Democrats Determined To Avoid Their Old Mistakes With Big COVID-19 Stimulus
The last time the U.S. economy suffered a crisis and needed an injection from the federal government, the Democratic Party was fighting with itself over how big rescue legislation should be.
There were those who thought something really huge ― over $1 trillion ― was necessary to get the country back on track after the 2008 financial crisis. But plenty of others believed an amount that high not only wasn’t necessary, but was a political loser. Democrats didn’t want to give Republicans any more ammunition to attack them as profligate spenders. Obama adviser Larry Summers actually forbade one of his colleagues from so much as presenting Obama with an option that topped $1 trillion.
Since then, a consensus has emerged among economists that President Barack Obama’s 2009 stimulus package, which ended up costing roughly $840 billion, greatly benefited the economy but should have gone much further. It essentially was big enough to anger Republicans but not big enough to fully get the job done for the economy.
The lessons from that fight, as well as the negotiations over the Affordable Care Act, are now shaping the $1.9 trillion stimulus package that President Joe Biden has offered to help the country recover from the coronavirus pandemic.
The takeaways for Democrats are clear: 1) Go big, and 2) don’t wait around forever for Republicans to get on board.
“The history of fiscal interventions has shown us that the tendency is to go small rather than to go big. If you listen to not just the president, but Janet Yellen, who has a fair bit of experience with this sort of thing, the risk here is not doing too much, it’s doing too little,” said Jared Bernstein, a member of the president’s Council of Economic Advisers.
“The lesson of 2009 is repeated and respected even among the colleagues who weren’t here at the time,” said Sen. Richard Blumenthal (D-Conn.), who was his state’s attorney general at the time.
“If you remember 2009, we...
