Coronavirus response, which could reshape economy, scrambles familiar political lines – The Boston Globe

The virus outbreak has opened a wide on-ramp that could deliver liberal policies like paid family leave and cash grants into the economy at an unexpected moment, one when the most progressive Democratic candidates seemed likely to fail to capture the party’s presidential nomination. The party as a whole has control over the House only.

But this week, it was Republicans who were emerging as the loudest champions of populist economic initiatives and deficit spending while Democrats internally debated how much direct aid they should provide to Americans.

“I’m always happy to hear from the converted,” Representative Richard Neal of Massachusetts said dryly. As the chair of the House Ways and Means Committee, the Springfield Democrat is working with House Speaker Nancy Pelosi on drafting the House’s version of the stimulus legislation.

Most Republicans fought tooth and nail against stimulus measures after the 2008 financial crisis, leaving President Barack Obama and Democrats to push through legislation on their own. But faced with this looming economic crisis under a Republican president, GOP senators appeared to more rapidly coalesce around a deficit-spending bonanza than House Democrats, whose leadership is still weighing its own proposal.

“I think they did not start out thinking as big as they needed to,” said one economist who consulted with House Democrats and did not want to be named, in order to speak frankly about private conversations. “Now they understand the magnitude.”

As more Republicans began floating the idea of sending checks to Americans — and several Democrats also drafted legislation to do so — Democratic leaders warned they did not want to sign onto any proposal that gave wealthy people more money.

“The Speaker supports Congress taking an approach targeted to those most in need,” Drew Hammill, Pelosi’s deputy chief of staff, said on Twitter.

Schumer, the Senate minority leader, said on Monday that “millionaires” shouldn’t be getting payments, and criticized the idea of sending Americans $1,000 checks as “small thinking” since that money would quickly run out for those in need.

Later in the week, Democrats began to regroup, criticizing McConnell’s latest proposal, which would give $1,200 checks to individuals making up to $75,000, for giving less to lowest-income Americans and favoring corporations. In a letter to Democrats on Friday night, Pelosi called McConnell’s proposal a “non starter” and said the response to the crisis had to increase unemployment assistanceand Medicaid, help small businesses, expand paid leave, and “put money directly into the hands of those who need it most.”

“I think there’s a chance here to do some fundamental restructuring of the American economy,” said Neal. “In moments like this, those who embrace intransigence or a rigid ideological position, they’re not likely to be players in that debate.”

Neal said he was open to going “maybe a bit higher” than a $75,000 income limit for people eligible for cash grants, although those negotiations were still ongoing Friday. He said it’s possible Congress would authorize more grants in one or two more major stimulus bills after the one being worked on to address the crisis.

“I think we can find an agreement on cash grants with the understanding that we’re likely going to have to go back for another round on them,” Neal said.

One member of Congress who did not wish to be named in discussing the deliberations said liberal lawmakers are pushing Neal to increase the dollar amount of checks to more than $5,000, and send them to people who make up to $100,000 a year, which would significantly top the Republican proposal.

Representative Katie Porter, a California Democrat, said that Pelosi and Neal have not embraced direct cash assistance to families to the degree that she would like. Some of the tools they have embraced, including tax credits, will simply take too long, she said.

“Democrats in 2008 and 2009 in that bailout made the mistake of putting way too many conditions and way too many hurdles in front of American families who needed help to avoid foreclosure,” Porter said. “Big banks got their bailouts literally overnight. I am discouraged that some of my Democratic colleagues don’t seem to have learned lessons from that.”

Some Senate Democrats also are pushing for more long-term action to stabilize the economy. Warren supports cash assistance, but she is calling for more permanent fixes, like widespread cancellation of student debt to be part of the stimulus package.

“I’m pushing Democrats to push for more,” she said. “A stimulus package that delivers permanent relief to the grass roots and not the treetops could reshape our economy.”

Warren disagreed sharply with McConnell’s plan to give less assistance to lower-income Americans. But even she expressed some surprise at the size of the Republican’s $1 trillion bailout package, which is bigger than the $750 billion stimulus she initially proposed.

“Based on the Republicans’ unwillingness to give President Obama an adequate stimulus package back in 2009, I assumed they would be resistant to going as high as $750 billion in this stimulus package,” she said. “Obviously with a Republican in the White House, Mitch McConnell has changed his tune.”

The size of a rescue package is not the only indication of how progressive it is, and some Democrats cautioned that the Republicans’ big proposal could still do more to help corporations than working families.

Barney Frank, the former chairman of the Financial Services Committee, said Democrats who backed the $700 billion bank bailout in 2008 got “burned” in the 2010 elections when many of them lost seats as Republicans gained control of the House. That history may make Democrats nervous to back another gigantic rescue package this time around.

“There’s a little hesitancy, but I think it’s being overcome,” Frank said.

The fierce blowback to the Troubled Asset Relief Program, the bank bailout legislation known as TARP, which passed under President George W. Bush, may also explain Republicans’ enthusiasm for a more populist framing of the fast-changing coronavirus bailout proposal.

“I think a lot of Republicans don’t want to repeat the PR mistakes of the 2008 bailouts, where it appeared they were just helping Wall Street and not Main Street Americans,” said Alex Conant, a Republican strategist.

Progressive Democrats are calling for strict conditions on any aid received by big industries, and for the bulk of the aid to go to individuals. “Any aid to industry needs stringent restrictions and should be targeted to prevent workers from being laid off and to prevent cuts in their pay,” said Representative Ro Khanna, a Democrat from California. “Not a dime should go to shareholders or executives.”

Representative Joseph P. Kennedy III disagreed with the notion that Republicans had moved to the left of House Democrats on stimulus efforts.

“The Senate is moving first, but I believe Speaker Pelosi has some leverage here and I expect that you’re going to see them use it,” said Kennedy, who had proposed his own stimulus package that included a $4,000 payment for every adult making less than $100,000, plus $2,000 for each child, and scaled-back payments for those making more than that income level.

Jared Bernstein, a progressive economist who served as then-vice president Joe Biden’s top economic adviser from 2009 to 2011, pointed to a Goldman Sachs estimate that the economy could contract by an eye-popping 24 percent next quarter

“This is no time to jam the opposition,” he said. “Both sides are going to have to give.”

Jess Bidgood can be reached at Jess.Bidgood@globe.com. Follow her on Twitter @jessbidgood. Liz Goodwin can be reached at elizabeth.goodwin@globe.com. Follow her on Twitter @lizcgoodwin Victoria McGrane can be reached at victoria.mcgrane@globe.com. Follow her on Twitter @vgmac.

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