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Democrats make their bid for dominance

·Senior Columnist
·5 min read

When one of the two political parties controls Congress and the White House, they typically get one big shot to make their mark and lock in votes for the next election cycle. Democrats just got theirs, with the $1.9 trillion American Rescue Plan Congress passed on March 10.

Democrats will roll out a lot of new legislation during the next 18 months, but the ARP, as it’s known, is likely to determine whether Democrats hold or expand their control of Congress, or cede control to Republicans. The huge relief bill will do much to determine the status of the economy in the fall of 2022, as voters are considering their options, and it will be a test of whether Biden fulfilled his promise to get the nation back to normal.

Republicans had their big shot at dominance in 2017, when they passed the Tax Cuts and Jobs Act. They blew it. Most families got a tax cut under the law, but the savings for businesses and the wealthy dwarfed the savings for middle- and working-class households. President Trump and other prominent Republicans claimed the trickle-down effects would boost spending throughout the economy and raise middle-class incomes by $4,000. It never happened. Trump also said the law would pay for itself by boosting economic activity and overall tax revenue. That never happened, either.

WASHINGTON, DC - MARCH 06: President Joe Biden speaks from the State Dining Room following the passage of the American Rescue Plan in the U.S. Senate at the White House on March 6, 2021 in Washington, DC. The Senate passed the latest COVID-19 relief bill by 50 to 49 on a party-line vote, after an all-night session. (Photo by Samuel Corum/Getty Images)
WASHINGTON, DC - MARCH 06: President Joe Biden speaks from the State Dining Room following the passage of the American Rescue Plan in the U.S. Senate at the White House on March 6, 2021 in Washington, DC. The Senate passed the latest COVID-19 relief bill by 50 to 49 on a party-line vote, after an all-night session. (Photo by Samuel Corum/Getty Images)

Voters never warmed to the Trump tax cuts. At the outset, 56% of voters told Gallup they disapproved of the tax cuts and only 29% approved. By the time of the 2018 midterms that had improved slightly, with 46% disapproving and 39% approving. But if Republicans thought voters would reward them for putting more money in their pockets, they miscalculated. Democrats running on the need for better health care retook control of House in 2018, blocking the Republicans’ partisan agenda.

Will the Democrats do better with their huge relief bill? The opening bid suggests yes, they will. Support for the Biden relief plan was 62% in a Monmouth University poll, 72% in a New York Times poll and 76% in a Morning Consult poll. Many Independents and some Republicans support the plan. It won’t provide much direct aid to the wealthy, but it provides numerous benefits for low- and middle-income families, including relief checks of up to $1,400 per person, expanded tax breaks for families with kids and more opportunities to get subsidized health insurance. There are a lot more voters in those income brackets than there are millionaires.

Potential hurdles for Democrats before 2022

Here’s what could go wrong. Some economists worry the Biden stimulus bill goes too far, adding nearly $2 trillion on top of $4 trillion Congress injected into the economy during the last 12 months. If that causes too much inflation, the Federal Reserve might have to raise interest rates sooner than expected, which could prematurely end the recovery.

Treasury Secretary Janet Yellen said recently that by next year, the Biden stimulus should help get the unemployment rate back to where it was before coronavirus erupted a year ago, which was 3.5%. It’s at 6.2% now and some economists think that understates the number of people out of work. Yellen set a marker some voters will use to decide if Democrats deserve a vote of confidence in the 2022 midterms. If we’re nowhere near 3.5% unemployment by the fall of 2022, Democrats could have a problem.

It’s possible all that massive fiscal stimulus could produce some other unintended consequences. Only a small portion of Americans seem to care about the soaring national debt, but there’s still a chance massive amounts of federal borrowing begin to crowd out private investment, push up interest rates and cause the stagflation some deficit hawks have worried about for years. The coronavirus vaccine rollout is gaining steam, with Biden now saying there should be enough doses for every adult American by the end of May. But there could be reversals related to new virus strains or, or who knows, another pandemic.

Democrats are already drafting their next big legislative effort, an infrastructure package with unprecedented investments in green energy that could top $2 trillion. That will be harder to pass than the Biden relief bill, since it’s not considered the same type of emergency and there’s wider disagreement among Democrats about how to approach climate change. As non-emergency legislation, there will also have to be some tax hikes to pay for that infrastructure spending, making it tougher still.

As the minority party for the first time since 2016, Republicans are back to familiar territory, mainly serving as the Party of No. They can stop Democratic bills that require a 60-vote majority in the Senate, and force Democrats to vote along party lines, without a single defection, on budget bills that can pass the Senate with a simple majority vote. Republicans are already complaining about myriad elements of the relief bill and many will probably line up against a green energy bill in a similar way.

The opposition party normally gains seats during the midterms, which may be why Republicans feel they can simply run against the Democrats instead of offering an alternative set of ideas for progress. That seems risky. Stimulus funds will provide a lift well into 2022, and voters don’t bet against the economy when they feel it’s pulling them forward. Biden may know what he’s doing.

Rick Newman is the author of four books, including "Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. You can also send confidential tips, and click here to get Rick’s stories by email.

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