Stimulus outlook as House passes $3T coronavirus relief bill

National Taxpayers Union Senior Fellow Mattie Duppler joins Yahoo Finance’s Zack Guzman to discuss what measures didn't make the cut in the latest coronavirus relief bill passed in the House.

Video Transcript

ZACK GUZMAN: On the flip side, though, when we talk about monetary policy, we're also seeing another potential round of fiscal stimulus coming through out of Washington DC. On Friday, of course, the House passed the HEROES Act, which would propose about $3 trillion, which would match what's already been tossed out there in battling the coronavirus crisis.

But not a lot of people are optimistic that it's going to move past the Republican-controlled Senate, nor could it potentially, even if it did get passed, a veto power here by President Trump. But it did also-- it also offered interesting clues in terms of what Democrats might be willing to compromise on. For more on that, I want to bring on our next guest. Mattie Duppler, National Taxpayers Union Senior Fellow joins us now.

And Mattie, a lot of people are raising the point that it didn't necessarily go to the extremes for what Democrats might have wanted with this, even potentially, just a signal of a bill, first move to get Republicans to the table.

Interestingly, return to stimulus checks that we've already seen passed before, but not in the way that a lot of progressives have been pushing, in terms of income guarantees, or potentially, you know, repeat stimulus checks set up to really make sure that Americans are made whole here. What's your take on the way that it left some of those more progressive things out?

MATTIE DUPPLER: Well, Zack, that was a good synopsis. And that's why Speaker Pelosi lost 14 Democrats on the final vote for her House, what she called a messaging bill. But it is interesting. You know, we saw a retread of the stimulus efforts. That was in the CARES Act. That's $1,200 for a single filer. A little bit of fixing what's been going on with dependents in there as well, but not really wholesale changes a lot of progressives have demanded.

And a lot of progressives have made the point that $1,200 is not a lot of money, particularly if you're out of work for what has been the entire part of this lockdown effort, which is now 10 weeks for most parts of the country. $1,200 isn't going to begin to cover your expenses. So I think that that argument makes sense to a lot of people. The question is what should the public policy be moving forward?

A lot of progressives are claiming that the government should cover 100% of every worker's wages up to $90,000. That's in a bill from some members of the progressive caucus. I mean, that's going to be way too big of a pill, even for a lot of Democrats to swallow.

But some Democrats have argued that we should be just putting more into stimulus checks. And those should be re-occuring every month, so that Congress doesn't have to continue to revisit putting out new bills before people can get relief. You know, I would argue that these are all Band-Aid measures, particularly now that we're not in the throws of the lockdown.

So we've got parts of the country that are trying to reopen. I think what public policymakers need to be asking is how do we make sure that that reopening happens equitably and happens as quickly as possible. It's not like get people back to work, but to help people normalize what has been extremely disruptive several weeks for most of the country.

ZACK GUZMAN: Yeah, and I mean, you talk about how Republicans have lambasted this as just kind of a pet projects list for Democrats. But clearly, they left off some of the things that their more progressive wing wanted.

So, I mean, does that maybe signal to you that there are certain things on the table here that Republicans and Democrats still can't agree on in boosting stimulus spending? Because we have seen them already do that in the first wave of $3 trillion in stimulus. So what might be those compromises that both sides might be able to agree on, especially when we think about PPP and the other tax fronts out there and tax policy tools available for help?

MATTIE DUPPLER: Yes, Zack, I would remind your viewers that CARES Act was bipartisan in both houses. This is-- I mean, that's rare in Washington nowadays. I'll give you that. But it was a consensus document. And that should be the building blocks for what we do moving forward.

There has been some chatter about expanding or increasing the Employee Retention Tax Credit. That was included in the CARES Act. That allows employers to write off up to half of the first $10,000 of wages to employees. I think that's the tenor of where the conversation is focused right now.

And there might be a possibility for more compromise, because what that does is it increases cash flow. It increases certainty for businesses that are trying to manage their inventories and their workforces. And it makes employees less expensive. And that's what businesses need right. Now they need employee and rehiring to be the least expensive thing they can do in order to get the most number of workers back on the front lines and getting people back to work.

And in turn, that allows workers to try to level out some of the disruption that's been happening in their lives. They get to keep their benefits, which is super important. We're in the middle of a pandemic. It's good if workers can hold on to their health care benefits, I would think.

But secondly, then, that allows the economy to really start to kick in back into gear. That report from Jay Powell that you heard earlier, he said that he was optimistic that at the end of the year we could see some of the economic recovery happening. That only happens if we can get people back to work, and businesses can hire with certainty that they will have demand to meet their needs to continue to keep their doors open for the coming months.

BRIAN CHEUNG: Hey Mattie, it's Brian Cheung here, great to see you again.

MATTIE DUPPLER: Hey, Brian.

BRIAN CHEUNG: So I'm going to ask-- not to get all Committee for a Responsible Federal Budget on you, but the deficit is something that if you kind of rewound to, let's say, even a year ago, and you told someone we'd be passing a $3 trillion package in the form of the CARES Act, everyone on both sides of the aisle would probably have said, you're crazy.

I'm wondering, from your perspective, has the Overton window changed from a taxpayer perspective on the amount that they would be willing to see their representatives actually passing through Congress in order to stop the bleeding here? And do you think that's going to change structurally, even after we get through this recovery?

Do you think there's going to be a change in the way that taxpayers approach the way that Congress actually appropriates these large dollars of money for government spending?

MATTIE DUPPLER: Well, listen, Brian, I think that both someone like me, who's worked on federal policy for over 10 years, my friends over at CRFB, the people who are talking about the deficit about why it's important is because what we've been saying is there needs to be fiscal space for emergencies just like this.

I mean, these are unprecedented times. We're in the highest unemployment rate we've seen in any of our lifetimes. We need to have a prompt and targeted fiscal response. That's not to say that it's always appropriate to have deficit-fueled spending running up the ledger and for taxpayers ultimately to be footing the bill.

In fact, I would say that this makes the case for during times, especially in flush times that we are much more fiscally prudent in our decisions with tax dollars, so we have more of that opportunity to respond exigently when we find ourselves in circumstances just like these.

So I don't know about the Overton window, whether it's going to tip for politicians. I hope that it includes a conversation about why it is that we talk about the deficit and why we talk about fiscal fight federal finance a way that we do, because it makes it possible for us to have an efficient response in the future when we run into situations like these.

ZACK GUZMAN: Yeah, and I mean, the policy here, when you think about the extra $600 on top of unemployment, the idea that you don't want to have people looking for a job, getting out there, infecting more people, and how quickly that shifts when you're trying to get people back to work as well. Interesting topics, no doubt. But Mattie Duppler, National Taxpayers Union Senior Fellow, appreciate you joining us.

MATTIE DUPPLER: Thank you.