America’s Sausage Factory
As a child I was warned that if I ever saw how sausages were made, I would never eat them again. The legislative process is a lot like producing sausages as all sorts of extraneous things get thrown into the finished product; and the current negotiations over a new economic stimulus act are demonstrating the resemblance. For example, the President is seeking to include $1.7 billion to rebuild the FBI building and roughly $30 billion for military equipment (approximately $6 billion of which is to replace the monies he diverted from the last defense appropriation to build his wall). The Democrats are also guilty of throwing in items which seem wholly unrelated to either fighting the virus or propping up the nation’s economy. Their HEROES Act includes appropriations for voting rights protection and monies for the 2020 Census. It also includes raising the deductibility of out-of-pocket expenditures by teachers for items used in their classrooms and extends work permits for DACA recipients.
Sir Isaac Newton is best known for his law of gravity which postulates that the force attracting two objects is directly proportional to the product of their masses and inversely proportional to the square of the distance between them. In that same genre, my first law of legislation hypothesizes “The economic value of unrelated expenditures contained in a piece of legislation is directly proportional to the product of the monies being appropriated and the sum of the relative desires of the parties to have the legislation enacted and inversely proportional to the media’s willingness to examine it.” The new stimulus legislation will be a good test of this hypothesis.
Those with sensitive stomachs may wish to skip the factory tour and proceed directly to the gift shop.
The current state of the negotiations can best be described as “dead in the water,” a Navy term describing a vessel that has lost power and survives at the mercy of the enemy. The Democrats deserve credit for having foreseen in May that (a) the nation was not taking appropriate action to contain the virus, (b) the monies that had been appropriated in the four previous stimulus bills would soon run out and (c) further appropriations would be necessary. The Senate Republicans, infected by the unbridled optimism afflicting the President, chose to do nothing in the hope that the spread of the virus would subside, the economy would rebound and further economic stimulus would be unnecessary.
While their strategy seemed plausible on its face, it ignored a number of formidable problems. First, it vastly underestimated the magnitude of the coming resurgence of the virus and overestimated the extent to which the nation’s economy could recover if most Americans remained paralyzed by fear of contracting the virus. Secondly, it assumed that, faced with the impending economy hardships that would be visited upon working class Americans, the Democrats would quickly capitulate and accept what little economy stimulus Senate Republicans would be willing to offer. Thirdly, it ignored the fact that almost half of the Senate Republican caucus did not want to provide any further economic stimulus out of a concern that the nation was running up debts that our children, grandchildren and countless generation to come would have to repay. Thus, it wasn’t even clear that the Senate Republicans would be able to offer a stimulus package for the Democrats to grudgingly accept. Lastly, there was the White House which could be counted on for coming up with its own proposals (usually designed to further the President’s personal economic interests) which would make an agreement that much more difficult to achieve.
The dynamics of the negotiations are interesting. When the Senate reconvened in mid-July the Republicans did not come with a legislative proposal to counter the HEROES bill adopted by House Democrats. Instead, Senate Majority Leader McConnell spent two or three days huddling with the President and his lieutenants before announcing the parameters of a bill his caucus was prepared to enact. It would have been advantageous for the Republicans to have passed a competing bill before commencing negotiations with House Democrats. This would have given them a much stronger negotiating position as it would have allowed them to cast the blame on the Democrats for not having gone along with their bill to extend economic relief to the roughly 30 million Americans who remain unemployed.
As it turned out, Senator McConnell did not have the votes to pass his own proposed legislation. In fact, he did not even have an understanding with the administration as to the contents of his proposal. The President wanted a payroll tax deferment and money for the construction of a new FBI Building. McConnell rejected the former because it was totally nonsensical as a payroll tax deferment would be of no value to America’s 30 million unemployed workers. He rejected the latter demand because it was extraneous to the legislative goal of keeping the economy afloat while fighting the pandemic, the very argument he was planning to use to reject a number of item in the competing House Bill. Since both of these were pocket-book (his own) issues for the President, he immediately announced that a provision limiting the liability of business owners, McConnell’s principal sine qua non for the resulting legislation, was not important. You have to admit that our President doesn’t take rejection lightly. This tit-for-tat effectively brought to an end the Senate majority’s role in the negotiations with the Democrats.
Considering the importance of this legislation to the future of our nation’s economy (and possibly the President’s own re-election) you might be surprised that the man who holds himself out as a “dealmaker extraordinaire” and the author of the “Art of the Deal” would send his Chief of Staff and Treasury Secretary to negotiate the terms of the legislation while he spent the weekend on the golf course. The answer is surprisingly simple. First, he understood that his vaunted negotiating skills are a myth he has spent years propagating. Secondly, he feared having to negotiate with someone as smart and tough-minded as Nancy Pelosi, particularly since he had limited bargaining power because he stood to bear the brunt of the blame should the negotiations fail and the nation’s economy be allowed to falter. Thus, it would be bad enough to be forced to capitulate, but to do so to a woman would be more than his ego could endure. Thirdly, having his lieutenants conduct the negotiations is an important facet of his negotiating modus operandi. This allows him to blame his emissaries if negotiations are not successful. In addition, once a deal is struck, he can disavow some of his own obligations embodied in the deal, leaving his adversary with the choice of either accepting his unilateral changes or pursuing legal recourse. This is exactly what Trump did in the negotiation of the CARES Act (which provided over $2 trillion of economic stimulus) when he disavowed that act’s requirements to cooperate with the oversight efforts of the Congress. While the Speaker has little regard for the President’s honesty, that act of treachery is surely indelibly etched into her memory.
Thus, for the past two weeks, the actual negotiations have been taking place between House Speaker Pelosi, Senate Minority Leader Schumer, Treasury Secretary Mnuchin and White House Chief of Staff Meadows. At the beginning of their talks, the two representatives of the administration announced that that the $3 trillion appropriation called for in the House HEROES bill was excessive, to which Speaker Pelosi said, “Wait, there’s more” and proceeded to offer a new list of items to be included in the legislation which included another $400 billion of expenditures.
The administration’s negotiators then suggested that getting Senate Republicans to go along with another budget-busting piece of legislation would be tough and that they should proceed with a bill covering the nation’s minimum foreseeable needs and deal with the remainder of items on the Speaker’s “wish-list” at a later date. This had a very hollow ring to it as the Speaker was still waiting for the administration’s proposal to make the 2017 tax act’s individual tax cuts permanent which had been promised when that act was being debated. Maybe it was to be a rider on the administration’s long awaited proposal to replace Obamacare—you know, the one the President recently mentioned that protects individuals with pre-existing conditions.
Seeing that this tactic was not getting very far, the administration’s negotiators suggested that they immediately enact a one-week extension of the federal supplement to the states’ unemployment benefits. This would give them additional time in which to iron out their remaining differences. To seasoned legislative watchers, this is known as the “old continuous resolution ploy” which allows legislators to deal with the immediate crisis while effectively putting off any effort to address the underlying problem or, worse, a remedy for long-term issues (like an underfunded census count or the need for mail ballots for the fall elections) which the opposing party would like to enact using its bargaining power in this negotiation. Nice try fellows, but the Speaker didn’t go for it.
Over the last two weeks, the four negotiators have had ten meetings in which they explored all of the issues. This past Monday, they gave themselves until the end of this week to agree upon a compromise so the legislation could be quickly enacted at the beginning of next the week and the Senators could get on to more important business like returning to their homes and raising money for their re-election campaigns. In an effort to get things moving, the Trump administration increased its offer regarding supplemental unemployment benefits to $400/week and to extend the moratorium on evictions from federally funded housing projects until December. In return, the Democrats reduced their request for funding for the nation’s postal service from $25 billion to $10 billion. For his part, Senator McConnell, recognizing that he is in a no-win situation, having stood by the administration that has caused this train wreck, magnanimously stated that he was willing to go along with whatever the Democrats and the administration agree to. Two Republican Senators facing tough re-election battles (Senators Susan Collins and Martha McSally), along with Mitt Romney, broke ranks with their party and expressed a willingness to raise the federal unemployment supplement to as high as $500/week. Meanwhile, a dozen other Senate Republicans, sensing that a compromise might be nearing, suggested that the new legislation include a $25 billion provision to help the airline industry.
By Thursday, the negotiating positions were still far apart. Seeing that little progress was being made, the President tried to provide an impetus to the negotiations by announcing that unless the Democrats went along with the administration’s proposal, he would take executive action which would include deferring evictions from federally financed housing projects, declaring a payroll tax deferment and authorizing a federal supplement to state unemployment benefits. While treats against an adversary in a superior negotiating position rarely work, the President is particularly enamored of them because he has been very successful in using them to silence women who have accused him of sexual assault and suppliers and tradesmen whom he has short-changed for work done or goods supplied. While he has the power to defer evictions, he clearly lacks the power to grant supplemental unemployment benefits or to defer the collection of payroll taxes. Although it’s difficult to imagine how the President can reconcile not collecting taxes imposed by Congress with “faithfully executing the nation’s laws,” at a press conference on Friday he stated that such technicalities do not concern him.
With respect to the supplemental unemployment benefits, he might seek to redirect the roughly $100 million unexpended funds in the Paycheck Protection Program. He has also asked various federal agencies about undistributed CARES Act money which is an indication of what the President has in mind. For sure, Senate Republicans would remain mum over this encroachment on the Congress’ power to direct governmental expenditures and the Supreme Court, which allowed him to redirect $6 billion of military appropriations to build his wall, might again hold its nose and go along this blatantly unconstitutional ploy.
One problem with such a blatant power-grab is that it is likely to be met with an injunction in the U.S. District Court; and while the President might indeed win the case on appeal to the Supreme Court, that will take time and, in this case, time is not on the President’s side. If additional monies don’t start flowing the nation’s 30 million unemployed workers very shortly, the nation’s economy could descend into a steep downward spiral virtually annihilating the President’s chances for a second term. For this reason, Speaker Pelosi is not likely to be moved by the President’s threat. Beside wasting valuable time, the President’s threat is also likely to raise the Speaker’s ire, making further negotiations more difficult. In that sense, the the author of “The Art of the Deal” has simply pulled the wrong tool out of his too box. He has used the tool he prefers rather than the one best suited for the job.
In reality, both the President and the Democrats have a common goal; namely, to take action that will maintain the health of the nation’s economy. Thus, logic should dictate that the President simply instruct his negotiators to make whatever concessions are necessary to conclude a deal. He could always later refuse to abide with those terms he doesn’t like. In addition, he has always been the most generous when he is expending other people’s money (think of the Trump Foundation funded by third-party donations and used to settle lawsuits against the President); and this situation would fit into that pattern. Unfortunately, our President is guided more by emotion than logic and seemingly capitulating to Speaker Pelosi, a woman, may be more than his ego will allow.
There may be another (and darker) explanation why a deal has not been struck. The President may have correctly concluded that no amount of stimulus funding at this point is going to revive the nation’s economy to a point that it will significantly enhance his chances of being re-elected. That’s because current efforts to curtail the virus are not going to reduce the spread of the virus over the next two months sufficiently to encourage Americans to return to restaurants and shops. Nor will it be sufficient to cause children to be returned to their classrooms so that their parents can return to their jobs. Thus, a reviving economy has effectively been taken out the President’s election equation; and providing further economic assistance to struggling states and unemployed workers is likely to be viewed as a plus for Democrats who have been championing these measures. In this sense, adopting a few token actions through Executive Orders may provide the best net result for his re-election effort. After all, he has already demonstrated that he really doesn’t care how many Americans die or if children are placed in danger by being forced to return to schools which cannot safely accommodate them. By walking away from the economic stimulus negotiations, he at least has a chance to blame the ensuing economic distress on the Democrats’ unwillingness to accept an offer which almost half of the Senate Republicans have already rejected.