While the Trump administration and Republicans in Congress say further coronavirus relief spending is inevitable, a group of prominent conservatives is fighting to stop the money from flowing.
The group, led by Trump outside economic adviser Steve Moore, says that more federal spending would slow down the recovery by keeping people unemployed, would cause even more unsustainable levels of debt, and could result in a shift of employment from the private sector to the government.
Moore is planning to bring together a group of conservatives to send President Trump and Senate Majority Leader Mitch McConnell a letter titled “Stop the Madness of Runaway Government Debt Spending.”
“Government spending – and policies such as paying millions of workers more money to stay unemployed than to go back to work, and paying states more money to enable them to stay shut down – is inhibiting the fast recovery we want in jobs and incomes, not stimulating it,” the letter states.
Moore, a contributor to the Washington Examiner, said a number of other prominent conservatives have signed and supported the letter, including former Heritage Foundation President Jim DeMint, former Secretary of Education Bill Bennett, conservative media mogul Brent Bozell, FreedomWorks President Adam Brandon, and Lisa Nelson, CEO of the American Legislative Exchange Council.
The group is facing an uphill battle. Treasury Secretary Steven Mnuchin said on Wednesday that he strongly supports further legislation to provide more relief to the economy but added that the aid must be more targeted to help specific businesses and industries that are struggling.
McConnell has taken more of a wait-and-see approach to further spending, focusing instead on the economy opening up and the future implications of spending on the national debt. However, the Kentucky Republican has repeatedly expressed an openness to further coronavirus spending at some point in the near future if the need arises.
Congressional Democrats, on the other hand, have been adamant in providing more coronavirus aid as soon as possible. House Democrats in May passed a new round of coronavirus legislation costing more than $3 trillion that would provide a historic level of federal aid to those hurt by the pandemic. In particular, the bill, which has not been taken up by McConnell in the Senate, would provide $1 trillion to state, local, and tribal governments to help them keep operating without the tax revenue lost because of the economic shutdown.
Moore said he hoped the surprise gain in jobs reported in early June slows the momentum for another round of major fiscal relief from Congress and “kills the idea of the ‘blue-state bailout,'” referring to the Democrats’ demand to support state and local governments. State budget shortfalls, based on historical patterns, could total more than $500 billion. State and local government employment fell by 1.5 million in the past two months.
Moore’s letter urges that the trillions of dollars of federal government debt spending in the wake of the coronavirus must stop “immediately” and that any further emergency government spending that might be necessary in the short term should be offset “dime for dime” by reductions in nonemergency federal expenditures.
“You’re not going to need all this stimulus spending now that the economy is open. After the latest jobs report, it seems we’ll soon be at 5 to 6% unemployment,” said Brandon at FreedomWorks.
Instead, Brandon said he would rather the federal government focus on incentivizing job creation and investment through initiatives like temporary payroll tax cuts or a capital gains tax cut.
He criticized some economic aid programs provided by the government in the past few months, such as the additional $600 in unemployment benefits and the small-business relief program known as the Paycheck Protection Program.
“The PPP loans were very sloppy. The constant refrain I hear from people is that those who needed the money didn’t get it and those who didn’t need it, got it,” said Brandon.
The letter states that the coronavirus relief spending coming out of Congress is out of control, saying that the country is getting close to an “unthinkable” $10 trillion federal budget, “which is more money than the United States government spent, adjusted for inflation from 1800 through 1980.”
The Congressional Budget Office said in early June that the projected federal deficit for fiscal year 2020 would be roughly $3.7 trillion and $2.1 trillion in 2021. In March, before the pandemic, CBO’s deficit projections were for just over $1 trillion in each of those years.
