Politics Before Polity

“#StimulusChecksNOW” was trending on Twitter Wednesday afternoon, if that tells you anything about the mood in the US, where lawmakers spent another day debating the details of a virus relief package, while delivering the customary smattering of upbeat soundbites.

“[We’re] still talking and I think we’re gonna get there,” Mitch McConnell said, while speaking to reporters. The Senate has been asked to make itself available over the weekend in case it takes until Friday to get a House vote.

“We agreed we will not leave town until we’ve made law,” McConnell declared. For his part, Chuck Schumer said the “finish line is in sight.”

As it turns out, the sense of urgency for McConnell is tied to the Georgia runoffs. Imagine that, right? According to one source (which is apparently all you need these days), McConnell told GOP colleagues on a private call that in his view, getting a deal done before January may bolster David Perdue and Kelly Loeffler, who are attempting to do what Donald Trump couldn’t: Win in Georgia.

Jon Ossoff and Raphael Warnock, the latter of whom has been the subject of an overwrought smear campaign that some strategists worry might backfire on Loeffler, held narrow leads in sparse polling as of Monday.

Apparently, the final price tag on the stimulus deal will come in below $900 billion, just “slightly” lower than the $3.4 trillion Democrats initially demanded in the original HEROES Act.

I’d be lying to readers if I didn’t express palpable disdain for this process. As noted here on Tuesday afternoon, the five-month delay represents a complete legislative breakdown, and a wholly unacceptable dereliction of duty on the part of elected officials. Politics came before the polity at every, single turn. And that goes for both parties, although you’d be obtuse not to acknowledge that a disproportionate share of the blame lies with McConnell.

The deal won’t include direct aid for local governments, although there are reportedly provisions that ensure funding can be allocated to schools and disbursed where it’s needed for vaccine rollout. There will be stimulus checks, apparently, as well as an extension of the federal unemployment supplement. The direct payments are said to be $600, while the extra jobless benefits will be $300 per week.

As for whether this is enough to see the US economy through until vaccine rollout is complete, Jerome Powell declined to offer an opinion when pressed Wednesday. “The case for fiscal policy is very strong. That’s widely understood,” the Fed Chair said, during his post-FOMC press conference. “The details are entirely up to Congress,” he emphasized, before reiterating that there’s an acute “need for households to have fiscal support.” “I don’t have a view of the size of it,” he remarked.

Obviously, that’s a polite lie. Of course Powell has a “view on the size of it,” and my guess would be he thinks $900 billion isn’t sufficient. Queried on state and local aid, Powell reminded Congress (without addressing lawmakers directly) that “state and local governments are very large employers.”

At this point, the Fed will take whatever help it can get, though, presumably on the assumption that the new administration, and specifically Janet Yellen, will be able to deliver additional stimulus. Powell said he won’t discuss policy with Yellen until she’s confirmed. Somehow, I imagine they’ve already had a discussion (or two or three or twelve).

The Fed decided Wednesday to hold off on tweaking the composition of monthly asset purchases, and what they did deliver in the form of outcome-based forward guidance around QE was very vague.

Asked repeatedly during the press conference to elaborate on what, precisely, the Fed means with its new pledge to continue QE at the current pace “until substantial further progress has been made toward the Committee’s maximum employment and price stability goals,” Powell largely demurred.

He did make it clear that WAM extension is always possible, but also noted that since August, the Fed has tweaked its mandate and adopted outcome-based forward guidance on both rates and asset purchases. His comments had a kind of “Listen, we’ve done quite a bit” feel to them.

Treasurys took it largely in stride. One might have expected meaningful bear steepening, but the knee-jerk price action around the statement and press conference was ultimately unwound. “There were enough differing opinions on the topic that we’re admittedly surprised at the relatively tame price action following the Fed,” BMO’s Ian Lyngen said. “While the wordsmithing surely merits high marks for ambiguous monetary policy vagaries, it also signals bond-buying will be a feature of the Treasury market for the foreseeable future.”

And maybe that’s all the market needed. Stocks ended mixed. Again, one might have expected a selloff. While WAM extension this month was far from a foregone conclusion, the failure to deliver and the vacuous nature of the forward guidance tweak left something to be desired. Note that vacuous forward guidance is something different from ambiguity. Ambiguity is desirable, but there’s a fine line between ambiguous and nebulous. The former equates to flexibility, while the latter might be construed as a sign that policymakers aren’t sure-footed. Anyway, that’s (more than) enough tasseography for today.

Powell fretted over the scope of the virus surge. “This spike is so much larger,” he said. “This will have an effect on activity. The first quarter will show significant effects.”

Speaking of the virus, documents released to the public Wednesday by House Democrats revealed what I think it’s fair to call nauseating details of comments made by a senior Trump administration advisor within the Department of Health and Human Services.

I’m not in the mood to editorialize around objectively bad things in the interest of pacifying anyone’s partisan predilections on Wednesday, so I’m just going to close this with two excepted passages from a memo detailing one “strategy” that was bandied about in June. You can draw your own conclusions.

MEMORANDUM December 16, 2020

To: Members of the Select Subcommittee on the Coronavirus Crisis

Fr: Majority Staff

Re: Supplemental Memorandum on Investigation into Political Interference with Coronavirus Response

This memorandum describes evidence recently obtained by the Select Subcommittee showing that a Trump Administration appointee at the Department of Health and Human Services (HHS), Senior Advisor Paul Alexander, privately strategized with other top Administration officials as far back as June 2020 about pursuing a so-called “herd immunity” strategy in response to the coronavirus pandemic. Dr. Alexander explicitly endorsed allowing the disease to spread widely among “[i]nfants, kids, teens, young people, young adults, middle aged with no conditions etc.,” writing, “we use them to develop herd…we want them infected.” The views expressed in these private communications were later echoed by President Trump and other officials, raising the serious possibility that key Administration officials have pursued a deliberate or reckless policy of allowing Americans to be infected with the coronavirus.

Consistent with a “herd immunity” approach, the evidence obtained by the Select Subcommittee shows that Dr. Alexander privately acknowledged to other appointees that “[w]e always knew” that “cases will rise” as a result of the Administration’s policies. Yet even as he advocated for letting the coronavirus spread widely, Dr. Alexander also attempted to pass blame for the Administration’s failure to contain the virus to career scientists and public health officials. He also urged colleagues to suppress scientific information about the risk posed by the virus to minority communities that he admitted was “very accurate” out of concern that it would be “use[d] against the president.”