Conservatives sound alarm over pandemic spending

Conservatives sound alarm over pandemic spending
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Conservative groups are beginning to sound the alarm about the federal deficit as spending surges in response to the coronavirus pandemic.

By some estimates, the federal government has already thrown an unprecedented $3.6 trillion at shoring up the economy, funding a big expansion in unemployment insurance, offering forgivable loans to small businesses that keep workers on the books, providing lifelines to larger companies, and sending stimulus checks to almost every American.

The Treasury department said it would have to borrow $3 trillion between April and June alone. The overall accumulated public debt is on track to surpass the size of the whole economy this year for the first time since World War II, and is on track to reach its highest point ever in the coming years.


While deficit hawks kept relatively quiet in the run-up to the first four emergency economic and health bills that Congress passed, they are no longer holding their tongues — even as economists implore the government to do more to prevent an economic meltdown.

Last week, a group of 18 conservative groups banded together to write Congressional leaders a letter, urging them to pull back on deficit spending, and calling for policies to offset the next stimulus bills.

“While there is plenty to debate about the merits of each dollar that has been spent responding to COVID-19 at this point, our organizations are committed to a responsible federal government and are united in our dismay at the ever-escalating debt burden of our country,” they wrote.

Meanwhile, 60 members of the Republican Study Group, a conservative GOP House caucus, sent a letter of their own.

“Congress should offset future COVID-19-related deficits. Given the present fiscal crisis, the thought of any more debt-financed spending seems unimaginable," they wrote.

Reducing deficits requires some combination of spending cuts or tax increases, however, and negotiations as to how to approach the next coronavirus bill have already fallen along traditional party lines.


Democrats have dismissed calls by President TrumpDonald John TrumpObama slams Trump in Miami: 'Florida Man wouldn't even do this stuff' Trump makes his case in North Carolina, Ohio and Wisconsin Pence's chief of staff tests positive for COVID-19 MORE to include a payroll tax holiday for businesses in the upcoming bill. On Tuesday, Trump added a cut in capital gains taxes, which would largely benefit the wealthiest Americans, to his wish list.

House Budget Chairman John YarmuthJohn Allen YarmuthPelosi, Democrats unveil bills to rein in alleged White House abuses of power GOP, White House struggle to unite behind COVID-19 relief House seeks ways to honor John Lewis MORE (D-Ky.) accused Republicans of using the debt as a red herring to block programs they disliked.

“We don’t have a debt crisis, and we should not be fabricating one as an excuse to withhold critical aid in a time when Americans must turn to the federal government for help,” he said.

“Now more than ever, Congress must use our fiscal space and do what is needed to fight the real emergencies confronting us today,” he added.

Republicans, for their part, have blasted Democratic calls to rescue state and local governments that are flailing financially as a result of the pandemic.

Speaker Nancy PelosiNancy PelosiTrump expressed doubt to donors GOP can hold Senate: report Senators battle over Supreme Court nominee in rare Saturday session Sunday shows preview: Trump, Biden gear up for final sprint to Election Day MORE (D-Calif.) is expected to include $1 trillion for state and local governments in the House draft of the next coronavirus bill. Other Democrats are pushing expensive policies such as rent and mortgage forgiveness, paying out larger stimulus payments on a monthly basis, and keeping expanded unemployment benefits in place until the unemployment rate drops.

But the issue of state and local governments, in particular, has rankled conservatives, who argue that Democrats are seeking to rescue states that were already economically mismanaged before the crisis.

“‘Thinking big’ should mean tearing down the barriers that stand in the way of economic prosperity, not bankrupting future generations to paper over structural problems that existed long before this crisis began,” said Tim Phillips, President of the Koch-backed Americans for Prosperity.

James C. Capretta, a fellow at the right-leaning American Enterprise Institute, said that the lack of fiscal restraint before the crisis had made the situation worse.

Since President Trump came to office, the deficit rose steadily on the back of unfunded tax cuts and significant increases to both defense and domestic spending.

"The Trump administration is particularly at fault for pushing aside fiscal concerns when passing its tax policies and negotiating successive budget deals with Congress," Capretta wrote.

"Whatever else is done to address the crisis should not substantially exacerbate the long-term fiscal problem," he added.

But Capretta and other debt hawks have taken a subtler approach to emergency measures than some of the lawmakers on Capitol Hill.

Without a proper federal response, they argue, the economy could continue to languish and the pandemic could last longer than necessary. That, they say, would be a worse outcome than higher debt.

“This crisis isn’t over yet,” said Maya MacGuineas, President of the Committee for a Responsible Federal Budget, which pushes fiscal responsibility.

“We may have to borrow more to fund the health care response to the pandemic and keep productive workers and businesses open to facilitate a fast economic recovery. So we’re not at the moment in time to adopt measures that reduce the debt and deficit; the virus needs to be contained and the economy needs to stabilize,” she continued.

But unlike the earlier rounds of relief, which had to be rushed out the door at breakneck speed, policymakers have more time to consider exactly how to craft new legislation in a targeted way.

Using the bills as a vehicle to check off long-standing policy goals, and borrowing astronomically in order to do so, is the wrong approach, MacGuineas said, pointing to proposed tax cuts, infrastructure spending, and student debt relief.


“These aren’t the targeted relief that would justify additional borrowing,” she said.

In recent days, the Trump administration has begun speaking of taking a “pause” to assess the next legislative steps, rhetoric echoed by Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellTrump expressed doubt to donors GOP can hold Senate: report Senators battle over Supreme Court nominee in rare Saturday session Sunday shows preview: Trump, Biden gear up for final sprint to Election Day MORE (R-Ky.).

But if the trajectory of recent years is any indication, Congress is unlikely to put together a framework for reducing the debt burden once the crisis ends.

For his part, President Trump returned to a common refrain for how to address the debt, arguing that tariffs from his trade war would help bring it down and that the economy would eventually be able to simply grow its way out of debt.

“This country is going to grow like crazy as soon as we get it going, and we're going to start making our products here,” he said Sunday when asked about the debt.