There is a precedent for political rivals teaming up during a crisis.
President Donald Trump could help millions of Americans by securing a major economic stimulus package that prevents a wave of layoffs and bankruptcies before Biden takes office.
“2008 is a good example of how this is supposed to work,” said Eric Winograd, senior economist at Alliance Bernstein, now known as AB. “It’s clear that isn’t the pattern we are going to follow this time around.”
Trump has not conceded the race, nor recognized the election as legitimate. There are no plans to invite Biden to the White House, a longtime tradition, including when Trump met with Obama two days after the 2016 election.
“There is wide agreement that stimulus needs to be done,” said Winograd. “But if people aren’t cooperating on the basics, it becomes difficult to see how they can cooperate on stimulus.”
Bush worried about auto collapse
By contrast, the 2008 Bush-Obama transition is viewed as the model — even though Obama campaigned aggressively against Bush’s record. Still, Bush was determined to avoid repeating the mistakes that slowed the early days of his administration, which got a late start because of the 2000 recount.
In Obama’s first private meeting with Bush, he pushed the outgoing president for help with the auto industry. The Bush and Obama teams later met at the Treasury Department to game out options to provide aid to the auto industry.
But that December, Senate Republicans rejected a bailout of the auto industry. With financial markets frozen and the Great Recession underway, GM and Chrysler were on the brink of a bankruptcy and possibly liquidation that would have wiped out millions of jobs and decimated the auto suppliers. Even rival Ford was begging for immediate government help to save GM and Chrysler.
Even though the auto bailout went against Bush’s free-market instincts, he eventually approved using TARP funds to keep GM and Chrysler afloat.
“I am worried about a disorderly bankruptcy and what it would do to the psychology and the markets,” Bush said at the time.
Bailout ‘bought time’ before Obama took office
Steven Rattner, the Wall Street banker who led the Obama administration’s auto rescue, praised the move in his 2010 book “Overhaul.”
“The loans bought time, not just until January 20, inauguration day, but until at least March 31, giving us a little breathing room,” Rattner wrote in the book.
“It’s very clear that bailout was successful,” said AB’s Winograd. “It preserved an industry that is a large employer and has significant knock-on effects to the broader economy.”
Stephen Moore, an economic adviser to Trump, sees little chance of Trump backing a major stimulus package — even though the president championed a $2 trillion deal before the election.
“It’s a brand-new world. The election changes a lot,” Moore told CNN Business.
“I would say, “Mr. President, you don’t want your last act as president to be signing a $2 trillion debt bill. That’s going to be a stain on your record,'” said Moore, who added “we’re not giving up” on the election yet.
And in any case, economists say the focus should be on reviving the economy, not fixing the budget.
Moore said Trump could go along with a “fairly pared down” stimulus package that provides unemployment and small business funds, but no aid to state and local governments ravaged by the pandemic.
Greg Valliere, chief US policy strategist at AGF Investments, warned of a “very acrimonious transition” between Trump and Biden.