Signs of a Consensus on a Massive Infrastructure Bill
Author: Greg Valliere
April 1, 2020
WE BEGIN THIS MORNING WITH THE FOLLOWING QUOTE from President Trump: “With interest rates for the United States being at ZERO, this is the time to do our decades long awaited Infrastructure Bill,” he tweeted yesterday. “It should be VERY BIG & BOLD, Two Trillion Dollars, and be focused solely on jobs and rebuilding the once great infrastructure of our Country!”
THIS IS ALMOST EXACTLY WHAT NANCY PELOSI is saying; she wants a huge infrastructure component in the next coronavirus bill, which will begin to take shape by late April.
THE NEXT BILL WILL BE MORE DIFFICULT to iron out than the past three measures, for two reasons: first, it will contain provisions (like infrastructure and aid to the oil industry) that aren’t exactly tied to the virus, so the measure could become a “Christmas tree,” a rich Washington tradition.
SECOND, THERE’S INCREASING GRUMBLING from Republicans over the cost. “I’m not going to allow this to be an opportunity for the Democrats to achieve unrelated policy items that they would not otherwise be able to pass,” Mitch McConnell said yesterday. House Minority Leader Kevin McCarthy generally agrees with that sentiment.
McCONNELL HAS STATED IN RECENT DAYS that Congress should wait to see the results of the $2.2 trillion measure that just passed. But there’s a sense of near-panic in this city over the virus and the reeling economy, so money is no object; the deficit this year and next should exceed $3 trillion annually.
TRUMP IS THE LEADING ADVOCATE OF MASSIVE NEW SPENDING, it’s almost as if he’s a proponent of the Modern Monetary Theory, which dismisses huge deficits when there’s such strong demand for Treasury paper. And Trump is correct — with rates close to zero, if there’s ever a time to spend gobs of money on infrastructure, it’s now.
SO WE WOULD ENVISION A BILL that spends much more on hospital construction, telecom infrastructure, highways, new schools, water projects, bridges, dams, etc. It will be part of the fourth virus bill, which also will spend more on paid sick leave, state and local aid, and more backup for the Federal Reserve.
WE WOULD GUESS that 80% of Democrats will support another massive bill, as will about half of the Republicans in Congress; the other half has always argued that infrastructure spending has to be paid for. But the only Republican who counts is Trump, and he will insist on enormous new spending. We reiterate our bottom line on monetary and fiscal stimulus: the sky’s the limit.
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