Fiscal Policy

Republicans, Heed the Stimulus Lessons of December 2008

Freeway interchange in Los Angeles, Calif. (Eric Thayer/Reuters)
An infrastructure package would strengthen the Republican coalition.

History may not repeat, but it often puts the same people in familiar situations. Senate Republicans now find themselves in a moment uncannily similar to December 16, 2008.

It was another lame duck following a presidential election that replaced a Republican with a Democrat. As now, the Republicans in the Senate, led by Mitch McConnell, were refusing to negotiate with the Democrats over any stimulus — despite an economy that was plummeting. Even the unemployment rate was the same: 6.9 percent.

The outcome on the stimulus package depended on whether two Republicans would vote with the Democrats. As it happened, three did — Senators Susan Collins and Olympia Snowe of Maine and the late Arlen Specter of Pennsylvania — but on terms that produced a slow, disappointing recovery. Unlike the aftermath of previous U.S. recessions, annual growth never exceeded 3 percent in the Obama years.

The ultimate result was massive middle-class disaffection, setting the stage for Donald Trump’s takeover of the Republican Party.

Today, reviving the slumping economy will require unprecedented infrastructure investment, and while Trump talked about infrastructure for five years, he never did anything about it. A big reason was that many high-profile projects, such as New York’s Gateway Tunnel, are in areas that tend to vote Democratic.

But many Republican governors, such as Larry Hogan of Maryland and Charlie Baker of Massachusetts, are in states that need infrastructure revival themselves. Other Republican states have massive projects that lack funding to complete, including Texas, which wants a $30 billion high-speed rail connection between Dallas and Houston. More important, any Republican who aspires to be governor in states such as Pennsylvania, Michigan, and Georgia will need a boost from infrastructure spending as well.

The question now for Republicans is whether they will continue to imbibe the strange brew that is Trumpism. Stirring the pot with grievance, Trump has practically guaranteed that the party will never receive support from a majority of the American people. Republicans have lost the popular vote in seven of the past eight elections, and, other than the forgettable Benjamin Harrison in 1892, Donald Trump is the only elected president to lose the national popular vote twice.

Trumpism also appears to give the Democrats a long-term Electoral College advantage, turning previously reliable red states in the Sun Belt and Midwest into battlegrounds.

Still, as the year comes to an end, Senate Republicans may be inclined to reject infrastructure investment simply because they can’t resist the confrontational way of governing. That is a big mistake. In this case, cooperating with Democrats can actually help Republicans.

A good example of such a win-win was the Telecommunications Act of 1996, passed 414-16 in the House and 91-5 in the Senate. Republicans were never destined to beat Bill Clinton in 1996, but that law helped create a boom that enabled George W. Bush to promise tax cuts that helped him win the presidency. If it weren’t for the unforeseen financial crisis in 2008, Bush could well have been succeeded by a Republican president — in large part because Republicans compromised on legislation that unleashed the Internet economy.

In short, by supporting infrastructure investment today, Republicans can help themselves in states they must win to control the Senate and House, states where they can elect more governors and where their next presidential election will be decided.

Republicans who like being in the party of the aggrieved should oppose everything President Biden wants, regardless of whether it’s a good idea. Republicans who would prefer to position their party for enduring popularity should head toward the political middle — at least for the first few months of the next presidency. That is when the fate of an infrastructure bill, and the economy as a whole, will be determined.

In this connection, here are three lessons from the experience of 2008-09.

First, there’s no way to tell how bad the economy will get, so pass a stimulus bill large enough to meet the worst assumptions — in this case, that sufficient vaccine distribution will extend well into 2022. In 2009, the Republicans and Democrats negotiated the stimulus bill downward. Don’t do that again.

Second, fund all the major physical platforms the economy requires: power, communications, transportation, water, sewage. Embrace earmarks or other allocation standards as a way of making sure every worthy state and community gets funds. Republicans should even embrace the Clean Energy and Sustainability Accelerator that some GOP House members supported with Democrats earlier in 2020. The bill allocates 40 percent of its funding to disadvantaged communities, many of which are located in Republican strongholds.

Third, stimulating the economy equals reviving infrastructure, not least because workers in this category can safely do their jobs outdoors. Spending will be sustained and substantial for years. State and local governments will play a big role, as will private-sector investors from around the world. Terrence Keeley, a BlackRock official, recently wrote, “Trillions of dollars of private capital are both ready and willing to be deployed for high-quality infrastructure projects.”

There is little for Republicans to dislike in this prospect, and making the right choice now allows them to be a competitive party for years to come.

James K. Glassman, former Under Secretary of State for Public Diplomacy under President George W. Bush, is a member of the advisory board of the Infrastructure Bank for America, a proposed private institution to invest in U.S. infrastructure.

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