No, Shutting Down Another Stimulus Won’t Cost Trump The Election

No, Shutting Down Another Stimulus Won’t Cost Trump The Election

What makes Trump look worse before the election: trying to get a deal with no success, or pointing out that the other side doesn’t want a deal for political reasons and pulling out of talks?
Willis L. Krumholz
By

President Trump announced on Twitter that he was shutting down stimulus talks with Democrats until after the election because they were “not negotiating in good faith.” “Pelosi is asking for $2.4 Trillion Dollars to bailout poorly run, high crime, Democrat States, money that is in no way related to COVID-19,” wrote Trump.

The president continued: “Immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business.” Instead, Trump is asking Sen. Majority Leader Mitch McConnell to focus on the Amy Coney Barrett Supreme Court nomination in the month before the election.

The criticism started immediately. Corporate media scoffed that now it would look like the lack of a stimulus was all Trump’s fault. Conservatives, especially of the nationalist conservative variety, were quick to criticize Trump for not making a deal with Democrats and for hinting at fiscal conservatism. The key theme was that Trump ending talks with Pelosi would cost him the election.

The criticism is wrongheaded, and a classic example of D.C.-think versus what works in the real world. The disagreement between the White House and House Democrats has little to do with “fiscal conservatism” (which has been dead in D.C. since the halcyon 1950s) or the total dollar amount of proposed spending, and much more to do with what the money does or doesn’t do.

Of course, the situation is fluid and Trump could reverse course within the week—it’s a classic Trump move to end talks only to restart them again. But as of now shutting down talks is the right move and won’t cost Trump the election.

That’s because the Democrats really have been negotiating in bad faith. Pelosi’s asks are intended to be unacceptable to Republicans, and when Republicans have moved to compromise, House Democrats have several times moved the goalposts.

Pelosi never planned on getting a stimulus passed unless she extracted a massive pound of flesh. Why would she give a win to Trump before the election? She’s operating on the conventional D.C. wisdom that one kind of stimulus helps Trump — so she’s been pushing a stimulus that would hurt Trump if passed. Just consider what a Pelosi is asking for.

First, House Democrats want nearly $1 trillion for state and local governments. At most, state and local governments have a $250 billion budget shortfall. Republicans have offered an amount equal to the actual budget shortfall, and some GOP senators have offered more—especially if the money gets kids back in school so parents can work. But Pelosi roundly rejected these offers. The biggest beneficiary of the proposed $1 trillion for states like California, New York, and Illinois would be public-sector unions—slush funds for the Democratic Party.

More state employees mean more dues paid to these unions and more money to the Democrat Party. States with massive pension liabilities, run up by leftist politicians giving handouts to the public-sector unions in exchange for votes and donations, could be wiped away at the federal taxpayers’ expense. People can complain about fiscal conservatism, but it isn’t good politics to give the opposing party $1 trillion, and little of this money would end up in the hands of actual working people.

Second, another divide involves Democrats’ wish to have the $600 in enhanced unemployment benefits continued, with retroactive benefits paid after the end of July. The problem here is that a person had to make roughly more than $60,000 per year from work to make work pay better than receiving the enhanced unemployment, which tweaked the rules to make it incredibly easy for those not even searching for work to receive the benefit.

The White House was offering $400 in an enhanced benefit. The way the math works, the lower the enhanced benefit goes, the lower the annual income threshold is for unemployment benefits to pay more than work.

Pelosi’s reasoning has nothing to do with Democrats’ love for welfare — it is completely political. The $600 enhanced benefit, were it continued back in July as certain all-knowing pundits wanted, would have kept the unemployment rate artificially high after the shutdowns. Even if people feel momentarily cash-rich, a high unemployment rate that is not moving lower is not conducive to an incumbent president’s reelection. Pelosi is smart and knows this. The White House knows this too.

Not only that, consider that outside of D.C., especially in rural areas, $60,000 per year is a middle-class income. The median is where most Americans are at. $60,000 is above the median individual income and just below the median household income. Anyone who thinks that the optics of paying people $60,000 annually not to work while others make less and work their tails off will fly in Middle America should quit politics. Even the White House’s final proposal of $400 in enhanced benefits — hoping to make a deal with Democrats — was too high.

Finally, Democrats had all sorts of other untenable asks. Remember the freakout over Post Office funding that became a media narrative when it was useful and has since disappeared from the ether? That’s because Democrats were pushing a stimulus bill that would aid mail-in voting — which means that un-postmarked ballots without a witness signature and sometimes collected by “third-parties” can come in days after the election in swing states like Pennsylvania and Michigan.

Republicans were never going to agree to all these demands. Senate Republicans ended up offering more postal funding, but the Democrats soon moved to another demand and the supposed urgent need for postal funding disappeared from the narrative.

To sum it all up, Pelosi offered Trump a deal. The deal was a crap sandwich, and she refused to budge even while Republicans tried to meet in the middle. No deal is absolutely better than a bad deal, both politically, and for the economy. The author identifies as a nationalist conservative and that’s why he believes useless spending really does matter because the data shows it especially hurts working Americans.

The question then was what the president would do. As a non-politician, who actually doesn’t spend all day on Twitter or worrying about what the media will say, Trump knows that in the real world it is far better to walk away and take the issue to the voters than to continue meaningless talks that make it look like all parties involved can’t get it done.

If the deal wasn’t going to happen before the election anyway, it is better everyone knows that and stops pretending to be negotiating. What makes Trump look worse before the election: trying and trying to get a deal with no success, or pointing out that the other side doesn’t want a deal for political reasons and pulling out of talks?

Now Trump will take his proposed stimulus to the American people. That includes more checks for American families, a payroll tax cut (which some Senate Republicans have opposed because of so-called fiscal conservatism), a modest amount of enhanced unemployment, and more aid for small businesses.

Trump should hammer Democrats for being opposed to a payroll tax cut — a tax that uniquely hits working Americans. Such a line is particularly useful to blunt Democratic criticisms of the corporate tax cut.

President Trump should also remind Americans of Joe Biden and Pelosi’s big priorities: A bailout for Democrat public-sector unions and an end to the Trump tax cut’s cap on the state and local tax deduction (SALT), which would amount to a massive tax cut for the blue-state rich. In other words, it is an opportunity to further make the GOP ticket the party of the working man and woman.

Willis L. Krumholz holds a JD and MBA degree from the University of St. Thomas. The views expressed are those of the author only. You can follow Willis on Twitter @WillKrumholz.
Photo White House / Flickr

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