Pelosi’s Taxpayer Ransom Demand Trump walked after the Speaker insisted on no less than $2 trillion.
https://www.wsj.com/articles/pelosis-taxpayer-ransom-demand-11602026171?mod=opinion_lead_pos1
President Trump decided Tuesday to walk away from talks on another coronavirus spending blowout until after the election, and that’s the best decision for the economy and taxpayers. Speaker Nancy Pelosi and Democrats refused to accept anything below $2 trillion, and their political ransom demand is what blew up the deal.
Mrs. Pelosi’s calculation is pure political cynicism. Either Mr. Trump agreed to her terms, or she’d blame him for the failure and use it as an election issue. She didn’t want to risk giving Mr. Trump even half-credit for a relief bill before the election. She knows the media will spin it her way, and if Joe Biden wins in November she’ll be able to write an ever bigger spending bill disguised as “stimulus” next year
You almost have to admire the audacity of her demands. Our sources say the White House’s final offer was in the range of $1.6 trillion, but Mrs. Pelosi wouldn’t take it. Think about that. A Republican President was willing to spend an amount that was half the federal budget only a few years ago, and Mrs. Pelosi said no. Some spirit of compromise.
Mrs. Pelosi’s biggest demand was more than $400 billion for states, cities and tribal lands. This is a bailout for Illinois, New York, California and other Democratic states that refuse to adjust their budgets to post-Covid realities. It’s an income redistribution play from Florida and Texas taxpayers to blue-state public-union pensions. She also insisted on at least $500 a week in enhanced jobless benefits, which means millions of Americans would earn more by not returning to work.
Stocks fell on the negotiation news, but that’s because Wall Street has become Pavlovian on the issue of so-called stimulus cash. But aside from money for beleaguered industries like airlines, there was very little stimulus at all. Both parties agreed on another $1,000 pre-election payment to millions of voters, but that would have little economic impact beyond a short-term fillip for consumer spending.
Federal Reserve Chairman Jerome Powell stuck his chin into the debate on Tuesday by claiming the economy will suffer without more fiscal aid. But that’s far from clear. The economy is still rebounding in robust fashion, enough so that at their September meeting the Fed Governors had to update their too pessimistic predictions from June. St. Louis Fed President James Bullard told the Journal this week that the economy is healthy enough that no more monetary stimulus may be needed.
Data such as industrial production and, this week, service-industry activity have been strong. A rebounding labor market and a 14% savings rate pave the way for more consumer spending without $1,000 checks. The Atlanta Fed’s GDPNow forecast for third quarter growth is 35.3% as of Tuesday.
The main current economic problem isn’t a lack of demand-side stimulus. It is the continuing restrictions on business and commerce in many states. The state economies suffering the most are those that have continued the strictest lockdowns. The August jobless rates in New York (12.5%), California (11.4%) and Pennsylvania (10.3%) were the highest in the country. Contrast that with Utah (4.1%), Texas (6.8%) and Georgia (5.6%). The solution is to reopen the economy while protecting the most vulnerable from Covid.
The relief debate now moves to the election campaign, and Republicans should educate voters about Mrs. Pelosi’s political extortion play. Her swing-district Members, many of them freshmen, will now return to their districts with nothing to boast about. They’re merely cogs in the Pelosi machine, and voters should know the real reason the relief talks failed.
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