What a spectacle. Much of America is quarantined at home, the public is so panicked there’s a run on toilet paper, the country desperately wants reassurance, and Nancy Pelosi and Chuck Schumer decide to take a bipartisan rescue bill as a political hostage.
That’s the display of Democratic leadership in a crisis the nation received on Monday as Senate Democrats blocked a $1.8 trillion bill that has urgent money for workers, hospitals, small business and, yes, even larger companies threatened by the forcible shutdown of the U.S. economy. When America most needs bipartisan cooperation, Democrats add to the economic uncertainty by putting their partisan interests above the needs of the country.
Democrats are lucky the Federal Reserve chose Monday to deploy its biggest financial guns so far, or the markets might have taken an even bigger fall amid Washington’s dysfunction. Equities still fell by 3% or so, but investors took some comfort in the Fed’s offer to buy as many mortgage securities and Treasurys as needed to calm the panic. The mortgage-securities market has been strained as sellers who need cash struggle to find willing buyers.
The Fed also signaled it is willing to buy securities of companies and municipalities. The Fed has been late in doing all this, but credit to Chairman Jerome Powell for moving fast and hard now. The problem is that the Fed needs fresh capital to backstop these facilities, and that has to come from Congress.
In particular, the Treasury must replenish its Exchange Stabilization Fund (ESF), which provides the capital backstop. That’s where the Senate bill comes in with its $425 billion for the ESF that the Fed could leverage up to many times that amount. The goal is to prevent this government-ordered business liquidity crisis from becoming a solvency crisis that becomes a banking crisis and depression.
Do Democrats even care? It isn’t obvious as they pander to their progressive base to make last-minute demands while blocking the rescue cash. The political chronology is instructive—and depressing about the state of Democratic leadership.
Majority Leader Mitch McConnell last week asked his GOP committee chairs to work with their Democratic counterparts on planks of the complicated legislation. Republicans sought about $850 billion in liquidity for businesses to prevent credit defaults and mass layoffs, and roughly the same amount on Democratic priorities—including enhanced unemployment benefits, direct payments to households, and a surge in medical spending. By Saturday night, Mr. Schumer was expressing “delight and surprise” at the “bipartisan cooperation.”
Enter the Democratic left, which trashed the bill as a handout to the wealthy. “Mitch McConnell & the GOP are pushing a crony capitalist slush fund for friends and donors,” tweeted Alexandria Ocasio-Cortez, who everyone thinks will challenge Mr. Schumer in a 2022 primary. Mrs. Pelosi returned from recess to say the House will write its own bill, and Mr. Schumer then blocked the Senate from even debating the bill that his fellow Democrats co-wrote. Stand up guy, that Chuck.
The “crony capitalist slush fund” line is false and dangerous. Government created this financial panic. Government told Americans to stay home and essentially ordered U.S. commerce to stop. Without revenue, companies can’t pay the bills. Without access to government loans, companies of every size will be forced to lay off employees by the millions.
Who do progressives think that hurts? The “working families” Democrats claim to care about will get the pink slips. Let’s see how inequality spikes if a prolonged recession cuts national output by 10% or more this quarter, or worse if this continues for a few more weeks.
Mr. Schumer suddenly claims there isn’t enough “transparency” in the bill’s replenishment for the Exchange Stabilization Fund, but the rules are essentially the same as they’ve been during previous Democratic and Republican administrations. Put too many burdens on the loans and companies will refuse to take the money to stay in business until it may be too late; or they may prefer to shrink and order mass layoffs to ride out the crisis.
Democratic cynicism was further exposed when Mrs. Pelosi released her 1,100-page bill Monday. House Majority Whip James Clyburn was heard last week advising Democrats to view the crisis as a “tremendous opportunity to restructure things to fit our vision.”
The Pelosi bill follows through by including an ideological wish list that has nothing to do with the coronavirus. There’s a Green New Deal mandate on airlines to offset their “carbon emissions” and publish CO2 emissions for each flight. There’s the House’s failed “election reform”—requiring states to allow early voting, mail-in voting, and same-day voter registration.
The Pelosi bill would require any loan recipient to provide permanent paid leave and a $15 minimum wage. Borrowers would not be allowed to pay a bonus to an executive or dividends to shareholders. Companies would have to provide statistics on the “gender, race, and ethnic identity” of their board members. Nothing like a deadly virus to get the country woke.
Democrats are trying to jam Mr. McConnell and President Trump to accept in a crisis what the left couldn’t pass in normal times. By our deadline Tuesday, Mr. Schumer had still refused to compromise. If Democrats refuse, they deserve to be held responsible for the damage to markets and the economy from putting partisanship above the national interest.
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