The last time the U.S. economy suffered a crisis and needed an injection from the federal government, the Democratic Party was fighting with itself over how big rescue legislation should be.
There were those who thought something really huge ― over $1 trillion ― was necessary to get the country back on track after the 2008 financial crisis. But plenty of others believed an amount that high not only wasn’t necessary, but was a political loser. Democrats didn’t want to give Republicans any more ammunition to attack them as profligate spenders. Obama adviser Larry Summers actually forbade one of his colleagues from so much as presenting Obama with an option that topped $1 trillion.
Since then, a consensus has emerged among economists that President Barack Obama’s 2009 stimulus package, which ended up costing roughly $840 billion, greatly benefited the economy but should have gone much further. It essentially was big enough to anger Republicans but not big enough to fully get the job done for the economy.
The lessons from that fight, as well as the negotiations over the Affordable Care Act, are now shaping the $1.9 trillion stimulus package that President Joe Biden has offered to help the country recover from the coronavirus pandemic.
The takeaways for Democrats are clear: 1) Go big, and 2) don’t wait around forever for Republicans to get on board.
“The history of fiscal interventions has shown us that the tendency is to go small rather than to go big. If you listen to not just the president, but Janet Yellen, who has a fair bit of experience with this sort of thing, the risk here is not doing too much, it’s doing too little,” said Jared Bernstein, a member of the president’s Council of Economic Advisers.
“The lesson of 2009 is repeated and respected even among the colleagues who weren’t here at the time,” said Sen. Richard Blumenthal (D-Conn.), who was his state’s attorney general at the time.
“If you remember 2009, we know that package was too small. It being so small, it caused the economy to recover a lot more slowly,” added Sen. Bob Casey (D-Pa.).
Biden is dealing with a different Senate than Obama did at the start of his first term. Obama had a bigger majority, but there were more than half a dozen moderates he needed to please to get anything done. Biden has a Senate divided 50-50, but there are far fewer moderates.
Biden has expressed an interest in bipartisanship, but so far, he is indicating much more willing to move forward quickly without the GOP than Obama was.
The mood has also shifted. The country appears far more unified around the idea of doing something big on coronavirus than it was on the earlier financial crisis.
“An important lesson after 2008 was that the stimulus efforts were probably too small.”
In early 2009, support for an $800 billion stimulus package hovered in the 50s, with a third or fewer of Republicans expressing support. Surveys that summer that asked Americans to weigh between stimulus spending and deficit reduction found the public anywhere from near-evenly divided to substantially preferring the latter.
A survey taken this year found Americans prioritizing economic recovery and dealing with the coronavirus outbreak significantly ahead of deficit reduction. In June 2020, as the nation settled in for a long haul with the pandemic, a 57% majority of registered voters wanted the government to do more, rather than leaving things up to businesses and individuals.
The progressive groups Data for Progress and Invest in America released a poll Wednesday that found 68% of voters want emergency relief “as soon as possible,” and 55% say to move forward with only Democratic votes, if necessary.
“Voters have been pleading for help since last spring, and with Republicans in power, it fell on deaf ears. The distinction, today, between which party is interested in digging out from this, and which party wants to sit on their hands isn’t an argument we have to make or win; it is the premise of Democratic trifecta,” said Eric Schultz, who was communications director of the Democratic Senatorial Campaign Committee from 2009-2010 and later worked in the Obama White House, referring to the Democratic control of the House, Senate and White House.
Even moderate senators from 2009 say that the current moment calls for substantial action.
“This kind of trickling of the money doesn’t give the boost that the economy needs at this time. I’m kind of a ‘go big or go home’ type of person,” said Mark Begich, a former Democratic senator from Alaska who is now a strategic consulting adviser with the lobbying and law firm Brownstein Hyatt Farber Schreck.
Begich was one of the moderate Democrats who wanted the Obama administration to cap the 2009 legislation at $800 billion. He said the overall number was getting “way too big to manage” and expressed concerns about some of the items included in the bill.
But he argues that the magnitude of what the country now faces is so much greater than after the 2008 financial crisis.
“We didn’t have a worldwide pandemic ― several hundred thousand people in this country that have died. To be frank with you, that is the significant difference. It’s not just an economic urgency ― which it was last time, only economics. This is health first,” he said.
Current Democratic lawmakers from more moderate districts are also, so far, largely on board with Biden’s strategy ― in no small part because of what happened in 2009.
“You are a fool if you don’t learn from mistakes. And there were mistakes that were made during the great recession.”
As a moderate Democrat representing a swing seat outside Pittsburgh, Rep. Conor Lamb is the type of lawmaker who may have been concerned about the size of the stimulus package in 2009. But he immediately blasted the Senate Republicans’ counterproposal in a Twitter thread in which he stated that “unity doesn’t determine the outcome here.”
“An important lesson after 2008 was that the stimulus efforts were probably too small,” he told HuffPost. “If we know now, that the COVID-19 shock is greater than 2008, our efforts should be bigger and stronger.”
Lamb, whose constituents voted for Donald Trump in 2016, also believes that a bigger recovery package is the smarter play politically. Whether it was deserved or not, Lamb believes that high growth and rising pay in the pre-pandemic economy contributed to Trump’s unexpectedly strong performance this past November.
“Our job is to give people that same feeling, but in a way that hits the middle class and working people even more,” he said. “Do it so that people really feel it.”
Rep. Matt Cartwright, another Pennsylvania Democrat in a swing seat, also emphasized the importance of bold action.
“The door for a bipartisan package is open, but we are the Democratic majority for a reason,” Cartwright said in a statement. “We are not about to keep the American people waiting for the relief they need and demand.”
Still, there are details where not everyone is in agreement, and the package could be downsized.
Some Democrats have started to discuss limiting the number of people who receive the next round of stimulus checks, by lowering the annual income threshold above which people no longer receive the full payment.
This more “targeted” approach would be a way for the White House and Democrats to lower costs show they’re willing to negotiate, but it would also deprive more Americans of assistance — and it’s unclear whether it would actually attract any Republican votes to the overall legislation.
Rep. Cheri Bustos (D-Ill.) oversaw the Democratic Congressional Campaign Committee, charged with expanding the party’s majority in the House. She also represents a district Donald Trump won in both 2016 and 2020, and said the biggest risk for the Democratic majority is not delivering significant aid to Americans.
“You are a fool if you don’t learn from mistakes. And there were mistakes that were made during the great recession,” Bustos said.
House Democrats saw their majority shrink by more than a dozen seats in the 2020 elections. Bustos said that while there will be pressure on those remaining Democrats from swing districts to show bipartisan appeal, that concern shouldn’t supersede passing the necessary relief.
“We’ll listen, and there’s some wiggle room on some of this, but in the end, we need to deliver,” Bustos said, saying that she and fellow Democrats met with Biden over a Zoom call Wednesday morning. “For the proposal from our friends across the aisle to not include one penny of help for our towns all over this country, that part of it is a nonstarter.”
Bustos said that on the call, Biden emphasized the urgency of acting quickly and while there might be some negotiations on individual elements of the package, he’s committed to moving forward with a big, aggressive package.
On Monday, Biden met with 10 Republican senators who pushed for a smaller stimulus package that would total $600 billion. It would offer smaller checks to people, no aid for state and local governments and less unemployment insurance. The president is under pressure to live up to his promise of uniting the country, with Republicans arguing that if he truly wants to do so, he needs to get their support for this package.
In an ideal world, everyone would like the coronavirus stimulus package to be bipartisan. The question is, how much time and energy should Biden spend on getting Republicans on board?
For most Democrats, the answer is easy: Don’t spend all that much.
Former Sen. Max Baucus (D-Mont.) was a key architect of the Affordable Care Act and, as chairman of the Finance Committee, presided over months of negotiations with Republicans to win support for a bill. The effort seemed increasingly futile to almost everybody else, but he stuck with it, despite pleas from both colleagues on Capitol Hill and officials at the White House.
“No matter how hard we pressed ... we couldn’t get Baucus to complete his work,” Obama wrote in his memoir. Although one Republican senator (Maine’s Olympia Snowe) voted for a bill in committee, none supported it on the floor.
Baucus said he has no regrets, because he believes bipartisan legislation is ultimately more politically sustainable ― something essential for a program that will, ideally, exist in perpetuity. But the rescue package is mostly about short-term, time-limited interventions, and the nature of the pandemic means that Biden doesn’t have time for months of negotiations.
“I don’t think he has much time. He’s got to decide pretty quickly,” Baucus said, regarding whether Biden will work with Republicans. “The virus is spreading, the different strains, such a huge issue. And if he wants his presidency to succeed ― clearly he does ― he has to lead. He has to be president. He has to not get bogged down in negotiations.”
Claire McCaskill, a former moderate Democratic senator from Missouri who was also around in 2009, tweeted on Tuesday that as long as the White House “focuses on policies that have broad public bipartisan support, they can be less concerned about politicians’ bipartisan support.”
So far, the Biden administration is largely standing firm on its $1.9 trillion package. Their argument is that they don’t need Republican lawmakers’ votes on their package since what they are proposing currently appears to be very popular among the American public, even among Republican voters.
“This is a bipartisan agenda,” White House Chief of Staff Ron Klain tweeted Tuesday, sharing a poll that showed two-thirds of Americans favored Biden’s $1.9 trillion proposal.
Biden told Senate Democrats this week that he believed the size of the GOP senators’ counterproposal was too small.
And the consistent message from the administration has been that there is a need to act aggressively to avert further disaster.
“[R]ight now, with interest rates at historic lows, the smartest thing we can do is act big,” Treasury Secretary Janet Yellen said at her confirmation hearing last month. “In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.”
“The economy needs help, so you do need to move expeditiously.”
Jim Manley, who served as a top aide to then-Senate Majority Leader Harry Reid (D-Nev.) during the 2009 negotiations, said he gives Biden significant credit for, so far, refusing to buckle to the Republican demands.
“They staked out a position and started driving a message on Friday that they were going to go big, and they haven’t walked away from that at all ― including during these negotiations with the Republicans,” said Manley, who is now a senior adviser with APCO Worldwide. “I think it’s very encouraging. They are determined to avoid the mistakes of the past.”
Democrats are continuing to message that they’re willing to work with Republicans on this emergency package, but in Congress they’ve already taken the first step toward passing the relief without Republican support. This week, Senate Democrats voted to approve a budget resolution that would allow for $1.9 trillion in new spending through a special process called budget reconciliation.
Budget reconciliation bills can pass with only the backing of a simple majority, meaning every Democrat will have to be on board, and Vice President Kamala Harris will have to step in as the tie-breaking vote.
The loudest moderate Democratic voice in the Senate so far has been Sen. Joe Manchin (W.Va.), who previously grumbled that $1.9 trillion was maybe too high but ultimately accepted the number as an upper limit. He’s made clear that he won’t sign on to nonemergency proposals being pushed through reconciliation, opposes the $15 an hour minimum wage included in Biden’s initial proposal and wants further narrowing of how many Americans would receive the direct payments in the proposal.
On MSNBC Wednesday morning, Manchin said Biden told him that he does not want a repeat of what happened in 2009, when Democrats negotiated with Republicans for months on the Affordable Care Act and essentially came out with nothing.
“I said, fine, Mr. President. I’m happy to start this process,” Manchin said, adding that he was not willing to change the rules of the Senate like abolishing the filibuster.
Some veterans of more collegial lawmaking eras also still see inherent value in at least making a good-faith effort to unite the two parties. Former Sen. Evan Bayh, a moderate Indiana Democrat active in the 2009 stimulus negotiations, argues that the key question is whether Biden can court Republican support without undermining his core policy goals.
There is a danger in moving too slowly ― say, longer than a few weeks ― but also a political risk in moving too fast, Bayh said.
“The economy needs help, so you do need to move expeditiously,” said Bayh, who is currently a senior adviser to the private equity firm Apollo Global Management.
But, he added, “If you just go out and put the hammer down immediately within a day or two, people will misjudge the man. Joe Biden would genuinely love bipartisan cooperation.”
Rep. Charlie Crist (D-Fla.), who was the Republican governor of the Sunshine State in 2009, effectively ended his career in the GOP when he welcomed Obama to an event in the state touting the state’s stimulus money. Crist and Obama shared a hug that Marco Rubio would use to attack Crist in the Republican Senate primary in 2010, prompting Crist to become an independent and subsequently a Democrat.
Crist, who made calls to Maine Sen. Susan Collins (R) to get her on board with the stimulus package in 2009, believes that Obama “got it just right.”
“I pray for” a bipartisan bill this time too, Crist said, though he admitted he’s not certain it will occur.
As for concerns about the size of the stimulus then, Crist said, “President Obama probably would have liked for it to have been more. But one thing I’ve learned in my public service is it’s better to get half a loaf than no loaf at all.”
And at least one former Democratic lawmaker who served during Obama’s first term warned in no uncertain terms against dispensing with the party’s historic concerns for fiscal prudence and bipartisanship.
“‘Going big’ isn’t consistent with what the president was proposing when he said, ‘We want to do things in a combined way’ ― in other words, reaching across to Republicans,” said former Sen. Ben Nelson, a Nebraska Democrat, who proved one of the toughest Democratic votes to get in support of the Affordable Care Act and now practices corporate law at the Omaha firm Lamson Dugan & Murray. “He said he’s president of everybody, not just those who voted for him. So it’s hard to have it both ways.”
The White House is banking on the belief that the American public isn’t focused on the budgetary process and the inside negotiations. They simply want to see results.
“What I think people are thinking about is we are almost a year into a crisis that has yet to be adequately controlled because of the lack of a focused and concentrated effort in the prior administration,” said Bernstein, adding, “What the American people want to see is action of scale that accomplishes three things: control the virus, distribute the vaccine and launch a reliably robust recovery.”
Igor Bobic, Jonathan Cohn and Ariel Edwards-Levy contributed reporting.