The partisan divide on crisis aid

A partisan divide over the next steps in COVID-19 financial assistance is stalling legislation in Congress that will aid businesses left reeling by the coronavirus crisis. In the first round of legislative remedies, both parties agreed on a half-trillion dollars for large corporations crippled by the outbreak, payments to individuals earning under $100,000, and $349 billion for smaller businesses. But with the latter fund empty, the consensus behind the design of aid packages is also dissipating.

In response to the near-collapse of the financial community in September 2008 — just weeks before a crucial presidential and congressional election — the Democratic congressional majority, the Republican minority and President George W. Bush set aside longstanding disagreements over the war in Iraq, Social Security and even existing oversight of the financial services industry to pass the $750 billion Troubled Assets Relief Program (TARP) law. There were points of confrontation during the negotiations; Democrats, for example, insisted that the loans be fully repaid with interest, as they were. But the urgency of the moment superseded the partisanship of the preceding eight years, and the law passed with strong bipartisan majorities in both houses of Congress.

Yet, just like the disappearing COVID-19 consensus, support for legislation to respond to the Great Recession evaporated, especially following the inauguration of President Obama. The first stimulus under Bush in early 2008 enjoyed bipartisan support. But as the recession worsened at the very end of the Bush administration, Republicans in Congress lost interest in cooperating on a new stimulus early in 2009.

The Obama stimulus was fashioned to attract Republican support, with nearly half of the funds going for checks to individuals rather than for the creation of public service jobs, as many Democrats preferred. The overall cost of the legislation was held hundreds of billions of dollars lower than economic advisers recommended, in response to demands from three crucial Republican senators in order to help attract bipartisan support. The concessions were to no avail; then-House Minority Leader John Boehner (R-Ohio) urged his conference members to oppose the Recovery Act, and every Republican in the House did so, as did all but the three senators who had insisted on cutting the size of the bill: Maine Republicans Susan Collins and Olympia Snowe, and Pennsylvania Republican Arlen Specter (who soon switched parties).

There also was little bipartisan support for subsequent relief measures, as President Obama and the Democratic congressional majorities sought additional aid for small businesses, community banks, homeowners at risk of foreclosure and millions of workers whose unemployment assistance was expiring. On issue after issue, Republicans not only rejected extending lifeline support for these groups — as they had provided to big banks, investment houses and insurance companies — but they insisted that any such expenditures be fully paid for upfront to avoid adding to the deficit, which was soaring because of the recession. These were the same Republicans who raised no concerns about the deficit under Bush when they voted for hundreds of billions of dollars in deficits for tax cuts, the wars in Iraq and Afghanistan and the new Medicare Part D benefit.

Republicans also opposed plans by House Speaker Nancy Pelosi (D-Calif.) and then-Senate Majority Leader Harry Reid (D-Nev.) to help prevent the layoff of first responders and teachers as state revenues were depleted. Even proposals to broaden participation in child nutrition programs to address food insecurity arising from the recession — a special priority for first lady Michelle Obama — encountered partisan resistance. To be sure, Democratic “blue dog” conservatives in the House and deficit hawks in the Senate also opposed some of these initiatives, forcing Reid and Pelosi to reduce the scope and efficacy of many of the anti-recessionary plans. 

The partisan response to the current crisis has many parallels.

Once again, the broad consensus on the initial approach, heavily weighted to the largest economic interests, drew bipartisan support. But the demands of Democrats for targeting additional funds to hospitals overwhelmed by demands for costly ICU treatment (not to mention essential safety equipment), to community banks ignored in the first tranches of funding, and for state and local governments are again being rebuffed by Republicans who now, unlike 2010, control the Senate. Majority Leader Mitch McConnell (R-Ky.) has indicated no interest in broadening the scope of the COVID-19 legislation to cover those left out of the initial packages. “There is no time to insist on sweeping renegotiations or ultimatums about other policies that passed both houses unanimously,” McConnell said.

The standoff may last a while: It seems unlikely that Pelosi and House Democrats, who already accepted distasteful provisions like the $170 billion for real estate investors, will simply accept McConnell’s refusal to add their priorities to the next bill. And it is likely that in this or future emergency legislation, Pelosi will not abandon her insistence that the federal government aid states in preparing for innovative voting procedures for November. Those negotiations are proceeding with the White House — not McConnell, who appears satisfied to play the self-described role of the “Grim Reaper” presiding over the “legislative graveyard.”

John A. Lawrence, former chief of staff to Speaker Nancy Pelosi, is the author of “The Class of ’74: Congress After Watergate and the Roots of Partisanship” and a Fellow at George Washington University’s Graduate School of Political Management. Follow him on Twittter @JohnALawrenceDC.