Now it's Trump & Co.'s turn to try to stimulate and bail U.S. out of trouble
President Donald Trump and Treasury Secretary Steven Mnuchin, right, with Vice President Mike Pence on Tuesday. Credit: Pool via EPA / Kevin Dietsch
The pandemic of 2020 heralds a massive shift in federal responses to the economy, which is now sputtering and stalling everywhere.
Fiscal hawks' warnings against excess government spending and entitlements fell out of fashion in the Republican Party well before the current crisis.
Now, in order to cope, the White House and Congress seem to have little choice but to further balloon debts and deficits.
Riding high in 2017, GOP majorities in the House and Senate passed a massive corporate tax cut. The White House also signed on to big military spending increases.
For better or worse, President Donald Trump, unlike previous GOP candidates, ran last time with no promise of fiscal belt-tightening or cuts. Long-term deficit projections have been swelling for three years.
Campaigning in June 2016, Trump casually suggested he could threaten default on U.S. debt should the occasion arise.
"I’m the king of debt. I’m great with debt. Nobody knows debt better than me,” Trump told CBS in an interview. “I’ve made a fortune by using debt, and if things don’t work out, I renegotiate the debt ...
“You go back and you say, hey guess what, the economy crashed. I’m going to give you back half.”
We are not at that point. But several elected policymakers still appear uncomfortable pushing massive amounts of cash out of the Treasury without strict controls, even as a national election looms in November.
Sen. Rand Paul (R-Ky.) briefly held up relief legislation last week. He pushed an amendment that would have required a Social Security number to get the child tax credit and authorized Trump to transfer funds between accounts as needed. Paul also called for ending U.S. military operations and reconstruction in Afghanistan, which would undoubtedly save costs for a suddenly squeezed government.
Senate Democrats and labor unions, meanwhile, called for conditions on airline aid, including tougher curbs on executive bonuses and stock buybacks, after Trump proposed a $50 billion package to help that industry.
Trump's push for stimulus sounded at first like predecessor Barack Obama's response to the Great Recession of 2008, with its bailouts for struggling industrial firms, its cash payments to average Americans — and, of course, its prospects of mounting deficits.
The crisis brings its scattered warnings of what not to do.
“Let me be clear: We’re not doing no-strings-attached bailouts that enrich shareholders or pay CEO bonuses. Period,” Sen. Elizabeth Warren (D-Mass.) tweeted Tuesday.
Trump previously charged that Obama's restructuring of U.S. auto manufacturing a decade ago amounted to “ruining American industry."
But the president's statements, always meant for momentary consumption, hint of no coherent approach to this massive new economic trauma.
Last week, Bank of America executives made clear they weren't awaiting permission from Trump or anyone else to start using the 'R' word. They notified clients: “We are officially declaring that the economy has fallen into a recession."
The massive relief package under review at the Capitol will better define who the national government can help, how much, and when.
Dan Janison is a member of the Newsday editorial board.
