Here's Why Democrats Have An Edge Over Republicans in Stimulus Negotiations

The White House and Democratic Party leadership both cast blame for the stalemate over a stimulus package on the opposing side, but, in the battle for another round of relief, experts see Republicans as having more to lose.

While the chasm between the two sides remains significant after weeks of discussions, there are areas of common ground, including an agreement on issuing another round of stimulus checks. As a compromise, The White House suggested moving forward with a bill encompassing areas in which both sides agree and tackling more contentious issues later, but Democrats stood by the need for aggressive relief and rejected a piecemeal approach.

With a divided Republican Party and an election only three months away, experts told Newsweek Democrats are poised to hold firm on the position that it's a $2 trillion package or no package at all.

"What's their incentive to back down? If Democrats thought they'd be blamed squarely for the deadlock, I think they'd give in or they'd go to the table for something smaller," Sarah Binder, a professor of political science at George Washington University and senior fellow at the Brookings Institute, said. "If you do something smaller, Republicans can say, 'We're done.' And I think Democrats don't want to be in that position."

Part of what's working in Democrats' favor, according to experts, is their unity. Having passed the HEROES Act in the House of Representatives in May, the party has a clear vision of their demands. Republicans, however, are far from being on the same page and infighting over what should be included—or if there should even be another package—calls into question if any bill will be able to get more than 50 percent support among GOP senators.

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Senate Majority Leader Mitch McConnell delivers remarks during the Weekly Senate Policy Luncheon Press Conference on June 25 on Capitol Hill in Washington, D.C. With some Senate Republicans facing tough reelection bids, McConnell faces pressure to pass a stimulus package. Tom Brenner/Getty

Polling shows that the majority of Americans support additional support for small businesses, another round of stimulus checks and expanded unemployment payments. So, Democrats pushing against a curtail of emergency relief and for a renewal of the CARES Act is a message they likely feel is popular, Binder said, and thus another motivation to hold out for a deal they want.

And, if come November, they take control of the Senate and the White House, Daron Shaw, a professor at the University of Texas' Department of Government and Frank C. Erwin, Jr. Chair of State Politics, said they've "effectively won." Senators Susan Collins, John Cornyn and Martha McSally are facing tough reelection bids against Democratic challengers and polls put Democratic nominee Joe Biden more than 10 percentage points ahead of President Donald Trump.

With that kind of control, Democrats could more easily pass measures in line with their agenda and even provide relief without a formal stimulus package. By implementing an automatic stabilizer, Congress could provide enhanced unemployment benefits whenever the unemployment rate increased above a set amount without requiring legislators to vote on the measure.

Tied to the nature of the economy, Brian Kench, dean of the Pompea College of Business at the University of New Haven, said it takes politicians out of the story during a recession. Having it already in place would also likely increase speed and efficiency in getting payments to those who are out of work.

According to a CNN poll, 89 percent of Americans already decided on who they'll cast their ballot for, making it unclear how much of a role the economy will play in swaying the election. However, historically, it's been one of the most important predictors of a presidential election.

"I think the president is eager to sign something that will show action and that will perhaps provide economic stimulus before the election," Jason Roberts, associate chair and professor in the political science department at University of North Carolina-Chapel Hill, said. "The president gets outsized attention in a situation like this, so President Trump probably has more to lose in terms of perception."

In times of a divided government, Shaw said inaction on the part of Congress to pass a stimulus package will "fall at the feet of the Trump administration." Some Republicans are pushing Senate Majority Leader Mitch McConnell to strike a deal, an indicator that Binder said suggests they feel they're losing the messaging war or agree that more government action would be valuable.

While some prominent Republicans took umbrage with the price tag of the proposal presented by Democrats, and being the party known historically to be home to fiscal conservatives, Shaw said the GOP is at a disadvantage to prove they're taking the pandemic seriously.

"The public's perception of government responsiveness to issues is if you're spending money you're addressing the problem and Republicans are constantly put in this position of, 'It's not that I'm opposed to spending on education but I don't think the money is being spent wisely,'" Shaw said. "Optically it pays off for Democrats because spending shows your commitment to fixing the problem."

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Senate Minority Leader Charles Schumer listens as Speaker of the House Nancy Pelosi speaks during her weekly news conference at the U.S. Capitol on August 6 in Washington, D.C. Experts told Newsweek that Democrats likely have the upper hand in stimulus negotiations, in part, because of their unity. Stefani Reynolds/Getty

While attention should always be paid to the national debt, but economic experts told Newsweek the government should be spending now and enact fiscally conservative measures later. A "forceful up front" effort may boost the price tag, but Bill Foster, vice president at Moody Analytics, said being "bigger and bolder" helps ensure the recovery is swifter.

A small package means the economy is going to face "some headwinds" as America heads into fall, Michael Feroli, chief U.S. economist at J.P. Morgan, said, and the most time-sensitive issue is expanded unemployment, making it a priority. State and local aid, a sticking point in the negotiations, is also important, but when comparing it to unemployment payments, Feroli considered it to be the less urgent of the two.

Wayne Winegarden, a senior fellow at the Pacific Research Institute, agreed that a "tightly focused" response should center on targeting families and businesses bearing the brunt of the pandemic to "help them weather the storm," and policies that incentivize private sector growth once shutdowns are over.

"I think a better phrasing of the issue is not the size of the response, but the effectiveness of the policies implemented as a response to the unique challenges facing the economy today. More spending is not necessarily better spending," Winegarden said.

Once hoping for a V-shaped recovery, where a sharp economic decline is followed by a sharp rise, America's now looking at a W-shaped recovery, where the economy takes a second sharp decline and then another sharp rise. Given that the economy is likely to remain in flux until the pandemic is over, Kench said "mission number one" should be creating a safe and effective COVID-19 vaccine. It may take four times the amount of money the government thinks it needs, but if a vaccine is created, "all the other stuff is secondary."

"What's fundamentally different from this recession relative to the past financial one is that it's a health crisis ... we'll muddle along until this vaccine comes along," Kench said. "So, the number one item is to solve that piece."

Here's Why Democrats Have An Edge Over Republicans in Stimulus Negotiations | U.S.