The amount of COVID- related benefit here is relatively small: Lanhee Chen

Lanhee Chen, Hoover Institution Fellow and Former Mitt Romney 2012 Policy Adviser joins the Yahoo Finance Live panel to discuss the latest on Congress clearing the $1.9T aid bill and sending to Pres. Biden.

Video Transcript

ZACK GUZMAN: For more on where this political battle goes in this recovery, I want to bring on our next guest kicking us off today, Lanhee Chen, Hoover Institution fellow and former Mitt Romney 2012 policy advisor. Lanhee, good to be chatting with you again here. I mean, the popularity of this relief package, I think, is worth stressing.

A Pew Research poll pointed out that it had about 70% of Americans favoring it, so it's a tricky spot for Republicans, I think, to be in to say that this is bad. What's your reaction to the way they held strong against the Democrats in the House and maybe where they go from here, since it is a lot of money flowing to Americans right now.

LANHEE CHEN: Yeah, no question that there is a an element of this policy that will be very popular. In fact, I think several elements of it will be very popular. I think at the end of the day, though, Republicans made the proper policy argument here.

And this is going to be the challenge, is, can they get out there and have a counter message that basically says, look, the actual amount of COVID relief, the actual amount-- for example, you saw Chuck Schumer referring to this notion of getting more vaccines in arms. That's a very, very small amount of this package. It's less than 10% of the total that's really being devoted to those kinds of things.

Is that the kind of message that Republicans can get out there and send regarding this package, that essentially the amount of COVID-related benefits, the amount of COVID-related relief here is a relatively small piece of the whole? I think that's a challenging message. There's no question about it.

But it's a message that they've decided they want to stick with. They believe that they've got a long-term pathway here to make the argument that this was essentially a bunch of unnecessary spending on progressive policy priorities. You heard Mitch McConnell say that. The efficacy of that, we'll know with time. We'll see whether that argument is compelling or not. But in the short run, it certainly seems, Zack, like it is a large hill to climb.

AKIKO FUJITA: Lanhee, one of the areas that surprisingly didn't attract as much Republican opposition is this extension of the child tax credit. And we've heard Senator Romney certainly argue for something even more significant than what we have right now. Democratic lawmakers have indicated they want to push to make this a permanent credit. How much support do you think there is from Republicans? And how do you think they calculate this particular part of the bill? Because it does seem like there is some agreement on both sides.

LANHEE CHEN: Yeah, and that's the interesting thing here, Akiko, is that there are parts of this bill that I think would have garnered some bipartisan support-- certainly, the part about direct sort of funding to help with the vaccine distribution, acquisition of PPE, et cetera. and then this child tax credit piece is really interesting because you did have a number of Republicans coming out calling for an expanded child tax credit to support family and child rearing during these challenging times around the pandemic.

And then, of course, you noted Senator Romney. He actually called for a broader overhaul, even, of the entire system relating to assistance for families and for those with kids. So there was the possibility that this piece could have garnered bipartisan support. I think the challenge, though, is now that you've had such a partisan battle over this $1.9 trillion package, I'd argue, in some ways, you've poisoned the well in terms of being able to come together on areas of public policy, where there may have been agreement, like, for example, expanding tax benefits for those with families and kids.

So I think that is-- that's a challenge we're going to have to see. Again, we're only going to know as this plays out over time. But my sense looking at it now is that Republicans are going to be really loathe to try to come together with Democrats, even in areas where potentially there may have been agreement.

ZACK GUZMAN: I think that's a very good point. And I think it's especially something that a lot of cannabis investors out there have noticed, thinking about how many moderates would need to come along for any changes on that front. But when you think about it, it does sound like Democrats are really banking on the financial impacts being remembered for a long time, right? Thinking that Americans that might need that stimulus check that was promised, really capitalizing on that and hoping that it pays dividends later on in the next election cycle.

But Lanhee, I mean, when you look at of where we're at in this recovery, there is a lot of truth out there that we might need some sort of relief for the hardest hit Americans. We got unemployment claims earlier today showing that it dropped to a four-month low, but the number coming in at 712,000 claims, down from-- underneath expectations of 725,000. But when you look at that and kind of gauge where we're at in the recovery versus what passed, I mean, it's tough to look at it and say that it wasn't necessary, right?

LANHEE CHEN: Well, I think you have to ask the question, could the policy have been more targeted? One of the things that we know about this pandemic in the period of time since the initial-- we've now been in this for a year-- the period of time since the initial declaration of pandemic, what you see is a real kind of bifurcation in the American economy, right? Some Americans have done just fine, in fact, have prospered during this time, and other Americans have been very hard hit economically. There have been-- there's been a fraying of the social fabric. There have been mental health issues that have come up as a result.

And so the question is, was this relief package really targeted to those Americans who needed it? And I think part of the Republican argument going forward is going to be, look, you could have taken a fraction of the money, targeted it more specifically at those who really needed the help, and ended up with a much smaller package that was much more directed, that was much more focused.

And I think that that's going to be-- again, I think that's going to be the issue going forward, which is, yes, there's no question that some more assistance probably was needed. But you have to remember this comes on top of $4 trillion of assistance last year. And so, really, I do think this could have been a much more targeted formulation, and in that sense, a much more effective one that could have garnered some bipartisan support.

AKIKO FUJITA: So Lanhee, I guess the question is, where does this leave the other legislative priorities? You said the partisan manner with which-- the partisan way in which this passed poisoned the well. What about issues like infrastructure now? Because that's something that both parties have said they can come together on. That's another big bill that could be on the table here. Does that derail priorities like that?

LANHEE CHEN: I think the devil will be in the details, Akiko, on infrastructure. I think there's always the potential, when you're talking about coming together, spending money on members of Congress' districts to repair roads and bridges and increase our capacity, for example, to transport goods and transport people. Those are all things people like. But when you talk about how is that spending going to happen, where will that spending be, is that spending going to be, quote, "paid for," those are the tough questions.

And I think if the answer is that they're going to do a $4 trillion package of spending, where there's no pay fors, and it's just a bonanza and a blitz of money going out into America, I think that will be challenging, again, for Democrats to do. I think the only way they're able to bring Republicans along is if they work together with them from day one to try to craft a package where there can be bipartisan agreement. Because infrastructure is one of those areas where the potential has always existed, and where I think you could potentially see something much later this year.

AKIKO FUJITA: OK, we'll be watching that. Lanhee, always good to get your insight. Lanhee Chen, Hoover Institution fellow and former Mitt Romney policy advisor.