Rescue and rethinking
New ideas on the rise, as reflected in Biden's recovery program
The House of Representatives just passed President Biden’s American Rescue Plan. He is expected to sign it into law on Friday. With that signature, help will begin to flow.
During the nail-biter negotiations in recent weeks, I confess to falling into a familiar despair. Why not do the obvious thing and raise the minimum wage for millions? Why not fight for the biggest possible checks and the longest-running unemployment aid?
But as I began to focus on the final package, that familiar sense of dismay began to lift. This wasn’t everything. But it was a lot. It will help a lot of people, and help them now. Leaders on the progressive end of things and in the moderate, milquetoasty middle agree this is some of the most significant, far-reaching public action in decades.
But what most stands out to me about the American Rescue Plan is that it points to the ascendancy of certain ideas in the national discussion and the fading of others. As President Biden has said in one of his famous parent quotations, “Don’t tell me what you value. Show me your budget, and I’ll tell you what you value.” In several significant ways, the American Rescue Plan hints at important turnings in the society’s values.
Giving people money. From Andrew Yang’s advocacy of a universal basic income on the presidential debate stage to a growing interest among philanthropists and nonprofits in direct cash transfers to the poor, the idea of giving people money — no strings attached, just cash money, without elaborate programs involved — has been on the rise, as chronicled by the journalist Annie Lowrey in her book “Give People Money: How a Universal Basic Income Would End Poverty, Revolutionize Work, and Remake the World.” Now the American Rescue Plan will give “most parents a monthly check of up to $300 per child,” reports The New York Times, which described this plank of the program as a “policy revolution” unto itself. “Though framed in technocratic terms as an expansion of an existing tax credit, it is essentially a guaranteed income for families with children,” The Times explained. The program is expected to cut child poverty roughly in half, though a big question remains whether it will be made permanent after this year.
Centering the poor, not just the middle. Democrats love the middle class. They want to help people in that class, get more people into that class, give that class the security it supposedly once knew. The poor are another matter. At most, you will hear talk of the working class. But poverty generally gets ignored.
As Will Bunch has written in The Philadelphia Inquirer, talk of poverty has been taboo for Democrats since white resentment grew in the wake of the civil rights movement of the 1960s and Democrats feared poverty talk would repel moderate white voters by making them think their money was going to unworthy Others:
In the 1970s and 1980s, politicians mostly on the right side of the dial exploited that backlash to reshape the way poverty gets talked about in our national debate — inventing a world of "welfare queens" and "young bucks" who were somehow living the good life on the government dole, a farcical portrayal of what it's really like to be poor in America…
Rather than fight back, most Democrats cowered in fear, re-crafting their platform to fight only for “the middle class” and avoid mentions of poverty that might scare off white voters.
Against that backdrop, the present rescue program is remarkably focused not just on the middle class but also on the poor. “To Juice the Economy, Biden Bets on the Poor,” read the headline in The New York Times this week, observing that the package would “overwhelmingly help low earners and the middle class, with little direct aid for the high earners who have largely kept their jobs and padded their savings over the past year.” The Tax Policy Center crunched the numbers and concluded that, contrary to the trends of the last four decades, the tax changes envisioned by the legislation would raise the after-tax incomes of the poorest one-fifth of Americans the most — by about 20 percent — while raising that of the richest one-fifth of Americans by just 1 percent or so. Is it enough? No. It is the right direction? Yes.
Sidelining Wall Street “problem-solvers.” Under Republican presidents as well as Democrats, crisis in recent years has often brought a strange theory back to life: that stable, healthy corporations are a priority if you want to help people weather the storm. But big corporations, while certainly benefiting from certain planks of this rescue package, are not its priority.
And this would appear to be related to a changing of the guard in Democratic Party economic circles. As Alex Thompson , Theodoric Meyer, and Victoria Guid reported in Politico the other day, “The Robert Rubin Citigroup clique is no longer at the cool kids table, after occupying it during the last two Democratic administrations.” They write:
While this isn’t what Bernie Sanders or Elizabeth Warren’s team would have looked like, it’s further to the left than many expected. Liberals currently in the private sector have been infuriated, feeling they’ve been black-balled in favor of think tank-types with little-to-no business experience.
If the Biden administration isn’t explicitly anti-Wall Street, it’s certainly the least Wall Street White House in many decades.
The idea that Wall Street bankers and CEOs have special insight into solving problems — even if they’ve helped cause them — is, one hopes, on the wane.
Learning to stop worrying about the budget. But how are we going to pay for it? This question used to attend any attempt to do anything to help anyone in American public life. But, again, the intellectual ground appears to be shifting. With advocates like the economist Stephanie Kelton touting Modern Monetary Theory, which tells political leaders to defenestrate their deficit worries, there was a notably muted quality to deficit worries voiced in the debate over the rescue package. “The broad economic consensus, both within and outside the Biden administration, is that the magnitude of the current crisis necessitates a very large response, and that $1.9 trillion is not too big,” Felix Salmon wrote in Axios not long ago. If anything, the most common worry, voiced in a Washington Post essay by the paterfamilias of the economist old guard, Larry Summers, was about inflation.
In response, Kelton ran a small victory lap in her long-running quest to end groundless deficit anxiety:
Do I think the proposed $1.9 trillion puts us at risk of demand-pull inflation? No. But at least we are centering inflation risk and not talking about running out of money. The terms of the debate have shifted.
The rescue plan, of course, at best represents the beginning of the end of the plague year and its associated economic disaster. It only flicks at some of the more significant changes that will be required in healthcare and education, childcare and antitrust, tech regulation and beyond to truly rescue American society, economy, and democracy.
But for now, in what has been a long season of darkness, there are glimmers of light. Some help is on the way — and buried in that help are the seeds of fresh thinking.
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