government transfers, reserving welfare for those most in need, and otherwise preferring to boost growth by shrinking the state. A newer wave of party leaders, however, increasingly see a role for government in supporting families and workers directly with cash, rather than merely getting out of their way. This difference of vision, part of a larger libertarian/populist contention, will doubtless continue to play out after the crisis is over, into the 2024 political season.

Republicans' cash payment plans have come in a flurry over the past week. On Monday, Romney proposed $1,000 onetime checks to every American adult. He was followed on Tuesday by Cotton, who floated an income-capped onetime payment of $1,000 per adult and $500 per child, and Hawley, who called for direct payments to families in the amount of IRS estimates of average monthly expenses, up to $2,206 for a family of five.

These are expensive, expansive proposals, on par with or exceeding those floated by Democratic colleagues like Sens. Bernie Sanders (I., Vt.) and Kamala Harris (D., Calif.). While such payouts have precedent in the Bush administration's tax rebates in the 2001 and 2008 recessions, their aggressiveness indicates Republicans are worried less about fiscal restraint, and more about bolstering families—both now and in general.

"Privately, many Republican lawmakers have warmed to cash benefits as a proactive but non-bureaucratic way to support families," Samuel Hammond, who directs welfare policy at the libertarian-leaning Niskanen Center and helped design the Hawley plan, told the Washington Free Beacon. "They have just been waiting for the right moment to act. No one expected that moment to be a global pandemic, but here we are."

In part because they recognize this dynamic, the cash-for-coronavirus push has raised some coalition members' hackles. Sen. Lindsey Graham (R., S.C.) told reporters on Tuesday that cash payments were redundant and the government should focus on providing small business loans: "I'm not going to give a check on top of a check."

The Wall Street Journal editorial board on Tuesday issued its own condemnation of the instant cash plan, arguing that it is ill-suited to address "genuine hardship," while "some people who will get the $1,000 won't need it." Conservative economists Steve Forbes, Art Laffer, and Stephen Moore also opposed the idea, saying it and other transfers "will inhibit growth and discourage work."

The common theme in these objections is a skepticism of what government welfare can achieve. Rather than issuing universal payments, this more-libertarian camp argues it is better for the government to narrowly target support to those most in need, while otherwise staying out of the way to avoid hampering economic growth.

While the current dispute is prompted by the coronavirus, similar back-and-forths have flared up before. During the 2017 tax debate, two populist-minded conservatives, Sens. Marco Rubio (Fla.) and Mike Lee (Utah), attempted to trade an increase in corporate tax rates for an expansion of the child tax credit, in effect giving most families with children money back on their payroll taxes at the cost of making businesses pay more. Rubio described the plan as "pro-growth" and "pro-worker," an appeal to more populist conservative values.

But to those now opposing cash transfers, the idea of a child payment reeked of liberal welfare. The Journal blasted Rubio for slowing tax reform and for introducing "a disincentive to work [that] we would have thought antithetical to conservative principles," i.e., paying a tax refund to those who owe no federal tax. The amendment was eventually defeated by a group of Republicans who joined with Democratic colleagues in opposition. Just as with cash-for-coronavirus, among Republicans, the dispute was philosophical: Can universal payments help people, or should the government just stay out of the way?

Joshua McCabe, a professor of sociology at Endicott College who authored a historical study of recent American welfare policy, told the Free Beacon that he sees the difference between the pro-payment and anti-payment camps as coming down to how they define "welfare." Other nations' conservatives, McCabe said, make a distinction between "social assistance"—generous benefits for those most in need, like the unemployed—and "income supplements"—universal, but much smaller benefits to give families a leg up. Conservatives in America have long synonymized the two but, McCabe argued, that may be changing.

McCabe noted that the GOP has been moving toward support for universal payments slowly over the past several years—first with the Rubio-Lee amendment, and most recently with Romney's announcement of his support for a universal child benefit. Now, McCabe said, "We see a broad group of Senate Republicans, including Hawley and Cotton, pushing for similar measures." The backing from the White House is likely to help move the ball even further for the pro-cash camp.

"The key thing to watch is which group rank and file members end up gravitating toward," McCabe said. "In the past, cash-friendly members wouldn't bother sticking their necks out and deviating from the orthodoxy because they had no cover and no concrete proposal to support. Now they have a viable option. That changes the calculus."

That seems to be making anti-cash GOPers nervous—about this fight, but also about their political futures. Cotton, Hawley, and Rubio are all considered potential contenders for the 2024 Republican presidential primary. A successful run by any of them could shift the balance of power in the party away from its more libertarian, business-oriented wing and into the hands of the nascent populist, worker-focused tendency awakened by, among other things, the electoral success of President Donald Trump.

What that means is even as Congress works to avert economic catastrophe, everyone is still thinking about the long game. The success of cash-for-coronavirus may be the nod some GOPers need to come out more strongly for measures like a child payment during better economic times. That, in turn, would profoundly alter Republican orthodoxy on welfare—and, by extension, the party itself.

Update 1:37 p.m.: This post was updated to more precisely describe the Rubio-Lee amendment.