It was March 2008, and the American economy was in free fall. The George W. Bush administration was frozen, relying on token measures of the Federal Reserve to try to stem the bleeding caused by a decade of myopic financial policy that had finally culminated in the subprime mortgage and market meltdown known as the “Financial Crisis.” The stock market had already collapsed, wiping away the net worth and future retirements of millions, and the economy was already in recession. The unemployment rate had jumped, in a month, from 4.8% to 5.1%. An Illinois senator and presidential candidate named Barack Obama—then locked in a tight race with New York Sen. Hillary Clinton—issued a blistering critique of the Bush administration’s ineptitude: "It's a policy so divorced from the reality facing the American people and the American economy that it would be laughable if it weren't so frightening."
Fast forward one year to February 2009. Barack Obama had just been sworn in as president. The unemployment rate was now 8.1%. House Democrats, now with a Democratic president, had worked for months on an $819 billion recovery plan to shore up American business with grants, loans, and infrastructure projects, as well as aid for Americans hardest hit by the crisis. This fiscal “stimulus” passed, without a single Republican vote.
The measure then went to the Senate, where Democrats, despite having the majority, nevertheless made serious concessions to Republicans in order to get the legislation passed. Ultimately, the recovery plan was pared down to $787 billion before it passed both the House and Senate.
The man who is currently our Senate Majority leader, Kentucky’s Mitch McConnell, opposed the recovery plan from the start. Instead, he—along with Republican Sen. Jim DeMint of South Carolina—offered an “alternate plan,” consisting of government-backed mortgages and more tax cuts. As our economy teetered on the brink of what many feared would be a permanent, Depression-scale disaster, even conservatives such as Philip Zelikow, writing for Foreign Policy, characterized the Republican effort at the time as ineffective.
The responses so far look like general unease about big government, mocking particular spending ideas, and calling for more tax cuts. Thus the administration’s approach looks earnest and coherent, even if flawed. The Republicans are just nipping at the margins.
Had the “fiscal stimulus” to the economy not been passed—or had Republicans controlled both the House and Senate—what we now call the Great Recession would very likely be known as the Second Great Depression. It is also quite possible that we would still be mired in it. The years that followed that stimulus, called the American Recovery and Reinvestment Act of 2009, have been widely understood, by Democrats and Republicans alike, as “the longest period of economic growth and job creation in American history.”
Now the economy is facing something potentially as destructive to the world economy as the 2008 meltdown. Just last week the Federal Reserve instigated an emergency rate cut that had exactly zero effect, recalling nothing so much as the Fed’s impotence during the run-up to the Financial Crisis. The stock market has, virtually overnight, responded to the rapidly developing coronavirus pandemic like a scalded dog, as the drastic implications and “ripple effect” of a global economic shutdown become terrifyingly clear. Monday’s market collapse triggered “circuit breakers” in the market just to (temporarily) stem the bleeding.
What has also been abundantly clear is that Republicans have learned nothing from the collapse of 2008-2009, or more likely, they don’t want to admit the obvious. Although the Recovery Act passed during the Obama administration contained billions in targeted tax relief (including a large tax credit for renewable energy production), the bulk of the stimulus was dedicated to loans, grants, and contracts for education, transport, and rebuilding infrastructure. Almost one-third was for funding so-called “entitlement” programs, like Medicaid, food stamps and unemployment benefits, which were necessary to get millions of Americans through the crisis.
Today we see a similar disparity in fiscal policy in response to the coronavirus pandemic already emerging between Republicans and Democrats. The Trump administration, acting with its routine, reflexive incompetence, first floated a magical, amorphous “tax cut” as their only idea for solving the crisis brought on by the coronavirus pandemic. When the markets reacted to that with a unanimous vote of no confidence, the administration tried to get more specific. The tax cuts would be directed to the hospitality industry, the cruise industry, and the airline industries. There is now also vague talk of a payroll tax cut, although the value of a smaller payroll deduction in Americans’ pockets will provide little in the way of fiscal stimulus, particularly where homebound workers aren’t spending anything beyond basic necessities.
According to CNN, “Wall Street executives, including bank CEOs,” have been invited to provide suggestions on how the U.S. economy could possibly claw itself out of a worldwide work stoppage.” The White House is considering small “timely and targeted micro forms of assistance,” according to Larry Kudlow, the Fox News personality now apparently responsible for saving the entire U.S. economy. But, as he clarifies, “we’re not looking at these massive, federal, throw money at people plans.”
On Monday, the markets again weighed in on the administration’s response to the coronavirus pandemic: The Dow registered its largest one-day point drop in history.
Meanwhile, the Democrats in the House and Senate are treating the coronavirus pandemic with the seriousness it actually warrants, as indicated by a statement issued Monday by House Speaker Nancy Pelosi and Senate Minority Leader Charles Schumer.
In light of reports that the Trump administration is considering new tax cuts for major corporations impacted by the coronavirus, we are demanding that the administration prioritize the health and safety of American workers and their families over corporate interests.
- Paid sick leave — workers impacted by quarantine orders or responsible for caring for children impacted by school closures must receive paid sick leave to alleviate the devastating consequences of lost wages;
- Enhanced Unemployment Insurance — we must ensure unemployment insurance benefits are available and sufficient for workers who may lose their jobs from the economic impacts of the epidemic;
- Food security — we must expand SNAP, WIC, school lunch and other initiatives and suspend implementation of any regulations that weaken federal food assistance, in order to ensure vulnerable populations do not lose access to food during this epidemic;
- Clear protections for frontline workers — we must have clear standards and sufficient distribution of necessary protective equipment for health care and other workers who are in contact with people who have been exposed or are suffering from the virus as well as the people responsible for cleaning buildings and public facilities;
- Widespread and free coronavirus testing — to control the spread of coronavirus, the administration must ensure that all Americans who need an evaluation are able to access locations for cost-free testing and rapidly increase the unacceptably low daily test processing capacity inside the U.S.;
- Affordable treatment for all — patients must be reimbursed for any non-covered coronavirus-related costs, or else the epidemic will be worsened because Americans will fear they cannot afford the costs associated with treatment;
- Anti-price gouging protections — we must ensure that Americans are protected from price gouging of medical and non-medical essentials during this emergency;
- Increase capacity of medical system — we must use our emergency response mechanisms to mobilize resources and facilities in order to respond to surges in demand.
It’s clear that the same disparity between Republican and Democratic responses to an urgent calamity impacting the well-being of literally millions of Americans was apparent in 2008 and 2009, and remains apparent today. Republicans—before Trump, and now under Trump—uniformly and robotically respond to any crisis with calls for “tax cuts,” while Democrats respond by addressing the practical ramifications, the nuts and bolts of the actual crisis. With the coronavirus pandemic there is also the massive additional task of managing an unprecedented public health catastrophe. Thus far the Trump administration hasn’t even seen fit to acknowledge the magnitude of that, and continues to downplay its seriousness, even as the infection rates soar throughout the country.
There is a lesson here for all Americans, one that is likely to grow more and more apparent in the coming weeks: Republicans are ideologically unprepared—if not utterly incapable—of managing any crisis of this magnitude. Since their entire ideology assumes that the government is “bad,” they can’t adapt to any situation where government action is clearly the only solution, whether it's an economic crisis brought on by their own fiscal malfeasance, or here, a public health crisis of unprecedented proportions. They simply don’t have those tools in their kits. They are so wedded to their ideology that they can’t even begin to comprehend just how complicated a crisis like this will be, or the measures necessary to protect Americans from disaster.
The painful lesson here for Americans is that Republicans must be voted out if this country is going to survive. Hopefully Americans will come to understand this … before it’s too late.