Pelosi pushes infrastructure, more state and local assistance for next stimulus bill

WASHINGTON (Sinclair Broadcast Group) — Before a single dollar of the largest economic stimulus bill in history has been distributed, congressional leaders are already drawing battle lines for the fight over the next coronavirus relief bill, which could prove much more contentious.

House Speaker Nancy Pelosi, D-Calif., said Monday Democrats hope to have a fourth emergency spending package ready for a vote soon after they return to Washington from their recess. The House is currently scheduled to be back in session April 20, but that may change.

“Our first bills were about addressing the emergency. The third bill was about mitigation. The fourth bill would be about recovery. Emergency, mitigation, recovery,” Pelosi said on a conference call with reporters.

A $2 trillion bill approved by the House and signed by President Donald Trump Friday provides small business loans, relief funds for larger companies and state and local governments, expanded unemployment benefits, and direct payments to millions of Americans. Lawmakers aimed to blunt some of the economic damage caused by the coronavirus pandemic and the social distancing policies that have led to the closure of nonessential businesses in many states.

“The stimulus package is really targeted at areas that businesses need right now, finding ways to support cash flow and helping businesses keep people employed,” said Michelline Dufort, director of the Center for Family Enterprise at the University of New Hampshire.

Pelosi laid out several provisions House Democrats want to see included in a fourth package:

• Infrastructure investment, including expansion of broadband access and improvements to the nation’s energy grid
• Government funding for the costs of coronavirus treatment
• More assistance for state and local governments, including the District of Columbia
• Stronger family and medical leave protections
• Limited expansion of state and local tax deductions that were capped under the 2017 tax reform bill

Republicans rejected some of those proposals in the last round of negotiations, and they did not seem much more enthusiastic about them Monday, dismissing Pelosi’s agenda as a liberal “wish list,” at best tangentially related to the current crisis.

“They’re approaching it — it seems like — as an opportunity to pass their political and ideological agenda. We’re approaching it as, ‘How do we protect the public health and our economy?’ And those are pretty divergent goals,” Sen. John Cornyn, R-Texas, told Politico.

Other GOP lawmakers have questioned whether another stimulus bill will be needed. Treasury Secretary Steven Mnuchin said Sunday the White House is open to another package but is hoping the one Trump just signed will be enough.

“I’m not sure we need a fourth package,” House Minority Leader Kevin McCarthy, R-Calif., told Fox News Sunday. “Before we go to start drafting a fourth package, I’d like these three packages we just put out — remember, it’s more than $2 trillion, the largest we’ve ever seen — to take care and get this economy moving.”

The urgency of the crisis and the political pressure to get something to President Trump’s desk quickly sped the previous emergency relief bills through Congress in a matter of days, prodding reluctant lawmakers to accept provisions they otherwise might not. With weeks before members of either chamber even return to Washington, that immediacy is now lacking.

House Democrats, left out of the drafting of the Senate bill, are eager to place their policy priorities at the forefront next time. Pelosi’s efforts to inject those ideas into Senate negotiations last week mostly fell flat, with Republicans accusing her of attempting to take advantage of an emergency to advance Democratic environmental and election reforms.

“’We want to change the voting laws, we want to change this, we want windmills all over the place to ruin everybody’s house and farm. We want to do all sorts of things,’” President Trump said on “Fox & Friends” Monday. “They wanted things that were so ridiculous and had nothing to do with putting people that just essentially lost their jobs putting them back to work.”

Economists say workers, businesses, and state and local governments will likely need more federal assistance before this pandemic has passed, but they see little reason to rush it through in a matter of weeks. Pelosi may be right about some of the elements the next stimulus bill should contain, but spending on this scale deserves greater scrutiny.

“I believe the next bill is about infrastructure, but I think racing to the next bill is a bad idea. Congress is taking advantage of the public’s sense of urgency and panic to push through specialty projects,” said Anne Marie Knott, a professor of business at Washington University in St. Louis and author of “How Innovation Really Works,” pointing to the $25 million for the Kennedy Center included in last week’s legislation as one example.

According to Jeffrey Bergstrand, a professor of finance at the University of Notre Dame and a former Federal Reserve economist, hospitals and state and local governments are going to have enormous financial needs in the months ahead. The federal government may need to provide them with a lifeline, but he added infrastructure spending is generally a bipartisan priority that could help get the economy back toward full employment.

“Both Democrats and Republicans have been discussing this possibility since the inauguration of President Trump,” he said of an infrastructure package. “What better time?”

Dufort noted much of what is needed in the future would be determined by how long the outbreak lasts and how deep its effect on the economy is once it is over. It will also take time for the impact of the previous emergency spending to become clear.

“What remains to be seen is how long this goes on and if what’s being offered for relief, loans and grants is enough to keep that gap closed for businesses,” she said. “Businesses thrive when there is certainty. COVID-19 has taken a real toll on certainty.”

Particularly with $2 trillion in immediate relief already being injected into the economy, though, some say the focus now should be on directing resources to fight the virus and bolstering the public health response.

“Our national strategy right now is almost wholly reactive and defensive,” said Michael Merrill, director of the Labor Education Action Research Network at Rutgers University. “We are told to stay home and wait it out. That is good advice, and necessary. But we need to do more. We need to re-purpose our economy and our society to fight this war. And only the federal government can do that.”

That means invoking the Defense Production Act to order companies to produce necessary supplies and equipment—something President Trump has so far been reluctant to do--and recruiting and funding what Merrill described as “a public health army” to win the war against the virus.

“We need to mobilize now,” he said. “The truth is we have millions of people in the field fighting the virus. We need to appropriate money for them: protective equipment, monitoring, hazard pay, etc.”

Trump indicated Monday he is considering hazard pay for health care professionals as part of a future bill. However, all of this is costing money the federal government does not have, and the impact on the deficit will eventually need to be taken into consideration.

“I think we should assume that most of the $2 trillion gets added on to the current debt, so $76 billion in additional interest gets added to our annual deficit—even with these historically low interest rates,” Knott said. “That’s a lot of foregone programs, but more likely higher taxes.”

Merrill warned a failure to efficiently contain the virus could also have ramifications for the nation’s debt if it causes people to lose faith in the government and its ability to meet its obligations. He argued that debt-financed tax cuts for the wealthy and corporations already damaged the federal government’s credibility and left the country on an unsustainable fiscal path.

“If we continue to throw money at problems but refuse to raise the revenues required to support our promises, it will all eventually crash We need to do much better or we are done,” Merrill said. “Appropriating money to contain the virus and save lives will do more for our long-term credibility than another bailout.”