The Morning Dispatch: A Trillion Here, a Trillion There

Happy Tuesday! We’re too tired to come up with a good lead-in today, so we’re going to play the hits: “May the 4th be with you!”

Get it? Star Wars? And today’s date? It’s funny!

Quick Hits: Today’s Top Stories

• In response to progressive backlash, President Joe Biden formally announced yesterday his administration’s new plan to raise the United States’ refugee cap to 62,500 this fiscal year. “This erases the historically low number set by the previous administration of 15,000, which did not reflect America’s values as a nation that welcomes and supports refugees,” Biden said in a statement.

• At least 20 people are dead and 70 injured after a support beam gave out and a subway car in Mexico City fell from an elevated section of its track Monday night onto a busy street.

• New York, New Jersey, and Connecticut will begin to lift most COVID-19 capacity restrictions beginning May 19, Govs. Andrew Cuomo, Phil Murphy, and Ned Lamont announced Monday. Social distancing guidelines will remain in place.

• The Biden administration’s Department of Education appointed Richard Cordray—former director at the Consumer Financial Protection Bureau—to oversee the Department’s administration of federal student loans. 

• The Supreme Court declined to hear the appeal of a former West Point cadet who said she was raped at—and had her official complaints dismissed by—the U.S. Military Academy. Justice Clarence Thomas argued in dissent that the appeal should be taken up to reverse a wrongly decided 1950 case preventing military personnel from suing for injuries from non-combatant activities.

• The United States confirmed 49,661 new cases of COVID-19 yesterday per the Johns Hopkins University COVID-19 Dashboard, with 4.0 percent of the 1,232,582 tests reported coming back positive. An additional 457 deaths were attributed to the virus on Monday, bringing the pandemic’s American death toll to 577,492. According to the Centers for Disease Control, 34,012 Americans are currently hospitalized with COVID-19. Meanwhile, 1,188,734 COVID-19 vaccine doses were administered yesterday, with 147,517,734 Americans having now received at least one dose.

Where Are All the Deficit Hawks?

During his first address before a joint session of Congress last Wednesday, President Biden unveiled his roughly $2 trillion American Families Plan, a sweeping proposal he hopes to pass alongside his $2.4 trillion infrastructure proposal. “We can do it without increasing the deficit,” Biden said of both proposals during last Wednesday’s speech.

Biden plans to pay for his next two plans with hefty tax hikes on corporations and the wealthy, but his $1.9 trillion coronavirus relief bill—and the approximately $3.5 trillion in COVID relief before that—was financed with borrowed money and deficit spending.

Had these bills been introduced on the House and Senate floor just 10 years ago, the reaction likely would have been quite different. In the aftermath of the 2008 financial crisis, deficit hawks constantly warned that the rising national debt would cause interest rates and inflation to skyrocket to unsustainable levels, weakening the dollar and setting off a Greek-style debt crisis.

But in part because the Federal Reserve has maintained incredibly low interest rates, the forewarned impending debt crisis has yet to come to fruition. Before the coronavirus ravaged the economy last March, unemployment, inflation, and interest rates were hovering near historic lows—even as the national debt passed $23 trillion.

That last figure now stands at nearly $28 trillion, and will only continue to grow. According to the Congressional Budget Office’s February projections, federal debt held by the public will equal 107 percent of GDP by 2031 if the government’s tax-and-spend agenda remains generally unchanged. Should we be alarmed? 

Brian Riedl, a senior fellow at the Manhattan Institute, thinks we’re likely to see a series of mini panics among investors as opposed to one big crash. “What will likely happen is, as the debt continues to soar, at a certain point, Wall Street may panic and the bond market may panic and worry that Washington is not in control of its debt,” he told The Dispatch. “At that point, [investors] will begin to sell their debts or demand higher interest rates. Such a sell-off will panic the stock market, and Washington will likely be pressured into cutting spending or increasing taxes to a degree to try to get the debt under control.”

That could get ugly, and require cuts to programs that both parties have long been unwilling to put on the chopping block. Riedl suggests that a combination of spending cuts and tax increases totaling 6 percent of GDP by the 2040s would be necessary. “You either need to raise taxes 6 percent of GDP, which would be brutal, or reduce mostly Social Security and Medicare spending by 6 percent of GDP, which would be brutal, or a combination of the two,” he said. What would this look like in practice? Significantly means-testing Social Security and Medicare benefits, or a near doubling of taxes on the middle class. 

Balancing the budget is no simple task. Republican politicians have in recent years generally paid more lip service to reducing the national debt than Democrats, but Bill Clinton was the last president to oversee a budget surplus—albeit with a Republican-controlled Congress.  

But as we move further and further from the stagflation that rocked much of the 1970s, some more progressive economists have begun to question whether balancing the budget is even a worthy goal. Adherents to the modern monetary theory (MMT) framework believe that, because “financially sovereign” countries like the U.S., the U.K., and Japan have complete control over their currencies and can print money at will, they have no need to raise taxes or borrow foreign currencies to offset increases in spending. Greece’s 2009 debt crisis, the theory goes, was exacerbated by its reliance on the Euro.

MMT proponents argue that unlike private businesses and individuals, the federal government needn’t budget like a household because it is not financially constrained by anything other than inflation. “[The federal government] operates its budget under a completely different set of rules and constraints—the relevant constraint is inflation,” Stony Brook University economist and leading MMT theorist Stephanie Kelton told The Dispatch.

“Can the government spend too much? Sure. Can it put too much money in our hands? Of course,” Kelton said, drawing on the most recent COVID relief bill as an example. “If those $1,400 checks had been $140,000 checks, we have a big problem on our hands. So inflation is the right thing to pay attention to.”

Others aren’t quite as carefree about ballooning debts and deficits, and argue that MMT is just another excuse for the federal government to spend big. For Daniel Bunn, vice president of global projects at the Tax Foundation, the national debt becomes a concern when GDP growth wanes. “[The debt] begins to matter when you hit some sort of wall with GDP growth or with population growth,” he said. “Or you end up with a stagnant economy because of tax or regulatory reasons.”

“We have this privilege that allows us to continue borrowing as long as we have dynamic growth,” Bunn continued. “And from my viewpoint, dynamic growth means less government, a little less tax regulation, a little more permissiveness towards the innovation and the dynamism that kind of drives our country forwards.”

Deficit hawks argue that, ironically, the deficit panic of 10 years ago is contributing to the complacency over deficits today. “We had trillion-dollar deficits from 2009 through 2012 and the sky didn’t fall,” Riedl said, adding that this is now the guiding philosophy among many politicos and economists alike. “I think they’re learning the wrong lessons, because the trillion-dollar deficits back then were a temporary result of the recession rather than a permanent expanding structural increase in deficits that are only going to worsen.” 

“But when you combine the regular unpopularity of deficit-reduction with low interest rates—and the fact that the deficits ten years ago didn’t cause any collapse—you see why people are more complacent today.”

Senate GOP Hits Biden on Anti-Racist Education

Last week, Andrew wrote about how a proposed change to a small-ball civics education program at the Department of Education was likely to spark one of the first significant culture war fights of the Biden administration. On Friday, a group of three dozen Senate Republicans led by Minority Leader Mitch McConnell scaled that fight up with a letter to the Biden administration calling the proposed rule “divisive nonsense.”

“This is a time to strengthen the teaching of civics and American history in our schools,” the letter to Secretary of Education Miguel Cardona read. “Instead, your Proposed Priorities double down on divisive, radical, and historically dubious buzzwords and propaganda. … Our nation’s youth do not need activist indoctrination that fixates solely on past flaws and splits our nation into divided camps.”

It’s hard to find the target of that bombastic rhetoric in the actual proposed priorities. The proposed change to the American History and Civics Education programs—whose $5 million budget doles out two or three grants per year for teacher training or high-school extracurricular programs—would prioritize applicants with “projects that incorporate racially, ethnically, culturally, and linguistically diverse perspectives into teaching and learning.”

Instead, the senators’ objections seem to key on the language introducing the new priorities in the Federal Register rule, which approvingly cites the New York Times’ 1619 Project and “anti-racist” scholar Ibram X. Kendi. The meat of their complaint, in other words, is that the Biden administration is positioning itself as an ally to progressives in education nationwide who, the letter charges, promote “radical ideologies meant to divide us.”

The signatories plainly suspect that, despite the vague and abstract language of the new rule, the upshot will be more public-school programs along the lines of examples given in the letter: a project promoted by the Oregon Department of Education arguing that “white supremacy culture shows up in math classrooms when … students are required to show their work,” or a California model curriculum that “urges teachers to lead students in a ‘Unity Chant’ that prays to Aztec deities for ‘decolonization.’”

The letter, then, can be read both as a reassurance to conservatives who worry about the introduction of critical race theory into U.S. schools and as a shot across the bow for the Biden administration, warning that federal attempts to back “anti-racist” ideas in civics education will be met with fierce Republican resistance.

What’s most interesting about this fight is whether it threatens to derail what has in recent years been a bipartisan congressional effort to put more federal money toward civics education. The Civics Secures Democracy Act (CSDA, formerly the Educating for Democracy Act) is a bill with high-profile Republican and Democratic sponsors in both houses, which would put about $1 billion a year toward civics education programs.

GOP Sen. John Cornyn is both one of those high-profile sponsors and a signatory to Friday’s letter. In a statement to The Dispatch, a spokesperson for Cornyn contrasted his bill with Biden’s proposed rule: “The Biden administration’s attempt to circumvent Congress, and more importantly local school boards, is outrageous. Senator Cornyn’s legislation prohibits the Secretary of Education from creating any such curriculum, ensuring these decisions of lesson-planning stay with school leaders and states.”

It bears repeating that Biden’s proposed rule doesn’t create federal K-12 curriculum. And neither, for that matter, would the CSDA: The bill assures that the money it appropriates for K-12 civics education would be disbursed to individual states for them to apportion as they see fit, without curricular input from the Education Department.

But what’s particularly interesting is that the money the CSDA would apportion to education nonprofits and colleges—in other words, the parts that cover the same territory as the programs governed by Biden’s proposed rule—is funded in the form of the same competitive grant programs as the one the Biden administration is changing. As the current boondoggle shows, laws set the general parameters and qualifications for these grant competitions, but the administration has broad leeway in setting specific priorities for how the grants are parceled out.  

For some conservative education experts, that means this bill would actually run the risk of funding more of the exact same activity Republicans are currently denouncing. “My read is that they really need to put in some prohibitions on the secretary, beyond just the one around curriculum, if they want to keep more of this sort of mischief from happening,” Michael Petrilli, the president of the Thomas B. Fordham Institute, told The Dispatch. “It might be impossible for it to be ironclad, but surely they could make the effort, plus leave a trail of congressional intent that would make life harder for the culture warriors.”

Republicans Want to Combat Cancel Culture. How, Exactly?

If you’ve been paying attention to Republicans in recent months, you may have heard the phrase “cancel culture” once or twice. In a piece for the site today, Declan takes a look at how the GOP is hoping to turn “combating cancel culture” into a 2022 rallying cry—and what “combating cancel culture” would actually mean in practice.

What is cancel culture?

It’s an ambiguous term; one that has come to serve as a catch-all phrase describing perceived progressive overreach in a wide range of forms. “It’s sort of like the old Supreme Court line,” Rep. Jim Jordan told The Dispatch when asked how he defines the phenomenon. “You know it when you see it.”

And Republicans have been seeing a lot of it lately. 

A Virginia police officer being fired after anonymously donating $25 to the legal defense of Kyle Rittenhouse, the teenager charged with homicide in Kenosha, Wisconsin last fall? Cancel culture.

Dr. Seuss Enterprises ceasing publication of six titles because they “portray people in ways that are hurtful and wrong?” Cancel culture.

Disney removing actress Gina Carano from The Mandalorian after she compared being a Republican today to being a Jew in Nazi Germany? Cancel culture.

Sen. Josh Hawley and Rep. Elise Stefanik losing his and her book deal and Harvard Institute of Politics board seat, respectively, after objecting to the election results on January 6? Cancel culture and cancel culture.

Could this actually help Republicans in 2022?

They seem to think so. “Cancel as many people as you can right now,” Sen. Rick Scott—chair of the National Republican Senatorial Committee (NRSC) this cycle—wrote in an open letter to “Woke Corporate America” a few weeks back. “There is a massive backlash coming. You will rue the day when it hits you. That day is November 8, 2022.  That is the day Republicans will take back the Senate and the House. It will be a day of reckoning.”

Rep. Tom Emmer, chairman of the National Republican Congressional Committee (NRCC), echoed those sentiments in a statement provided to The Dispatch. “There is a backlash brewing against corporations doing the bidding of far-left actors,” he said. “It puts Democrats in a very difficult spot.”

But it’s not just Republicans saying this; some Democrats more or less agree with the assessment. “Wokeness is a problem and everyone knows it,” veteran Democratic strategist James Carville told Vox last week. “Large parts of the country view [Democrats] as an urban, coastal, arrogant party, and a lot gets passed through that filter. That’s a real thing. I don’t give a damn what anyone thinks about it—it’s a real phenomenon, and it’s damaging to the party brand.”

Public opinion analyst Harry Enten deemed criticism of cancel culture one of the GOP’s “best political plays” because polling shows it’s bipartisan. “Fear of cancel culture and political correctness isn’t something that just animates the GOP’s base,” he wrote. “It’s the rare issue that does so without alienating voters in the middle.” A late-February Harvard/Harris survey found 64 percent of registered voters believe there to be “a growing cancel culture” that is “a threat to our freedom.”

There are huge divides within the GOP over whether or not it’s a problem government has any role in solving.

J.D. Vance—the author and venture capitalist who is likely to enter Ohio’s U.S. Senate race in the coming weeks—urged Republicans to retaliate against businesses whose leaders met to coordinate responses to Republican-led efforts to change voting laws in states across the country. “Raise their taxes and do whatever else is necessary to fight these goons. We can have an American Republic or a global oligarchy, and it’s time for choosing,” said Vance, who declined to be interviewed for Declan’s story. “At this very moment there are companies (big and small) paying good wages to American workers, investing in their communities, and making it easier for American families. Cut their taxes. No more subsidies to the anti-American business class.”

Rep. Peter Meijer, a freshman Republican from Michigan, grew animated when presented with Vance’s comments. “How is that conservative? Where is there a fidelity to an underlying set of beliefs or principles other than just taking cues from the left and being inherently reactive?” he scoffed. “If you’re using the government to compel something you like, you’re setting the precedent for the government to be compelling something you don’t like. And the non-hypocritical approach is to just not have the government be a coercive entity towards those ends.”

Worth Your Time

• Derek Thompson does it again in his latest for The Atlantic, surveying and corresponding with more than a dozen vaccine skeptics to understand their reasoning before casting judgment. The respondents offer a range of explanations behind their hesitancy to get the jab, from prior bouts of COVID-19 to mistrust in public health officials and perceived liberal overreach. To promote the vaccine amid this reluctance, Thompson proposes a few possible ways to change the minds of the masses—and none of them involve public shame or coercion. 

• As the United States began its drawdown of the 2,500 troops stationed in Afghanistan Saturday, Kabul correspondent Thomas Gibbons-Neff and photographer Jim Huylebroek joined forces to capture the start of the process in an ominous photojournalism story for the New York Times. “The American withdrawal, almost quiet, and with a veneer of orderliness, belies the desperate circumstances just beyond the base’s wall,” Gibbons-Neff writes in anticipation of the spike in Taliban violence expected between now and the September 11 deadline to leave the country.

Presented Without Comment

Toeing the Company Line

• Monday’s episode of Advisory Opinions is a jackpot for Supreme Court bingo players, as David and Sarah play a guessing game as to which justices will write some of the Court’s most anticipated forthcoming opinions. Stick around for a discussion of two cases involving racial classification in the dispensation of government relief to “socially disadvantaged” farmers and ranchers, a debate on which Supreme Court cases AP U.S. history students should be required to commit to memory, and more.

Let Us Know

What would have to happen for you to become a single-issue voter on the debt/deficit? On a scale of 1 to 10, how concerned are you about federal spending?

Reporting by Declan Garvey (@declanpgarvey), Andrew Egger (@EggerDC), Haley Byrd Wilt (@byrdinator), Audrey Fahlberg (@FahlOutBerg), Charlotte Lawson (@charlotteUVA), Ryan Brown (@RyanP_Brown), and Steve Hayes (@stephenfhayes).