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Will Congress Ever Break the Covid Relief Standoff?

It is distressing that good economic policies often make bad politics and therefore aren’t adopted. Examples abound, including carbon taxes to combat climate change and broadening the tax base by closing loopholes. This is sad but familiar turf.

But the seemingly interminable delay in getting another coronavirus relief package through Congress is different—and weird. America is in the middle of a pandemic-induced emergency, with money from March’s Cares Act drying up. Providing more relief to a struggling populace is sound economic policy, not to mention essential on humanitarian grounds. It should also be good politics. Politicians normally delight in providing benefits to the electorate before an election.

Yet progress has been blocked by Senate Majority Leader Mitch McConnell, with the acquiescence of his Republican colleagues. Why? One naive hypothesis is that the GOP is taking a principled stand against budget profligacy. Really? These are largely the same senators who voted enthusiastically to cut taxes in December 2017, when the economy did not need stimulus. Now it does.

A second hypothesis, which I believed for a while, is that the need for fiscal relief was acute mainly in blue states, many of which were ravaged by the virus in the spring. Red-state senators were thus not sympathetic. But many red states—including Kentucky—were hit hard during the summer surge in Covid-19 cases and need help now.

A third hypothesis is that the Heroes Act, passed by the Democratic House in May, with a price tag of more than $3 trillion, includes items that Republicans abhor. Yes. But Heroes was just an opening bid, which House Democrats never expected Senate Republicans to embrace. It wasn’t until the end of July that McConnell countered with his own opening bid, the proposed Heals Act—don’t you love the names?—with a price tag around $1 trillion.

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