Friday, May 22, 2020

Will Congress Act?

David Super

     On Friday, the House of Representatives passed the “Health and Economic Recovery Omnibus Emergency Solutions Act” (the “HEROES Act”) by a less-than-stirring 208-199 vote.  Retiring Rep. Peter King (R-NY) was the only Republican to vote for it; fourteen Democrats, mostly in marginal seats, voted against it.  Senate Majority Leader Mitch McConnell (R-KY) insisted that further legislation was not yet needed and pronounced the House bill a non-starter in the Senate. 

     Showing he has lost none of his flare for irony, Sen. McConnell declared that the bill “includes a massive tax code giveaway for high earners in blue states. Working families are struggling to put food on the table, but House Democrats are prioritizing millionaires on the coasts.”  Meanwhile White House economic advisor Larry Kudlow, having not received the memo, insisted that massive capital gains tax cuts and reductions to corporate income taxes should replace extended unemployment compensation in any future package. 

     The Senate spent the week meeting what it regards as an urgent public need – confirming still more right-wing judges – and then adjourned for an extended Memorial Day recess.  When it will resume regular sessions is unclear.  

     Then the Congressional Budget Office (CBO) released further devastating estimates of economic damage, mirroring Goldman Sachs’s prior downward revision of its estimates.  Now Senator McConnell says further legislation may be “not too far off.”  What should we expect?

     In all likelihood, Congress will enact one more coronavirus relief bill this year, and that bill will come immediately before July 4.  For Republicans to justify a refusal to legislate at all, they must either claim that no problem exists or that it cannot be solved.  As both the pandemic and its economic dislocation increasingly strike communities where the Republican base lives, the former claim is rapidly losing sustainability.  Claiming that nothing can be done is dangerous for an incumbent party, inviting calls to bring in new blood.  With early polls placing their Senate majority in some jeopardy, that seems an unlikely gamble for the Majority Leader to take.  Senator McConnell prefers to have a Republican president, but he lives and breaths to have a Republican Senate. 

     The July 4 congressional recess is the effective deadline for legislation.  After that, Congress will be out much of the rest of the summer for the two party conventions – and the approach of those conventions will harden each party’s positions.  Reaching agreement also will get harder as individual races come more clearly into focus:  Republicans might, for example, not only demand substantive provisions to their liking but also insist that particularly endangered senators be given a formal role in sponsoring popular provisions.  Might Iowa farmers like an “Ernst Rebate” check? 

     With news about the pandemic, the economy, and the polls changing rapidly, it is difficult to predict with much precision the shape of the final legislation.  Some aspects of the process, however, can be anticipated. 

     First, the legislation likely will embrace few topics not addressed in prior coronavirus relief bills.  Senator McConnell mocked extraneous provisions in the HEROES Act as a “seasonal catalog of left-wing oddities”.  Democrats, in turn, will want mightily to resist long-term tax cuts that increase the structural deficit (and pressure on human services programs) as well as the Republicans’ strange proposal to immunize employers for illnesses workers contract on the job.  Both parties’ bases are likely to be more forgiving about the omission of provisions they support than they about the inclusion of ones they detest.  The solution is likely to be an informal germaneness test based on the contents of the prior bills. 

     Second, the process of formulating the legislation will go slowly for a long time and then suddenly go very, very fast.  With any final package likely to anger both sides’ partisans, and no real capacity to keep negotiations secret, neither side has any incentive to make concessions – even provisionally – until the very end of negotiations.  Once that time comes, however, the impending recess will force decisions to be made very rapidly. 

     Savvy advocates are working now to generate momentum for their proposals to become high priorities.  They also are getting as many proposals, and possible fallbacks, as possible drafted into legislative language and costed by CBO.  An under-appreciated but often pivotal aspect of the legislative process is the allocation of the time of Legislative Counsel attorneys and CBO analysts.  Once negotiations start in earnest, any options that are not officially drafted and scored will effectively be dead. 

     Each chamber’s leadership is attempting to influence how these scarce resources are rationed among their various Members and committees.  One way of stretching one’s ration of Leg Counsel time is to give its attorneys proposed legislative language that is already clear and compliant with its conventions, requiring only light touch-ups.  The more sophisticated outside groups, and even some Members and committees, have sought out attorneys capable of producing these sorts of drafts.  This also can increase the chances of getting a proposal scored as CBO typically refuses to provide estimates without clear, final legislative language.  CBO is less receptive to suggested cost estimates, except those submitted by the Administration, but that does not stop others from trying. 

     Third, even if the news on the pandemic and the economy is bad, and even if polling shows the electorate increasingly scorning them, the Republicans will nonetheless retain the upper hand in negotiations.  Politically, unless one side or the other badly misplays, the electorate likely will divide blame for failure to produce legislation.  But the Democrats will be fighting for desperate people in immediate need whereas the Republicans are pursuing broader ideological interests.  Those interests would like to win tax cuts or narrow workers’ rights in this legislation, but if they cannot they have plenty of money to continue those fights into the future.  Their longer time horizon provides a crucial advantage. 

     Finally, the one issue most likely to bring down the legislation is state fiscal relief.  If the Republicans were still the party of the states, as they were for several decades, keeping the states fiscally viable in the face of a crisis not of their making should be easy.  Today’s party, however, is having trouble passing up an extraordinary opportunity to force massive state budget cuts. 

     Democrats, on the other hand, cannot back down on this issue.  The fiscal position of the states is dire:  an estimated $765 billion in budget shortfalls over three years.  That is half again what states lost during the first three years of the Great Recession.  By way of comparison, if states halved their education spending – K-12 and higher education – for three years they still would not have enough to close this gap.  Budget cuts of this magnitude would fundamentally transform the role of government in this country. 

     Perhaps even more importantly, Republicans agreed to a large state fiscal relief package in exchange for Democrats agreeing to forego it in legislation increasing funding for the Payroll Protection Program.  Part of the deal was a promise that President Trump would tweet his support for state aid.  Experienced legislators typically will not continue working with those that refuse to honor their word, whatever the substantive consequences.

     Once this legislation passes, it is difficult to imagine the parties coming together on anything else substantial until after the election.  Leaders tried to placate advocates for provisions omitted from prior legislation by assuring them that another bill would soon be coming.  That will be much harder this time.


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