The Morning Jolt

Economy & Business

Congress Did a Poor Job

The U.S. Capitol, after Congress agreed to an economic stimulus package created in response to the economic fallout from the coronavirus in Washington, D.C., March 25, 2020 (Tom Brenner/Reuters)

We made it to Friday.

Prime Minister Boris Johnson has tested positive for the coronavirus. He announced the news in a tweet this morning. “Over the last 24 hours I have developed mild symptoms and tested positive for coronavirus. I am now self-isolating, but I will continue to lead the government’s response via video-conference as we fight this virus. Together we will beat this.”

No, Congress Did Not Rise to the Challenge of Coronavirus and a Collapsing Economy

This week’s The Editors brought one of those rare moments where I disagreed with Charlie Cooke. Disagreeing with Charlie is a bit like looking at Michael Jordan and thinking, “I can take him one-on-one.” (I’m sure Charlie would prefer a comparison to Gardner Minshew.) That being said, I still think speed mattered, and that the U.S. Senate did not act with anywhere near the requisite urgency that the coronavirus-driven recession warranted.

I probably spoke imprecisely; the U.S. government does not have a Third World structure or response to the coronavirus crisis. But some of our members of Congress are treating it with the rank opportunism, selfishness, small-mindedness, greed, and provincialism we associate with Third World kleptocrats, tinpot dictators, and other leaders who make bad situations worse. The house is burning down, and they’re blocking the fire truck from getting to the scene because the firefighters don’t plan to use their preferred kind of fire hose.

Once the economic-relief bill is signed, it will still take time for the money to reach the people. Treasury Secretary Steven Mnuchin estimates most Americans will get the relief money in about three weeks. If the Internal Revenue Service already has your bank account information on file, you’ll get it quicker. If the IRS doesn’t have that information, the money will be sent by check. In February 2008, Congress and the Bush administration agreed on legislation to send out stimulus checks. Americans started getting the checks in May, June, and July. Oh, by the way, the IRS is attempting to operate under social-distancing rules, just like everyone else, meaning it is probably not working at top speed.

The money going to move slowly, while the economic effects of the coronavirus crisis are accelerating more quickly. It is hard to overstate the scale of the economic shock of more or less declaring that all “nonessential” businesses have to close their doors indefinitely.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, laid out how we’re getting the economic equivalent of a Hurricane Katrina, all around the country, simultaneously:

In 2008 the crisis was focused on the financial system and housing market. It was much more narrow. This is, in effect, an economywide shock. When [Hurricane] Katrina hit New Orleans, it was a catastrophe. This is like a natural disaster hitting the whole economy at once. Except for food and grocery stores, most other sectors are all being squeezed at the same time, across industries. All these firms are drawing down bank lines of credit because they’re scared. That’s the mechanism by which this natural disaster is going into the financial system.

Economic analysts are now looking past the current quarter projecting that the economy will shrink by 2 percent for the year — and that’s simply not knowing how quickly we can start the economic engine back up again.

Kashkari, who administered the TARP program, knows a heck of a lot more about this than I do, but his conclusions line up with my instincts — get the money out the door as fast as possible, and fix what goes wrong later. “If a bunch of businesses get help that didn’t need it, that’s fine, that’s much better than taking a decade to rebuild the labor markets. After the fact, some investigator or some reporter is going to find some business, some millionaire who got a free gift from the government because we didn’t tailor the program. And people will say, ‘Oh my gosh, how outrageous.’ And there will be congressional investigations. We just have to get over it, err on the side of getting more help out there.”

Each day, we’re seeing some sort of new ramification of this timeliness problem. The federal government delayed the deadline for filing federal income taxes from April 15 to July 15, and because people often need to know their federal tax bill to calculate their state tax bill (and vice versa), many states are doing so as well. But most state budget years start July 1. In addition to having a sudden crash on sales tax revenue — because no one can buy anything besides groceries and restaurant delivery and take out — states now won’t have income tax payments coming in the way they usually do. Remember, just about every state requires its budget to be balanced (although there is some debate about what qualifies as “balanced.”)

Down in Florida, the state’s chief financial officer, Jimmy Patronis, is pointing out that the recently passed state budget didn’t account for any of the coronavirus-induced shocks. The Disney resorts are closed; as of 2015, Disney World was paying close to $600 million in state and local taxes. People are being kept off the beaches. Almost no one is flying south for vacations. How many people are even thinking about going to Florida later this year? The state has a 6 percent sales tax. How much projected tax revenue is being lost with every canceled sporting event, concert, festival, and other big gathering?

“Considering the COVID-19 pandemic the [state] Revenue Estimating Conference should convene to ensure there is sufficient revenue to pay for fiscal year 2020-2021,” Patronis told me in an email. “We all share in a constitutional obligation to ensure the state can raise sufficient revenues to finance the appropriations prerogatives of the legislature.”

Patronis said he’s interested in looking into the effects of the Rainy Day Fund, in a light-to-severe hurricane season, and how we would potentially overlay that with REC forecasting and estimates:

Clearly, government’s burn rate has increased while revenues have decreased. It’s difficult to budget for the future without credible revenue forecasts, which is needed now more than ever before.

Some might argue that when the country faces a problem that is so gargantuan, far-reaching, and so complicated, it makes little difference if Congress wastes another day with Nancy Pelosi insisting the legislation include mandatory diversity reports on corporate boards, an additional $45 million for the USDA Agricultural Marketing Program, an additional $78,000 to the Institute of American Indian and Alaska Native Culture, and so on. (Read Pelosi’s bill yourself.) But there’s the time cost and also the symbolism that even at the time of an unprecedented crisis, the federal government’s priority is to find extra money that can be steered to members’ preexisting special spending priorities here, there, and everywhere. This is the most serious of times, and it brought forth some of the most unserious of responses.

We’ve always had carnival barkers, pork-addicted idiots, and used car salesmen in Congress. Representative Jim Traficant of Ohio used to bellow “Beam me up, Mr. Speaker” on the House floor with hair that looked like a dead squirrel resting on his head. (Traficant’s only real policy demand in any given situation was that the federal government buy American-made products . . . which looks pretty appealing from the perspective of 2020!) But when a real crisis hit — the Kennedy assassination, Watergate, the Iranian hostage crisis, 9/11, the anthrax mailings — the grownups were in charge, at least enough to keep their eye on the ball. No one held up the entire government response so they could get some new federal offices in their district.

During negotiations, most lawmakers expected that once a deal was reached, the House of Representatives would pass the bill by voice vote. This is where they ask for all in favor to say “aye,” all opposed to say “no,” and the chair concludes the ayes have it. In the official congressional record, the measure is recorded as passed by voice vote, with no specific vote attached to a particular member. Voice votes are usually only used on less consequential measures such as renaming a post office. But voice votes can only be used with unanimous consent; any member who wants a recorded vote can ask for one and the measure cannot pass until the vote of each member in attendance is recorded.

The Senate passed the economic relief bill, 96 to 0. But now there’s a hitch: “Rep. Thomas Massie, a Republican who represents Kentucky’s 4th District, also hinted that he might object to a voice vote in the House of Representatives, which would force all members to return to Washington, D.C. and slowdown movement on the bill.”

“I’m having a really hard time with this. Because they’re saying, well it’s hard to travel, yadda yadda yadda,” Massie said. “Well, last night, 96 out of 100 Senators voted. All we would need is 218 out of 435 to vote,” he added, pointing to a section of Article I in the U.S. Constitution that states “a majority of each shall constitute a quorum to do business.”

Except we already know the coronavirus is on Capitol Hill. At least 36 members of Congress are in self-quarantine, after learning that they had interacted with someone with coronavirus. Right now, the House of Representatives cannot pass legislation without getting lots and lots of elderly people all together into the same room.

Brendan Buck, a former aide to Speakers Paul Ryan and John Boehner, observed, “it is quite the statement of his character that Thomas Massie is legitimately threatening the health of his colleagues, many in their 60s or 70s even 80s, for a stunt on a bill he knows is going to pass. I hope no one forgets what he’s done here.”

Congress needs to create a secure and verifiable method of voting from remote locations really, really fast.

ADDENDUM: Obviously, we have to take all news from Russian sources with a certain amount of wariness, but Kremlin spokesman Dmitry Peskov said a coronavirus infection has been identified in the Russian presidential administration. He added that Vladimir Putin had not made contact with the patient, and sanitary measures are being taken to stop the spread of the virus.

Because we all need it, here is one minute of puppies from the Atlanta Humane Society exploring the Georgia Aquarium.

Most Popular

The League of Morons

Let’s look back at the two and a half years when the greatest country on earth went crazy. What was that all about? How did it happen? How could so much have happened based on so little? Did we learn anything? It’ll take a keenly observant artist to put it all in perspective. Fortunately two artists have ... Read More

The League of Morons

Let’s look back at the two and a half years when the greatest country on earth went crazy. What was that all about? How did it happen? How could so much have happened based on so little? Did we learn anything? It’ll take a keenly observant artist to put it all in perspective. Fortunately two artists have ... Read More

How to Avoid a China-Led World Order

As the COVID-19 crisis has unfolded, it has opened our eyes to China’s rapidly expanding role in the international order and global economy. Beijing’s outsize role in the World Health Organization has come under attack, as has the muscular diplomacy used by China’s foreign ministry in responding to ... Read More

How to Avoid a China-Led World Order

As the COVID-19 crisis has unfolded, it has opened our eyes to China’s rapidly expanding role in the international order and global economy. Beijing’s outsize role in the World Health Organization has come under attack, as has the muscular diplomacy used by China’s foreign ministry in responding to ... Read More
Elections

Biden’s Middle-Class Tax Pledge

Biden is pledging not to raise taxes on anyone making less than $400,000 a year. As I note in my Bloomberg Opinion column, Democratic proposals to increase income taxes keep getting narrower in scope. In 1993, President Bill Clinton and a Democratic Congress raised income taxes on households making more than ... Read More
Elections

Biden’s Middle-Class Tax Pledge

Biden is pledging not to raise taxes on anyone making less than $400,000 a year. As I note in my Bloomberg Opinion column, Democratic proposals to increase income taxes keep getting narrower in scope. In 1993, President Bill Clinton and a Democratic Congress raised income taxes on households making more than ... Read More
Education

Science, Coronavirus, and Notre Dame

A few weeks back, the University of Notre Dame outlined its plan for reopening campus in the fall, detailing the way in which the administration hopes to bring students back to South Bend to resume in-person classes. Like the overwhelming majority of colleges and universities in the U.S., Notre Dame shifted all ... Read More
Education

Science, Coronavirus, and Notre Dame

A few weeks back, the University of Notre Dame outlined its plan for reopening campus in the fall, detailing the way in which the administration hopes to bring students back to South Bend to resume in-person classes. Like the overwhelming majority of colleges and universities in the U.S., Notre Dame shifted all ... Read More