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Cutting $2,000 Payments, and Limiting Who’s Eligible for Them, Is Bad Economics and Loser Politics

The same cabal of compulsive neoliberals and centrist grifters who derailed meaningful progress in previous Democratic administrations are at it again. This time, they want President Biden and the Democrats to lower expectations for Covid-19 relief by reducing the amount of direct payments to Americans and imposing harsh restrictions on who might be eligible for them.

On Sunday, a group of 10 Republican senators sent the president a letter outlining a plan to reduced his $1.9 trillion stimulus package to approximately $600 billion. To cut costs, the Republicans propose to limit direct payments to just $1,000 and to prevent them from going to anyone earning more than $50,000 a year. They also want to jettison Biden’s plan to increase the minimum wage to $15 an hour. The Republicans say they hope Biden will work with them to achieve “unity and bipartisanship.” In fact, they’re proposing austerity under the guise of “targeted relief”—a dangerously bad idea that some Senate Democrats have also begun to peddle.

If Biden buckles to the deficit hawks who favor a narrow response to the economic turbulence spawned by the coronavirus pandemic—a compromise some of the president’s recent statements suggest is possible—he will do his agenda and his party deep damage.

A “go-small” approach to the crisis would surely gain applause from the usual suspects—austerity-inclined members of Congress and the elite editorial pages that cheer them on. But a surrender of ambition at this point would reinforce a sense that, even when Democrats control the presidency and the Congress, they cannot get government to work for the great mass of Americans. That is precisely the vulnerability congressional Republicans hope to exploit in order to regain power in 2022.

Don’t think it will happen? Think back to the midterm elections of 1994 and 2010, when Democratic administrations that had been elected with high hopes were punished for prioritizing reduced spending and deficit reduction over bold responses to economic downturns. There are never any political rewards for conceding to the budgetary vigilantes who demand that Democrats give up on the dream of once again forging a New Deal or a Great Society. And there never will be.

That’s why savvy members of the party, led by Representative Ro Khanna (D-Calif.) are cautioning against restricting payments in a way that denies them to middle-class families.

“This is not just bad economics, but terrible politics,” Khanna explained after proposals surfaced to restrict direct payments to smaller amounts and fewer Americans. The Californian has long been one of the House’s most outspoken advocates for addressing poverty. But he also recognizes that there are many Americans who earn over $50,000 a year and yet are struggling to make student loan payments, get out from under credit card debt, and cover housing costs in communities where rents and home prices are skyrocketing. “Why would we want to further the perception that the government cares for the needy and the elite but not for the middle class?” he asks. “Have we learned nothing?”

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