The Wall Street Journal - 28.03.2020 - 29.03.2020

A6| Saturday/Sunday, March 28 - 29, 2020 *** THE WALL STREET JOURNAL.

THE CORONAVIRUS PANDEMIC

For all the talk of polarization, the

political stars are better aligned now for

crisis response. In 2008, the country was

led by a weak, lame duck president, George

W. Bush. President Obama took over in

2009, facing staunch GOP opposition to his

stimulus strategy. Those factors delayed

and limited legislation. President Trump

enjoys strong support from his party, and

his re-election rests on containing the

economic fallout. Democrats tend to be

more supportive of big spending programs,

regardless of who controls the White House.

The coronavirus crisis is still unfolding,

and there are mounting signs the economic

destruction could be far worse. In the

depths of the last recession, the number of

weekly initial claims filed for unemploy-

ment insurance never came close to a

million. A record 3.28 million Americans

filed for jobless benefits for the week ended

March 21—nearly five times the previous

record high set during the early 1980s

recession.

The decline also appears to be much

deeper. At the low point of the great

recession, gross domestic product

contracted by an annualized 8%. Now, the

median “pessimistic forecast” for a group

of economists surveyed last week by The

Wall Street Journal was a 10% drop for the

quarter ending June 30. Morgan Stanley

sees a more severe decline, saying Sunday

that GDP could fall 30.1% for that period.

Another difference: politicians worry

much less about the budget deficit. As

Congress weighed a big stimulus bill in

early 2009, lawmakers labored to keep

the price below $1 trillion—a number

they feared would look excessive. The

$787 billion measure was considered by

many economists to be too tepid for the

scale of the crisis. In the coronavirus

debate, the deficit gets scant mention.

By Jacob M. Schlesinger

and Hanna Sender

There are similarities

between the financial crisis

of 2008 and the coronavirus

pandemic of 2020. A sudden,

jarring breakdown in the

economy and markets,

followed by a massive

response from policy makers

to try to prevent a 21st-

century Great Depression.

One big difference: speed.

Washington has this time

done in weeks what took a

year and a half back then.

The first signs of the

financial crisis emerged in

August 2007, when securities

backed by subprime

mortgages plunged. Congress

and the White House

ultimately allocated about

$2 trillion to subdue the

disaster. The final big piece

wasn’t enacted until Febru-

ary 2009.

This year, Congress has in

March alone passed three

laws throwing about the

same amount of money at the

problem, barely two months

after the first officially

reported coronavirus death

in China.

Back then, the Federal Reserve was first to act, and for months took the lead as politicians

hesitated to deal with the unpopular cause of aiding the banks. In retrospect, the Fed was also

behind the curve, because it had to improvise measures. This time, the central bank has been

able to quickly pull off the shelf a tested crisis tool kit.

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March15-

*BNP Paribas becomes first major financial

institution to report major mortgage-related

distress by freezing subprime mortgage funds.

Sources: Congressional Budget Office; White House

at once,” he Mr. Schumer said.

At about 9:23 p.m., Mr.

McConnell issued a statement

saying he had asked GOP com-

mittee chairmen to write final

legislative text reflecting the

compromises they had reached

with Democrats, and to deliver

it later that evening. But a 10

p.m. statement from Mr.

Schumer’s office warned that

Democrats weren’t on board.

Republicans blamed Mrs.

Pelosi, whom Mr. Schumer had

been keeping apprised of the

talks. Democrats pointed the

finger at Mr. McConnell for

producing new legislative text

prematurely.

Tensions soared after news

at a closed-door GOP lunch on

Sunday that Sen. Rand Paul (R.,

Ky.) had become the first sena-

tor to test positive for Covid-19.

Within hours, two more Repub-

licans, Sens. Mike Lee and Mitt

Romney of Utah, entered quar-

antine because of close contact

with Mr. Paul. Two other Repub-

licans were already quarantined.

Democrats agreed at their

own lunch to block the 3 p.m.

procedural vote. Mr. Schumer

informed Mr. McConnell, but the

GOP leader ultimately pressed

ahead, knowing it would fail.

Privately, Mr. McConnell

wasn’t worried talks would fall

apart. He didn’t think there was

time for the usual legislative

gamesmanship. Not now that

Covid-19 had arrived in the Sen-

ate. “Every day that goes by, anx-

iety rises, jobs are lost,” he said.

On Monday, Democrats

blocked another procedural

motion. Anger boiled over on

the Senate floor. When Sen. Su-

san Collins (R., Maine) asked to

speak and Mr. Schumer ob-

jected, Ms. Collins marched

over and pointed her finger at

Mr. Schumer’s face. “This is ap-

palling!” she exclaimed.

Behind the scenes, Mr.

Schumer and Mr. Mnuchin were

making progress. Around 7

p.m., encouraged, Mr. Schumer

decided they were close enough

to reach an agreement.

He threw a log on the fire in

his Capitol office fireplace,

knowing that he likely would be

there for hours.

The two Senate leaders met

on the Senate floor about 1:

a.m. on Wednesday. There were

still some i’s to dot and t’s to

cross, Mr. Schumer said, and

they had to decide if they would

say there was a deal, or an-

nounce an agreement in princi-

ple. “We decided to say we had a

deal,” he said, “to keep the mo-

mentum going and give some re-

lief to the markets.”

For Mr. McConnell, the mo-

ment wasn’t celebratory. “I

think relief is a better word to

use,” he said. “We both smiled

and went to bed.”

would needlessly stall aid to

Americans.

To prevent a delay, House

Speaker Nancy Pelosi (D., Calif.)

worked with House Minority

Leader Kevin McCarthy (R., Ca-

lif.) and House Majority Leader

Steny Hoyer (D., Md.,) to as-

semble a flotilla of rank-and-file

legislators to stop Mr. Massie.

Many Democrats and Republi-

cans boarded red-eye flights

back to Washington or took

long road trips to reach the

quorum—216—needed to out-

flank Mr. Massie. His maneuver

would have succeeded only if

the House lacked a quorum or

if he had support from one-fifth

of the lawmakers to insist on a

roll call. Neither was the case.

“We have our differences,

but we also know what is im-

portant to us,” Mrs. Pelosi said

when she joined Mr. McCarthy

at a news conference after the

vote. “America’s families are

important to us.”

The vote came at a tense

time. The Capitol is awash in

anxiety over the novel coronavi-

rus, and two additional mem-

bers of the House—Reps. Mike

Kelly (R., Pa.) and Joe Cunning-

ham (D., S.C.) announced Friday

they tested positive for the ill-

ness. In all, at least five lawmak-

ers have contracted Covid-19,

including one, Rep. Ben McAd-

ams (D., Utah), who is on oxy-

gen support in the hospital.

In the most dramatic moment

of the floor debate, Rep. Haley

Stevens (D., Mich.) donned pink

latex gloves as she delivered an

impassioned plea to pass the

bill, talking beyond her minute

of allotted time and shouting

when her own leader, Mr. Hoyer,

urged her to suspend so he

could extend her more time,

while some Republicans jeered.

Lawmakers are already dis-

cussing what could be needed in

a subsequent economic-relief

package—which would be the

fourth to address the health cri-

sis. Mrs. Pelosi has said she

wants to see more worker-safety

protections, along with access to

free health care for those who

become sick from the virus.

Just five days earlier, the

third relief package had hit a

snag, and such a quick turn-

around on the legislation

seemed to be out of reach, ac-

cording to interviews with Sen-

ate leaders in both parties,

other lawmakers, senior House

Democratic and GOP aides, and

administration officials familiar

with the negotiations.

In a meeting March 22

among the top four congressio-

nal leaders in Senate Majority

Leader Mitch McConnell’s of-

fice, Mrs. Pelosi and the Sen-

ate’s top Democrat, Chuck

Schumer, ticked off objections

to the measure as it stood. In

particular, they raised the issue

of there not being enough over-

sight at the Treasury Depart-

ment over a $500 billion corpo-

rate assistance program for

distressed industries, and Trea-

sury Secretary Steven Mnuchin

indicated he was amenable to

working that out.

Mr. McConnell, who had re-

leased his second draft of the

bill that morning, was taken

aback. To him, this wasn’t time

to open discussions, it was time

to close them.

“It was rather heated,” re-

called Mr. Schumer later in an

interview, “and I said to Mitch,

‘You said it’s bipartisan. You

and I know it’s not biparti-

san.’ ” The New York senator

believed Republicans were try-

ing to jam Democrats by forc-

ing them to accept the GOP-

Continued from Page One

President

Signs Big

Stimulus

penned draft.

“We weren’t throwing stuff,”

Mr. McConnell, of Kentucky,

said in an interview. “It was

cordial. But aggressive.”

Mrs. Pelosi started talking

about her House version of the

bill and what she planned to in-

clude: expanded unemployment

insurance, aid to states and

help for cash-strapped em-

ployer pension plans.

It was, in part, a negotiating

tactic. Her aim was to put pres-

sure on Republicans to meet

Democrats’ demands for changes

to the Senate legislation. She

also saw it as a back-up bill

should Senate negotiations falter.

As the House speaker

walked out of the meeting, re-

porters overheard her give a

grim update to a staffer: “We

are so far apart.”

Mrs. Pelosi, who shepherded

two earlier emergency coronavi-

rus bills through Congress with

Mr. Mnuchin, had wanted a

“four-points” leadership meeting

earlier on. She had called Mr.

McConnell on Tuesday, March 17,

and asked for one, arguing that

reaching agreement between the

two Democrats, Mr. McConnell

and Mr. McCarthy of California

would be the most efficient ap-

proach. Mr. McConnell said no.

Republican frustration with

a previous piece of coronavirus-

relief legislation, which Mr.

McConnell told members to

“gag and vote for it anyway,”

also motivated the Senate GOP

to take a more active role in

the new round of talks.

So Mr. McConnell assigned a

handful of GOP working groups

to start putting together a bill.

The instruction was to find

proposals that Republicans

knew their colleagues wouldn’t

oppose reflexively on ideologi-

cal grounds.

On Thursday, March 19, Mr.

McConnell released his first

draft. It didn’t include ex-

panded unemployment bene-

fits, as Democrats had wanted.

It also didn’t include direct aid

to states.

Senators met on Capitol Hill

on Friday, March 20, and broke

into working groups. According

to Mr. Schumer, the groups

continued collaborating until

about 7 p.m. last Saturday.

That’s when Republicans

stopped responding to their

Democratic counterparts, he

said. “All the groups shut down

Lawmakers are

already discussing a

subsequent virus-

relief package.

The USNS Mercy Navy hospital ship entered the Port of Los Angeles Friday to help with patients.

MARK J. TERRILL/ASSOCIATED PRESS

How Fast the Economy Crashed—

And Washington Responded

The Fed and Congress sped up the response to the coronavirus

pandemic using strategies tested a decade ago in the financial crisis

Lawmakers Learn

Social Distancing

Friday’s House vote on the

economic-relief package took

place against an unusual back-

drop, with lawmakers spread

throughout the chamber and

advised to use hand sanitizer,

to avoid elevators and to keep

proper social distance.

“People who can see the

chamber now will see that we

are keeping a distance from

one another, not out of hostil-

ity but out of love for one an-

other and that we may keep

one another healthy and safe,”

said House Majority Leader

Steny Hoyer (D., Md.) on Fri-

day.

House members were

called to the vote because Rep.

Thomas Massie (R., Ky.) had

said he would try to force a

formal roll-call vote on the re-

lief package, which drew a rare

rebuke from President Trump

toward a fellow Republican.

“Looks like a third rate

Grandstander named

@RepThomasMassie. wants to

vote against the new Save Our

Workers Bill,” Mr. Trump wrote

on Twitter earlier Friday.

Mr. Massie was unbowed.

“I swore an oath to uphold

the constitution, and I take

that oath seriously,” the law-

maker tweeted. “Is it too much

to ask that the House do its

job, just like the Senate did?”

The uncertainty prompted

many lawmakers to begin driv-

ing and flying to Washington

well before dawn.

Republican Rep. Tom Reed

left his home in Corning, N.Y.,

at 3 a.m. to make it to the

Capitol by the time debate

started. Rep. Joe Kennedy (D.,

Mass.) said he got in his car at

4 a.m. to drive to Washington.

“Once we vote, I’m driving right

back,” he tweeted.

Other lawmakers on flights

back to the nation’s capital

posted photos on social media,

including one of a group of

lawmakers sitting on a nearly

empty plane, in rows 6 feet

apart.