The Daily - A Historic Stimulus Bill

Episode Date: March 26, 2020

To rescue the American economy in the coronavirus crisis, Congress is on the verge of adopting the most expensive stimulus bill in U.S. history. But how much is the battle over this measure being influenced by the last financial crisis? Guest: Julie Hirschfeld Davis, the congressional editor of The New York Times. For more information on today’s episode, visit nytimes.com/thedaily. Background reading: The bill promises a $1,200 payout to millions of Americans, increased jobless aid and grants to save small businesses from permanent closure. Here’s what it means for you.

From The New York Times, I'm Michael Barbaro. This is The Daily. Today. To rescue the American economy, Congress is on the verge of adopting the most expensive stimulus bill in U.S. history. Julie Davis on how much the battle over that bill is being shaped by the last financial crisis. It's Thursday, March 26th. Breaking news tonight, the coronavirus forcing millions more Americans into virtual lockdown. We're pressing the pause button on the American economy. We've never done that before. Unemployment could reach 20 percent. We've seen huge drops in business for the airlines, hotels. Majority leader Mitch McConnell has canceled the Senate's recess.

The Senate will instead stay in Washington, D.C. to work on legislation in response to the coronavirus. Lawmakers could send President Trump an emergency spending bill today. The concern is, are they just going to help the big guys again? So Julie, we have talked on the show about how the White House is approaching this pandemic. So now we want to turn to Congress. How would you describe Congress's approach to this pandemic? So Congress's chief role in this is that they control the purse strings. They control federal money. And they sort of went into this in a lot of ways, the way most Americans did, not actually recognizing that the response was going to have to be quite as large as it's turned out to have been. And it ended up that they have

basically passed now three pieces of major legislation to be able to get money to where it needs to go to respond to not just the public health crisis itself, but also the huge economic devastation that has followed. Okay, so let's talk about these three pieces of legislation that have dominated Congress's response to the pandemic. Let's start with the first one from a few weeks ago. So the first thing that Congress decides that it needs to do is just get more resources, get more money to the federal agencies that are on the front lines of this. The Department of Health and Human Services,

the Centers for Disease Control and Prevention, some of the agencies that are dealing with, you know, vaccine development and testing and all of the issues that we're now hearing about that are so important. So they drafted what at the time seemed, a couple of weeks ago, like a huge appropriations bill that would send $8.3 billion to those agencies just to kind of get them to the point where they could be supporting all of this extra

work, all this extra research that they would need to respond to the coronavirus. So the first piece of legislation is just kind of basic funding of the operations required to get through the crisis. Right. And so the bill itself passes on March 6th. And what does Congress tackle after this initial bill? What's the second piece of legislation? So the second package of legislation in general was supposed to deal with what very quickly became clear was just a real economic crisis that was accompanying the public health crisis. And that had to do with, first of all,

getting people access to free testing for this disease, but also, importantly, paid leave for people who were being told they shouldn't come to work, for people who were losing jobs, for people who were having to take time off to care for family members or for children who were out of school. The American people expect and deserve a coordinated science-based and whole-of-government response to keep them and their loved ones safe. A response that puts families first to stimulate the economy. And so Nancy Pelosi, the Speaker of the House,

really kind of took the reins. And after the president kind of deputized Steven Mnuchin, the Treasury Secretary, to do the negotiating on behalf of the administration. And the negotiations are going very well. This has been a bipartisan effort. The two of them, who actually have a pretty good working relationship, just started negotiating this much, much larger package of ways of knitting together a stronger social safety net for Americans who were going to be impacted by this crisis. But we thought it would be important to show the American people, to assure the American people, that we are willing and able to work together to get a job done for them. And there seemed to be an understanding that as long as that negotiation could stay on track, that relationship could remain intact, that this was going to be workable. And it was extraordinary, but it was also an extraordinary set of circumstances.

And I think there was a general feeling that the scope of this crisis was so large and that the economic impact on everyone was so pronounced that people were going to have to put their usual political principles aside to get something done here. And so that bill passes early in the morning of March 14th, a Saturday morning just before the House went out of session. They still don't know the actual size of that package. It was in the hundreds of billions of dollars, but they didn't have time to tally the cost before passing it. But that was a very large vote of support. They had only 40 Republicans voting no in the House. So in the end, what kind of paid leave was created by this bill? I mean, for the average American who gets sick or has a relative or child who gets sick, how many days off paid by the federal government will they have?

So under this legislation, most workers at small and kind of mid-sized companies would get two weeks of paid sick leave if they were sick, if they were quarantined, if they were trying to get tested to see if they had coronavirus or if they were caring for a sick family member. And then they would get 12 weeks of paid leave if people were caring for children, if their schools were closed or if their daycare or their other child care provider was not available. That's pretty meaningful. It's very meaningful. And it's the first time that there was a federally mandated paid leave benefit. And one of the significant things was that it applied

not just to regular workers, but people who don't typically get paid leave, like part-time workers, gig economy workers, things like that. And Democrats did fight pretty hard to get a more expansive benefit, but Republicans really pushed back. And so in fight pretty hard to get a more expansive benefit, but Republicans really pushed back. And so in the end, this was the compromise that they came to. And that brings us to the third bill, the one that Congress is debating today on Wednesday. Right. The entire time that Congress is debating this phase two package, it's clear to everyone that they're going to need to come back, not just with relief to Americans who are hurting, but with a much, much larger response to stabilize the economy as it's essentially having to shut down almost entirely to respond to the

pandemic. And so the administration came forward with an $850 billion proposal that included large amounts of money for distressed businesses, big and small, loans to prop up companies, prop up big corporations that form the backbone of the economy, and a much larger unemployment insurance program to cover people who essentially lost jobs for long periods of time, given the economic downturn. So this is kind of a classic, large-scale stimulus program. Right. And so as the scope of the problem becomes larger, as the estimates of how much this is going to cost grow. $850 billion quickly becomes a trillion. This proposal that's taking shape in Congress gets larger and larger. And that's when this whole spirit of comedy and let's put our politics aside and get this done quickly starts to fade away. And why is that, since the first two bills seem to sail through? Well, I mean, when you're talking about injecting a trillion dollars or more into the economy,

you have very different ideas among Republicans and Democrats about how best to do that. And so the ideological differences become a lot sharper. And hanging over all of this is the memory of the last time the government tried to put together a really aggressive stimulus program and government aid program for distressed companies in 2008 during the financial meltdown. And it was the same sort of crisis atmosphere. The global economy was melting down. The market turmoil we are experiencing today poses great risk to U.S. taxpayers. You know, the Fed chairman and the Treasury secretary at the time came to Capitol Hill. The taxpayer already is going to suffer the consequences if things don't work the way

they should work. And scared the wits out of congressional leaders and essentially told them, if you don't do something big and do something big now, this economy, our economy and the global economy is going to go, you know, down the drain, essentially. I am convinced that this bold approach will cost American families far less than the alternative. A continuing series of financial institution failures and frozen credit markets unable to fund everyday needs and economic expansion. They really scared them into a really quick and aggressive set of moves. And one of those moves was the $700 billion Wall Street bailout, also known as TARP. And, you know, it was another one of these situations where everyone was scared, everyone was moving quickly, they all were trying to put their politics aside and get this done. And in the end, they did pass that package. But for both political parties, both for Republicans and Democrats, they really paid the price. What do you mean? Well, you know, both conservatives and very progressive Democrats

felt that that package was a Wall Street package, was a package that, you know, prioritized big business, which many of these businesses were responsible themselves for the meltdown, that they got paid and essentially the government bailed them out and then didn't really help the people who got hurt in the process. And so that whole situation gives rise to the Tea Party. From Washington, D.C. to Connecticut to Wisconsin and all over the country, thousands of people came out to protest government spending. This anti-government spending movement among Republicans. And what are some of the lies

in the spending that you have particular problems with? The bailout. We're tired of the spending, tired of the lies that are going on, and we want to take our country back. And it also gives rise on the left to Occupy Wall Street. Occupy Wall Street all day, all week. What kind of power? People power! This movement of, you know, progressives who felt that, you know, the government had sold out to big business and just was not tending to the needs of working people. Wall Street, it crashes and, you know,

people starve, people lose their jobs, things like that. We're very angry at Wall Street. It's the heart of capitalism, American capitalism, especially. That's why we're here today at Wall Street. And in fact, you could argue that it's still the dominant theme of our political debate today. I mean, Donald Trump came to the fore talking about, you know, populist themes and helping the little guy and being anti-establishment. And Bernie Sanders on the left being against the big corporations and upending a system that was built for big companies and not for ordinary people. And so the reverberations of TARP and that vote and that bailout are still being felt in our politics today. Right. It's hard to think of a single piece of legislation that has so

profoundly reshaped American politics and even kind of how regular people with no connection to politics view their government. And it sounds like you're saying that that is what everyone in Congress is thinking about as they approach a trillion dollar plus piece of legislation that looks a little bit like what was passed in 2008. Right. looks a little bit like what was passed in 2008. Right. It's sort of the ultimate cautionary tale for members of both political parties who remember the anger that the bailout of 2008 inspired.

So you have two sides of the ideological spectrum who are each worried about the reaction if they do this wrong. We'll be right back. We'll be right back. So Julie, with the lessons of 2008 on everyone's mind in Congress, how does this debate over phase three, this trillion dollar plus stimulus package, start to unfold? So Democrats and Republicans quickly agree that they want to do a round of quick infusions of cash to Americans. So they decide that they're going to send checks, direct payments of $1,200 per person to anyone making up to $75,000 a year and then phasing out until you're not eligible if you make $99,000 or more. out until you're not eligible if you make $99,000 or more. Republicans, uncharacteristically,

are the ones pushing these direct payments, and Democrats are very much on board with that. This is really just to get people through the immediate pain of seeing the economy completely shutter. Okay. What else is in the bill? There's also a large unemployment insurance component in the bill where they expand unemployment benefits. So it applies to freelancers and gig workers and those sorts of people who don't normally benefit from unemployment insurance. And you get an additional 13 weeks and then a three-month expansion of what the benefit is. You get more money over more weeks. Essentially, Republicans and Democrats both agreed that they had to vastly expand jobless benefits for this next period of time. Okay, so what ended up being the big sticking points? Because

you mentioned that when it comes to this piece of the overall package, that the harmony starts to break down. Right. The big sticking point ends up being this $500 billion fund to essentially bail out distressed companies. $75 billion of that would go to specific industries like airlines that are singled out as sort of singularly affected by this pandemic and had the biggest brunt of the pain early on. But the vast majority of that money, the $425 billion, would go to the Federal Reserve to essentially cover their losses on a huge new lending program for large categories of distressed businesses who would be able to receive government credit to basically keep themselves afloat and to keep them in business during the downturn. So this seems the most like a 2008 style kind of bailout. That's right. It's just a big pot of money. And the Federal Reserve

has the ability to make these loans however it sees fit. The money goes through the Treasury Department, but in the end is not really money that Congress can control. And so this is where the controversy really begins. We're not here to create a slush fund for Donald Trump and his family or a slush fund for the Treasury Department to be able to hand out to their friends. We're here to help. Democrats start to call this a slush fund. $100 billion slush fund for Steve Mnuchin

to, you know, hand out loans to corporations as he pleases. I mean, do Americans think that this man, this man is going to look out for the well-being of working Americans over the well-being of corporations and corporate CEOs? I certainly don't trust him, not without oversight. That, you know, this is going to be money that has no strings attached. It's a blank check. They have no oversight over it. They said, no, no, no, no, no, no. Like, we need to know immediately which companies are getting this money. What are they doing with it? How is it

being overseen? We need to require that if you get money through this kind of bailout fund, that there aren't going to be any stock buybacks. The whole time you're getting government assistance, you should not be enriching yourself at the expense of your workers, at the expense of shareholders. And so they start to really push for much stricter conditions on this money. And it becomes a real bone of contention. So how does the fight over how this money will be used and overseen, how does that get resolved? So Democrats start demanding big oversight requirements over this fund. They want to have an inspector general whose job it would be to

monitor how this money gets spent, who gets it, how it's used. They also want to have a panel appointed by themselves, appointed by Congress, that would oversee the fund, that would get to see all the records, that would have access to all of the information that the government has about these companies and how they're being helped and what kind of conditions they have agreed to as a term of that help. These are the kind of oversight requirements that Democrats hope will prevent this fund from being regarded in the way that TARP was, that it was some sort of giveaway with no strings attached that allowed companies to take advantage of government help.

Okay, so that's the Democrats' pushback on this fund and on this bill. What is the response from the Republicans? The Republicans are livid. They ought to be embarrassed, Mr. President. In fact, I've heard from some of them who are embarrassed. They feel like they have negotiated in good faith with Democrats over all of these measures. We crafted this version of the proposal together. Over the payments to families, over the unemployment insurance, expansion. But yesterday, when the time came to vote on these urgent measures, our Democratic colleagues chose to block it.

They had actually come a fair way toward compromising with Democrats on some of the big things that Democrats cared about, and the Democrats were still holding out for more. Were Republicans right when they suggested that Democrats had started to try to infuse this third piece of legislation with liberal priorities? I caught Mitch McConnell on the floor giving a speech in which he suggested that all of a sudden things were cropping up in the Democratic version of this bill. Tax credits for solar energy and wind energy. Provisions to force

employers to give special new treatment to big labor. And listen to this. New emission standards for the airlines. Are you kidding me? Things that he regarded as just having nothing to do with the pandemic and saving the American economy.

I'd like to see Senate Democrats tell New York City doctors and nurses, who are literally overrun as we speak, that they're filibustering hospital funding and more masks because they want to argue with the airlines over their carbon footprint? There was an element of truth to that, because in the interim, while Chuck Schumer, the Democratic leader, was negotiating behind the scenes with Mnuchin, the Treasury Secretary, to get these last additional concessions to get to a deal, Nancy Pelosi did unveil her own version of a stimulus plan. It was a $2.5 trillion bill that had all sorts of Democratic priorities in it, because after all, it is written by House Democrats who control the other chamber.

But the reality was, and Senator McConnell clearly knew this, that the real negotiation was going on in the Senate bill. The Senate floor has at this point devolved into a real bitter place with a lot of shouting and some profanity that you generally don't hear from the normally courtly Senate. And part of the issue for Republicans who are in the majority is that their numbers are dwindling because by Sunday. Breaking headline on Capitol Hill, Senator Rand Paul testing positive for the coronavirus as Congress negotiates that massive stimulus package. They have learned that Rand Paul of Kentucky has tested positive for COVID-19. Right. He's the first senator to do so. You were all at lunch together on Friday. Yes, yes. We're at lunch together with Rand and hope he's doing very well.

But we have to determine whether any of us should self-quarantine as a result of being in the same room. And then two other Republicans who had been in close contact with him go into quarantine themselves out of an abundance of caution. close contact with him, go into quarantine themselves out of an abundance of caution. They already have two members who had already isolated themselves because they had been exposed to someone who later tested positive. And so their numbers are dwindling and there's really not much they can do to force Democrats to go along until they have gotten their concerns met. So with all of that pressure building behind this negotiation, late Tuesday night, early Wednesday morning, the White House and Republicans finally make the

deal with Democrats. They give them what they want on oversight. And the two sides come together on a compromise. And by Wednesday afternoon, they are on a glide path, it looks like, to pass it in the Senate. Right. So it's around 3.15 on Wednesday afternoon. And it sounds, from what you're saying, like, this bill is about to get adopted. Right. The Senate is planning later today, they're hoping to pass this, and then it would go to the House and get a vote in the House on Thursday. that will safeguard against the kind of public outrage and the long-lasting political fallout that America experienced after that 2008 bailout? I don't think we really know. The size of this fund is so large that it's really hard to predict

how it's going to impact the economy, how it's going to impact ordinary people, and what the political fallout might be. I think members of Congress and folks in the administration are just hoping that they have put in place something that will be effective. But I don't think anyone really knows. To go back to that word you just used, effective, is there a prediction of how long this nearly $2 trillion stimulus bill will actually stimulate the American economy? How

much time it's going to buy the United States economy in the middle of this pandemic? I think there's a lot of concern about that question. This is not sort of a blip in the markets that can be quickly rectified and we move on. People don't know how long companies will be shuttered for. It's unclear how long workers will be impacted and whether some of these jobs that may be eliminated in the process are even ever going to come back. So I think the real question now is not only how long will this last the economy, but what does the next phase look like? Because everybody on Capitol Hill recognizes that this is not going to be the last economic measure they're going to have to pass. They're already talking about a phase four and what's going to

be needed just to, you know, keep things at steady state for months and months to come. In other words, this $2 trillion stimulus package is just the beginning of what may end up being another set of multi-trillion dollar stimulus packages. Right. I don't think that anybody really knows the full scope of what's going to be needed to respond to what we're facing right now. Julie, it never feels like a good time to talk about the national debt, I suppose, but it is already $23 trillion. I just went and checked. And it's been on a very steady increase under the Trump administration. How exactly is Congress planning to pay for all of this? What's astonishing about this is that, you know, the vast majority of it is going to be financed by government borrowing for the foreseeable future. And that is something that many members of both parties have long been concerned about, but it is not something that anyone is questioning right now.

but it is not something that anyone is questioning right now. I think the thought is that this response needs to be as huge and aggressive as it possibly can be. And those considerations, you know, not that they were really top of mind for anyone in Congress for a long time now, as you well know. But anyone who was concerned about those things seems to be putting them aside for now, given what we're facing. Thank you, Julie. Thank you, Michael. On this vote, the ayes are 96, the nays are zero. The 60 the 60 vote threshold having been achieved, the bill is passed. Late Wednesday night, the Senate passed the stimulus bill with overwhelming bipartisan support.

There are millions of Americans watching us right now at home on their televisions, separated from friends and family, fearful for their children and their livelihoods, unsure of when the time will come when all of our lives may return to normal. In a speech from the Senate floor, Senate Minority Leader Chuck Schumer called it historic legislation to match a historic crisis. Let us tell them tonight that help is on the way, that they are not truly alone, that this country, that this Senate, that this government

is here for them in a time of dire need. The House is expected to pass the same legislation tomorrow. We'll be right back. Here's what else you need to know today. The global death toll from the coronavirus surpassed 20,000 people on Wednesday, led by Italy, which reported nearly 700 new deaths. Five countries now have death tolls over 1,000. Italy, Spain, China, Iran, and France. In the U.S., where the death toll approached 1,000, disruptions from the virus deepened.

We're going to limit movement outside the homes beyond essential needs, effective Friday, March 27th at 11.59 p.m. to Friday, April 10th. Idaho and Minnesota became the latest states to order residents to stay at home for the next few weeks. We have weighed out the variables here. We believe at this point in time, as of today, that buys us enough time. Meanwhile, school districts across the country, from California to Connecticut, extended their closures through at least the end of April to limit transmissions. Teachers, districts, and parents are getting creative and doing everything they can to ensure that their kids don't fall behind and that they stay engaged.

In Massachusetts, Governor Charlie Baker said he recognized the hardship that the closures have imposed on everyone involved. On behalf of all of us, I just want to say thank you because this matters. That's it for The Daily. I'm Michael Bavaro. See you tomorrow.