Stimulus Through Budget Reconciliation Will Cripple Economy, Set a Dangerous Precedent

Robin Walker | March 5, 2021 | 10:56am EST
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A man proffers dollar bills. (Photo credit: Getty/Yuri Cortez/AFP)
A man proffers dollar bills. (Photo credit: Getty/Yuri Cortez/AFP)

For anyone who thought a change in the administration would bring a speedy end to the COVID-19 crisis, think again. President Biden himself has suggested things won’t be back to normal until Christmas—still another 10 months away. But while the Biden administration’s vaccine rollout may be slow moving, Democrats certainly aren’t dragging their feet when it comes to implementing their own leftist agenda. In fact, some might say they are taking advantage of the pandemic as a means to push it. 

Democrats are taking up the next COVID-19 recovery bill—a so-called stimulus for an economy that’s been trashed by forced economic shutdowns. But it’s rapidly become clear that the bill, which is being prepared to move through the budget reconciliation process, is chock full of progressive priorities that will change our economic outlook—and the role of government in our lives—for generations. Democrats know that, thanks to the process’s limited terms of debate, reconciliation is their first chance to advance these policies through a simple majority vote. And they’re not losing any time taking advantage of it.

While another round of stimulus checks for American families may be at the forefront of the next stimulus bill, close behind these direct payments is a laundry list of policies that will debilitate American businesses and workers and hurl more Americans into permanent dependency on government programs.

Take, for example, the additional increase of unemployment insurance (UI) bonuses to $400 a month, which will be extended, yet again, through the end of August. Research shows, and common sense dictates, that any boost in unemployment benefits puts government in direct competition with business for American workers. A $400 weekly bonus is estimated to pay low-wage workers 42 percent more to stay home than to work, thereby changing the purpose of UI from a temporary, partial replacement of lost wages to a preferred source of income. Businesses are already having a hard time recovering from mandated closures, and any extension of UI bonuses will exacerbate the challenges they face getting employees to return to work. Americans want to work; they just need the right incentives to do so.

The bill also includes $350 billion in bailout money for states and localities, ultimately rewarding governors who shut down their economies and grew unemployment in their states. States have a long history of mismanaging their budgets that has only been magnified by the pandemic and related lockdowns. Federal bailout money gives them a “get out of jail free” card and enables them to overlook their mistakes, leaving the door open to the expectation that Congress is ready to spot them some cash any time they make poor decisions.

This legislation also dramatically expands the child tax credit, changing it from a partially refundable credit to a $300 a month per child cash payment. For those who want a universal basic income, this free money (there is no such thing) is a big step towards that goal. 

The bill incentivizes states to expand Medicaid by giving them more federal money. We know Medicaid expansion grows dependency and upends state budgets. This bill also further extends the number of weeks individuals can receive state unemployment benefits; increases subsidies for people purchasing insurance on ObamaCare’s individual markets; and puts $5 billion more into the Pandemic-EBT program, an add-on to the already existing food stamp program, with no clarity of when the pandemic emergency will end. These policies and the process to pass them make it clear: Democrats are using the pandemic to push a government solution instead of empowering Americans to regain their independence.

All of these policies are on their own are concerning, but passing them through the reconciliation process sets a dangerous precedent. While it’s true that new majorities of both parties have used reconciliation to pass priority policies like tax reform and health care reform, Democrats are exploiting the process to reshape our economy and reimagine our nation’s welfare system. No one party has ever gone to these lengths to pass New Deal-type policies under the guise of a “rescue” package. How can President Biden and others continue the call for unity when they’re jamming leftist policies down the throats of Republicans and hardworking Americans?  Sen. Joe Manchin (D-WV) is right—this $1.9 trillion package should have been bipartisan. 

The fact of the matter is, American voters did not grant Democrats the legislative mandate for which they had hoped. They do not control a supermajority in the U.S. Senate, which is why they are using the reconciliation process to achieve their goals. It seems likely that they will continue this pattern of behavior and continue to manipulate the budget process to achieve their goals without having to lift a finger to justify their policies or convince others to support them. This time they’re using reconciliation to cripple American businesses and force more Americans into dependency—what will it be next time?

Robin Walker is the senior director of federal affairs at the Foundation for Government Accountability.

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