How the Impasse Over COVID-19 Relief Could Delay Infrastructure Investment, Again

By Matthew McMullan
Oct 15 2020 |
Highway traffic in Jacksonville, Fla. | Getty Images

No one wants to give ground before Election Day. That’s not exactly good economic policy.

I don’t know if anyone has noticed, but there’s a presidential election coming up next month. That’s right: The United States is gonna pick a new president! Americans may re-elect Donald Trump, or replace him with former Vice President Joe Biden, or maybe even Kanye West! It’s very exciting.  

But even as the looming vote and the Republican focus to seat a new Supreme Court justice has sucked up all of Washington’s attention, there are major, immediate problems across the United States that continue to fester – problems that Washington could address right now. Like, for instance, the national economy that is in incredibly bad shape.

There are millions of Americans who have lost work or jobs because of the pandemic-induced economic recession. And in fact, approximately 900,000 people filed new unemployment claims just last week. The coronavirus, meanwhile, is still all over the country and a significant number of us aren’t interested in slowing it down – which means it isn’t going anywhere anytime soon. And so the recession it caused will drag on.

Congress passed humongous emergency aid packages in March and April to respond to the COVID-induced recession. But the programs attached to them have run their course, and most of the money they allocated has been spent.

There seems to be general agreement that something now needs to be done. The Trump administration has been negotiating with House Democrats for months now on a new economic relief package, after the House passed its own second-round relief bill back in May. On the table are extensions to the unemployment insurance programs, more direct stimulus checks, money for cash-poor state and local governments, and support for child care. Also on the table are how much to spend on all of this stuff – but the sides are hundreds of billions of dollars apart.

To further complicate all of this, it appears the Republicans who control the Senate have little stomach for much more stimulus spending. So, as talks slog forward, it’s increasingly likely that nothing at all gets done until after the Nov. 3 election. Roll Call reports legislation is unlikely to pass before the current Congress ends in early January and the presidential inauguration (or re-inauguration) takes place.

And Trump said the real reason (maybe not the only reason, but a big reason) that these talks are at an impasse: Politics! Gamesmanship! No one wants to look like someone else’s stooge ahead of election day:

“(House Speaker Nancy Pelosi) wants money for things you could — your pride couldn’t let it happen.”

President Trump

It’s October right now. The inauguration is in January. That’s a long time for broke people to remain broke because of pride!  

Millions of Americans are in dire financial straits, through no fault of their own. The country is in the midst of a once-in-a-century pandemic, and that requires a big-time response from Washington.

Which brings us to infrastructure investment.

The Alliance for American Manufacturing is on the record that infrastructure spending should be part of the next relief package, as it will generate a ton of domestic economic activity and create opportunities for people to get back to work.

President Trump feints at the infrastructure issue all the time; he even brought it up Wednesday night in Iowa during a rally, and points to (largely toothless) executive orders he’s signed to spur infrastructure projects. And a significant infrastructure program is a huge part of Joe Biden’s campaign pitch.

Investors are even lining their money up because they think an infrastructure program is likely to be a big part of stimulus spending in 2021.

But nothing is certain. It’s anyone’s guess if a re-elected Trump will maintain focus long enough to pass an infrastructure spending bill in his second term, especially after he played politics with it during his first term. And should Biden win, well: The appetite for spending will diminish among Congressional Republicans even further should a Democrat take office. Here it is from Bloomberg:

A GOP strategist who has been consulting with Senate campaigns said Republicans have been carefully laying the groundwork to restrain a Biden administration on federal spending and the budget deficit by talking up concerns about the price tag for another round of virus relief. The thinking, the strategist said, is that it would be very hard politically to agree on spending trillions more now and then in January suddenly embrace fiscal restraint.   

So … we just aren’t going to do any stimulus spending at all?

Polls have shown for years that infrastructure investment is deeply popular across the country and political spectrum. People want to do this! And the economy desperately needs the juice!

Washington needs to get to work to help Americans suffering because of the economic fallout of the virus, along with putting policy into place that will get the economy back on track. An American-made infrastructure program should be part of the next relief package.