There’s a tidy symmetry, intentional or not, between Gov. Larry Hogan’s “Relief Act” and President Joe Biden’s “American Rescue Plan,” proving that Republicans and Democrats can agree across state lines even if they can’t when they’re sitting side-by-side in Congress.
Where the state leaves off, the fed picks up, which is the way God intended, as the federal government has a bottomless maw that the states rely on under the exchange of power for fiscal sharing.
In Maryland’s State House, Democrats initially nodded general approval of Hogan’s billion-dollar relief package, though they promised a deeper dive into the details. On Capitol Hill, Republicans immediately tied a toe tag on Biden’s $1.9 trillion bailout plan, calling it dead on arrival.
Now Democrats in the Maryland Senate want to up the ante. They’ve added more than a half billion dollars to Hogan’s original proposal. In split-screen time, Republicans in Congress – play-acting like born-again virgins – are expressing shock, shock, shock over the national debt and want to gouge much of Biden’s rescue plan, forgetting that with their connivance the debt surged by $7 trillion during President Trump’s years.
So get used to hearing an obscure phrase, “budget reconciliation.” It’s been kicking around since 1974, and it rears up occasionally as a way to sidestep the usual rituals of budgeting, mainly the filibuster.
When the recondite phrase (I read recently that recondite is an underused word, so herewith begins a trend) is invoked, it signifies that only a simple majority of 51 votes in the U.S. Senate are required instead of the usual 60 on budget matters.
Budget reconciliation has also found its way into the Annapolis vocabulary and has logged in among other budgetary subterfuges such as “fenced off” and “deficiency appropriation.” Budget reconciliation is applied in the State House when the mandarins in the General Assembly feud with Hogan over spending, especially in matters of education and crime-fighting in Baltimore.
It is an undisputed axiom that whenever a legislative rule is established – whether in Maryland’s State House, Congress, Parliament, the Knesset, or the Bundestag – an accompanying parallel line of escape is also drawn.
(Beginning in fiscal 2024, sleight-of-hand tactics will no longer be necessary in Maryland. Voters approved a Constitutional Amendment that will allow lawmakers to add items to the budget so long as they do not exceed revenue projections.)
Relief is on the way. The numbers are staggering, probably beyond the comprehension of the average person who struggles to pay bills, kind of like the hieroglyphics on a pharaoh’s tomb.
But the numbers are only the beginning of the tell-tale story of how the pandemic has scourged everyday life in America, with even more lethal threats on the way from alien habitats. Behind the numbers are the jobless, the hungry, the sick, those who lost health care, the soon-to-be homeless, the upended businesses and all of the other wreckage in the wake of the year-long plague.
Both Biden and Hogan understand that people are hurting and the economy is in the shredder. Republicans in Annapolis no doubt will support Hogan’s big numbers while their counterparts on Capitol Hill resist living large under the ruse of fiscal prudence.
Much of Trump’s original $2 trillion stimulus program was ripped off by large corporations through programs that were intended for small and struggling businesses. Most people who were eligible received $600 checks, though Democrats argued for $2,000 payments. Trump later purported to support that higher figure but was rebuffed by his own party, whose leaders are once again sucking up to their disgraced leader who is in exile in his own luxurious Elba, Mar-a-Lago.
And before that, Trump’s 2017 massive tax cut, supported by Republicans with enthusiasm, cost the economy $1.5 trillion in revenue while most of the tax breaks went to the upper 20% of income brackets. The receipts are just beginning to appear that catalogue the abuses and inequities in the Trump stimulus package and the way the funds were plundered. Even funds to combat the coronavirus were misdirected and awarded randomly.
The proposed state and federal relief programs are well-aimed at their targets up and down the economy, hopefully with better management at the federal level, with Maryland’s package paid for from existing funds in various cookie jars, and the federal benefits, well, they’ll just crank up the printing presses and let ‘em roll.
But to allay any concerns, America’s biggest lender is itself, and not China, as many in the loopy QAnon brigade believe, through the Federal Reserve, which buys up most of the debt through the purchase of bonds. The state enjoys no such credit line but has to pay, on the barrelhead, from money in the bank.
Begin with Biden’s proposal. And here we are talking serious money. The $1.9 trillion plan includes: $1,400 checks for those eligible, to bring individual payouts up to the proposal of $2,000; a boost in unemployment payments as well as an extension of benefits; $25 billion in rental assistance for low and moderate income workers who’ve lost their jobs during the pandemic; $5 billion for struggling renters to pay utility bills’ and extension of food stamp benefits; $3 billion for Women, Infants and Children (WIC) program to secure food; $40 billion to help child care providers; and extension of the child care tax credit; $20 billion for public transportation agencies; and – the sticking points – a $15 federal minimum wage and massive aid to state and local governments for vaccination distribution and the opening of schools. And that’s only the surface.
Hogan’s program is almost a parallel accompaniment in an understandably minor key, a mix of payouts and tax breaks for individuals as well as businesses: Payments of $500 to eligible families and $300 to individuals, followed by later payments of $250 and $150; eliminate local and state income taxes on unemployment benefits; four months of credits to small businesses against state sales taxes; eliminate increase in unemployment taxes for businesses that lay off workers in 2020-21; partial forgiveness of state loans to businesses; subsidies for health care premiums; and more.
All of this is intended not only to help people – after all, what is government for? – but also to juice the imperiled economy by dumping trillions of dollars into what has been described as the worst year for the economy since World War II.
Economics is about money in motion. Nobody benefits from idle money. Both Hogan’s and Biden’s programs put money directly into the pockets of lower income individuals on the theory that they’ll spend it immediately and speed its movement through the economy. Middle and upper income individuals, lacking the urgency for food and shelter, would merely stash the money rather than put it into circulation.
As every political hobbyist knows, both houses of Congress are nearly deadlocked by narrow margins – Democrats control the House by a scant four members, and the Senate is frozen at 50-50, with Vice President Kamala Harris as the tie-breaking vote. In the Senate, Republicans have been battling for equal power even though Democrats control the chamber, no matter how slim or slight the majority. Budget reconciliation, anyone?
In Annapolis, Democrats dominate the General Assembly, with veto-proof majorities in both chambers, leaving little negotiating space for Hogan except to give Democrats pretty much what they want, which in this case is what he’s done.