Odd Lots - Rep. Ro Khanna On Why Democrats Should Cut A Stimulus Deal With The White House

Episode Date: October 20, 2020

With just two weeks until the election, talks over a stimulus deal remain ongoing, with negotiations having picked up between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin. Many of the disagreements haven't been about the price tag per se, but around language on such things as a national testing strategy and workplace liability. One of the most outspoken voices on the Democrat side, urging a deal, has been California Congressman Ro Khanna whose district encompasses much of Silicon Valley. He explains why, from his perspective, it's so important to get a deal done now. We also discuss the fiscal policy priorities of a theoretical Biden administration.See omnystudio.com/listener for privacy information.

I'm June Grasso, inviting you to join me for the Bloomberg Law podcast. Every weekday, we help you make sense of the legal stories that shape the nation and the world. Listen for complete analysis of the biggest court cases, the latest actions from Congress and regulators, and the legal moves driving the markets, from corporate law to constitutional law, and from state courts to the Supreme Court. At Bloomberg Law, we go beyond the day's headlines. We speak with top attorneys, judges, scholars and policy experts to break down what the rulings really mean. We do this every weekday,

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Today I'll be speaking with Roe Kana. He is the representative representing the 17th Congressional District of California. It includes a lot of Silicon Valley. He's a progressive Democrat. and what's striking is that he is, as far as I know, the only House Democrat to have publicly broken off with Nancy Pelosi over the current stimulus negotiations. So, of course, Nancy Pelosi in ongoing discussions with Steve Mnuchin, in perhaps an attempt to get a deal done before the election day to spend more money to aid the economy.

So far, there's a lot of debate. Speaker Pelosi has said that the. offer from the administration is inadequate, not necessarily so much about the dollar amount per se, but some of the language in it. Basically, all elected Democrats are with her. Our guest today, Rokana, saying, you know what, yeah, perhaps it's not a perfect deal, but it's worth getting the money out the door now, even if it's less than perfect. So I'll be speaking with the congressman about his argument and why Pelosi should do a deal and something you should note that This is a fluid, ongoing story.

So by the time you're listening to this, the situation may have changed. But as it is, we're recording this Monday afternoon on the 19th. So Roe Kahnah, thank you for joining us. Hey, great to be on. So far, as far as I know, you're the only elected Democrat, at least in the House, who has publicly said to the Speaker, just take the deal. Why do you think it's so important for the Democrats to compromise somewhat and get some money out the door now? Well, I said we need to make a deal. I didn't say take this specific

proposal, but I said, look, we do have to compromise. We do have to get money to people. The food bank lines in my district are twice as long. People are suffering and not being able to make mortgage payment. I was talking to someone who's going to lose their house. They've run out of their 401k. There's a concern that restaurants, small restaurants that many immigrant families own may shut down, especially with the winter months. We can't wait until February. We can't wait for a new administration. And after I spoke out, a number of others have spoken out, Tom Mellenowski, Peter Welch, and quite a few others. So in your view, as of right now, and I mentioned we're recording this Monday afternoon, October 19th, what do you see is the gap between what the sort of the idea?

deal bill from your caucus would be and where the White House is? Well, we had made a considerable progress in fact, right before this podcast, I was on a conference call with the speaker. And it looks like the White House has come finally to recognize the need for a national testing strategy. They've come up to our 75 billion that we need for contact tracing and testing. It seems like they are finally agreeing to more state and local aid. We were at 430 billion. There's still a part on that number. But we need language on liability to make sure we're not compromising worker safety on that issue. And we need language to make sure that the money that is being allocated actually is going to working families, the small businesses, and isn't just going to the discretion of how the

secretary wants to spend it. Go further on that point, because this has been a controversial thing ever since Kerasian. was passed earlier in the year. This idea of discretion on the part of the Secretary of the Treasury Mnuchin, what are your big concerns with that in terms of allowing him to decide how a certain amount of cash gets spent? Well, it could go to children. It could go to people in poverty. I mean, people say, okay, what's $20 billion, $30 billion in the context of $1.8 trillion? I mean, $30 billion going to children in this country would make. a dramatic difference in the poverty rates. It would make a dramatic difference in terms of

if we could get it to earn a tax rate or child tax rate. So the last thing we want to do is give the secretary money, which he may use to help airlines or may use to help executives, and people feel that the people most in need didn't have it. Now, you mentioned liability. This has been a big priority reportedly for a majority leader of the Senate, McConnell, that businesses have some sort of liability protection. What's your view? And how much is this a sort of poison pill that Democrats really just can't vote for versus something where there is potential for a compromise? I think there is potential for compromise. And the compromise that we have outlined is very simple. Adopt worker safety protections as a safe harbor. I mean, if you adopt the protections,

if you say we're going to adopt a plan to keep workers safe, we're going to have the appropriate PPE, we're going to have the appropriate social distancing, and you comply with that, then the liability is not going to be an issue. But we're not going to give you immunity if you have no plan to keeping workers safe. Okay, so in theory, businesses can, in your viewer, should be able to get some sort of legal protection under the stipulation that they take worker safety seriously. Exactly. And I think any language, once you comply with the worker safety provisions, that provides a safe harbor. I mean, then if you're sued, then you could say, no, look, we complied with what Congress said. It actually is a safeguard for businesses.

What McConnell is saying is just give them blanket immunity so that if people come to work and get COVID, they have no responsibility. Currently, the OSHA statute, I mean, this is getting a little in the weeds, but it has, it doesn't regulate airborne pathogens. So what McConnell is saying is, That's your problem. It's like getting the cold. If you go to work and you get the cold, you can't sue your employer. And unfortunately, there's some Republicans who still make that analogy. But COVID is not the cold.

It's a deadly disease. And we have to require that employers take basic measures. Particularly, I mean, when you look at Amazon and you have people in fulfillment centers where they're packed almost like sardines and rapidly transmitting the disease that Amazon or other companies like that need to take preventive measures. So obviously we're literally two weeks out or two weeks in a day as we're recording this from the election. How much anxiety, honestly, is there on the part of Democrats about this idea of, you know, quote, giving Trump a win or giving McConnell a win at such a pivotal moment, especially with the belief that a lot of people think there's going to be a huge Democratic sweep and the opportunity to pass the sort of perfect bill at the dream bill come January?

I don't think that's what's motivating it for a couple reasons. One, I think this would be seen as a win for the Speaker. I mean, the House Democrats passed something five months ago. They passed something a month ago. We all know that, you know, Trump's advisor, Kudlow, was out there saying, oh, we don't need a stimulus. The economy is doing perfectly fine. And that was wrong. And the president basically is going to be passing Pelosi's bill. I mean, so I think this would be seen as a win in leadership for House Democrats. Second, the huge would need. I mean, the fact of the matter is that you can't wait until February. I mean, the stock market can wait. Your stock market can say, look, the odds are Democrats are going to win and everything will be fine February and that's the expected value. But you don't have expected value calculations if you're looking to put food on the table or meet your next rent bill. So the urgency of acting is there as well. Right. So earlier in the spring, of course, the House already did pass a pretty substantial phase four. I don't even know what phase were on anymore, but another a huge deal. The Heroes Act, I think it was worth over $3 trillion. If we do get a Democratic sweep,

Biden in the White House, a Democratic Senate, do you think that is basically roughly what we could expect in terms of fiscal stimulus out of your caucus, or could it even be potentially bigger in your you? I think we would even do something bigger because that bill didn't have monthly stimulus checks. That bill didn't have the sufficient infrastructure investment to create jobs. So I think there's going to be a whole look at what is it going to take to get the economy back on track. What's it going to take to create jobs? Now, if we can get some of it done now, then we can come back for doing the remainder in February. And I think that there is a large value in doing that,

especially because you may have much greater Republican opposition once you have a Joe Biden as president. So potentially any deal that's done now prior to the election, or I guess theoretically, in the lame duck, could be seen as kind of a down payment on something larger, but allow some of the work to get done. now. Yes, I mean, because you don't, because like I said, people can't wait until February. And second, while I'm very confident on Biden and I'm hopeful on the Senate, I mean, it seems a big gamble to

begin to say that we're definitely going to win back the Senate. And let's say we don't. Let's say we have Biden and the Senate is still by one vote in Republican hands. Then what are we going to do? So I just think that there's too much writing on it. Let's get people relief. And then we can get done the remainder in February. Hi, I'm PJ Vote. My podcast Search Engine has a new two-part series for you. Of all the new technologies coming out of AI, the most transformative one might be driverless cars. They're already on the road in 10 American cities, and they're quickly coming to more. We tell the story of how we got here. The secret team at Google that spent 15 years

building what might be the safest vehicle on the road, and we cover the fights brewing in blue cities, where unions and politicians are working to keep those cars off the streets. Listen to search engine wherever you get your podcasts. Do you think that the Democratic Party, do you sense a change in deficit phobia in your party, whereas at one point, I think under the Obama administration, very early on after the great financial crisis, there was impulse on the part of the Obama administration to rein in deficits and talk about the important of getting them under control? Do you think that impulse is less there and that the party feels comfortable? about spending without apologizing for it?

I do. It's been necessitated by this crisis. You know, I will say one of the most unpopular votes I cast. I think it was one of two or three people to vote against the Democratic Rules package in the beginning of this Congress because it had PAYGO. And one of the arguments I made is PAYGO makes no sense as an economic matter. How can you pay for everything? What if we have a crisis? We may need to spend more than something costs.

and it's just terrible economics. And I was excoriated, I think, and certainly by certain colleagues, why are you voting against PAYGO? Well, it turns out that we had a pandemic and now they're just suspending PAYGO. Hopefully this teaches us a lesson that we shouldn't have PAYGO in future packages.

I mean, the idea is that a government needs to be able to spend when interest rates are externally low and when we have crises and need fiscal stimulus. And of course, Powell has made this argument. And I think this is where he makes a more conservative, and he makes this argument better than I do. And he says, look, in a low interest rate environment,

if you borrow the money and you spend it, you're going to prevent further permanent damage to the economy because you may save some restaurants and small businesses from going under. If you don't spend that money, you're going to have permanent damage, and that permanent damage is actually going to lower the economic growth. So spend the money now at low interest rates, preserve the growth. And then by the way, you can always pay it back. Now, people will argue that government's never pay back. But theoretically, there is no real economic case for not spending them. You know, one of the things that I think has really struck a lot of people with the CARES Act is that, and it sounds simple, but that putting money in people's pockets is just an incredibly powerful tool.

And that it works very well. And we saw this pretty impressive rebound in spending and all kinds of. of positive economic outcomes as a result of that, rebound much faster than a lot of economists had expected. What about something, and where do you stand on sort of permanently establishing more robust fiscal stabilizers so that we don't always need to have a bill or a vote or cares act like situation where as soon as the unemployment rate starts to rise, we kick in nationally unemployment insurance on a robust scale to start to balance out fight the downturn?

I think it would be one of the smartest policies we could have. Bill Spriggs, who was an economist in the Obama administration, has been pushing this. In fact, I was working with him on such legislation before the pandemic, but having automatic stabilizers, having some sense that things kick in,

particularly to state and local government so that they don't have to lay off and on unemployment insurance and extensions in moments of crisis, I think would help alleviate the worst of downturn, and make sure that we don't have these huge spikes in unemployment. All right. I'll let you go in just a minute, but I got to ask sort of one question that's not related to this.

Of course. Your district, you represent the 17th congressional district. And if you look at the names of the towns there, it's all the familiar Silicon Valley towns, Sunnyvale, Cupertino, Santa Clara, and so forth. Obviously, we've seen a lot of Democrats really get more aggressive about their calls for big tech, to be broken up, to be regulated more aggressively. Tell me about the conversations you have with your constituents on this topic. And how do you view that agenda in terms and in the context of representing the best, the best interests of the people who vote for you?

Well, we definitely need well-crafted regulations. I mean, we have to recognize the value of technology. I mean, they're responsible for some of the greatest innovations in the world, in our country. I think of the S&P 500, 90% of its growth over the last five years have been some of these tech companies. They're fueling a lot of economic activity in this country and helping even small businesses with, which are now selling online. And they're competing with Tencent and Baidu and Alibaba in China. On the other hand, we have to make sure that these platforms aren't abusing their own platform privileges. So I don't believe we should break them up.

But one thing I should do think we need to consider is to have a duty to deal with sellers. That means platforms shouldn't just have a presumption that they can do whatever they want on their platform and not allow other people to sell or to use their platforms if they have some form of monopoly power, some high concentration. I mean, too many people need these platforms and they shouldn't have the arbitrary ability to deny access. I mentioned at the big outset, you were the first elected representative to say, do a deal, not necessarily the deal that was on the table, but get some deal done. As you mentioned, a couple of others have now said that. Why was that not a, why was that a sort of minority

position or why has that been? Well, I mean, be candid. I mean, I think people said, oh, are you hurting our sides negotiating posture? And we should just speak with one voice and people, you know, you don't want to say that we're willing to compromise because we have to play hardball. I mean, those were the counter arguments for not speaking out. And my view is that, you know, my first duty is to my constituents. And a lot of people in my constituency said we have to go get something done. And I have faith in Nancy Pelosi. She's a very tough negotiator.

Having members say we need to get something done is not going to compromise her ability of getting the best deal. But I do think that the country wants members, at least making every effort to come to some agreement. And in your view, Speaker Pelosi is negotiating with Mnuchin and totally good faith with the desire to get a deal, not just because there's this perception that, oh, they just want to be seen as talking. No, I don't think so. Look, I don't understand why Trump, who has been so inconsistent when at some point says, I don't want to negotiate. And another point says, go bigger. if he was serious about this at 2.2 trillion where they're already up to like 1.9 trillion, he could have just said, let's take what the House has done.

I mean, and then it would have been very clear that the negotiations were taking place. I mean, we couldn't reject what we've already passed. So I think you've had a lot of gamesmanship out of the White House and McConnell, and that's really been where the bulk of the problem is. That said, you know, there are people on our side. We believe we have to compromise as well, and we want to get something done. All right, Rokana, thank you so much for joining us, and we'll be watching. Take care. Thanks for having me.

And that was my conversation with Representative Rokana. You know, of course, by the time you're listening to that, everything may have changed in terms of where we are with the stimulus. But again, we're recording this Monday afternoon on the 19th. So there you have it. been another episode of the Oddlots podcast. I'm Joe Wisenthall. You can follow me on Twitter at the stalwart. Follow my co-host, Tracy Allaway on Twitter at Tracy Alleyway. Follow my guest on Twitter, Representative Rokana. He's at Rep. Rokana. Follow our producer, Laura Carlson, at Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca Levy, and check out all of our podcasts onto the handle at podcast. Thanks for listening.

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