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US pandemic relief worked. Why are Republicans stalling on more?

The Los Angeles Regional Food Bank distributes food outside a church.
Reuters/Mike Blake
The number of Americans who rely on food banks is rising in the pandemic recession.
  • Tim Fernholz
By Tim Fernholz

Senior reporter

Published

US president Donald Trump and Senate Republicans continue to drag their feet on new legislation to bolster the US economy as it reels from the cost of the pandemic. There’s no good reason to do this!

Last week, a bipartisan group of senators agreed on a relief package to distribute more than $900 billion in aid. The move was endorsed by Democratic leaders in the House and Senate, representing a significant concession, since the House enacted a $2.2 trillion relief bill in October that Republicans have ignored. It’s not clear if Republican senate leader Mitch McConnell or Trump will back the new bill.

It would help if they did: The US economy is recovering from the pandemic, but all too slowly. Job creation in November was positive but distressingly slower than the pace needed to rebound. Unemployment remains twice as high as it was at the beginning of 2020. The number of people unemployed for six months or more grew by 385,000 people to 3.9 million, a critical indicator of the long-term damage to the economy as the recession continues.

That’s especially true as the assistance from this spring’s pandemic relief bill expires at the end of the year. Millions of unemployed Americans will lose benefits, even as eviction moratoriums and aid to small businesses expire. The sudden pullback of resources, just as many jurisdictions begin to reimpose pandemic-related business restrictions, threatens a double-dip recession before any vaccines can be distributed.

This is entirely avoidable: Just look at what happened this summer. Even as production cratered far more quickly than during the 2008 recession, US household income actually rose thanks to the mix of $1,200 checks to households, expanded unemployment insurance, relief for small businesses, and the Federal Reserve backstopping capital markets.

US pandemic relief proved more generous than the more automated stabilizers deployed in some European developed economies, in part because those measures are more targeted at maintaining living standards than America’s fiscal firehose. The results in the chart above are unprecedented—and likely played a role in Republican politicians’ outperformance in pre-election polls.

With the November election now decided, it appears the incentive to keep the economy from cratering in 2021 has expired among some lawmakers. A special election in Georgia that will decide which party controls the Senate may be one reason for the outgoing president to relieve Americans’ hardship.

The massive spending prompted by the pandemic may give pause to those concerned about the US debt load. But the US still has space to spend freely, and even those who believe the current path is unsustainable in the long term say that preventing needless damage before a vaccine is widely distributed is a wise use of public resources.

This isn’t a thought experiment. The government has a button it can push to prevent the immiseration of millions next month. What choice will it make?

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