Rahm Emanuel, when he was Chief of Staff to Barack Obama, said “No crisis should be wasted”. What he meant was that when there is a legislative moment where there is an urgency and general willingness to act, measures should be added to the package of other measures that are a long time part of the leadership’s agenda. That is what happened with the passage yesterday of the American Recovery Act. No Republicans joined to aid the Democrats, truthfully saying that many of the measures had nothing to do with coronavirus relief but were part of long time Democratic wish lists, but some of the Democrats did not waver too much from the bill, except for eliminating the fifteen dollar minimum wage and forgiving student loans, and did approve of provisions that could be considered radical in a liberal way in that they moved forward major programs to expand entitlements so as to provide a more substantial way of life for all citizens and particularly those who were all but the rich, the rich not needing the assistance. Biden’s law is incremental but substantial, a firm way whereby economic situations do not interfere in people achieving their life, liberty and quest for happiness. From a Liberal point of view, this is the greatest advance since the New Deal, and Democrats from Bernie Sanders to John Manchin are impressed by the audacity, even if Larry Summers says that the package of money is so large that it will lead to inflation. The U. S. has had no inflation since the late Seventies, which is two generations ago, and the Federal Reserve has the ability and the power to squeeze out any inflation should it arise. Look at the solid policy accomplishments rather than speculation.
Many of the measures in the American Recovery Act are directed at providing money to deal with the impact of the coronavirus pandemic’s economic impact. It makes sense to clean schools up so that students can return to the classroom; it makes sense to give money to states so that first responders can be paid even if state tax revenues have decreased because of the closing down of commerce; it makes sense to pay for administering vaccines. Some of these measures, however, are related to coronavirus only in the sense that the money supplies so great a shot in the arm that it will jumpstart the economy much more quickly than would a lesser package. The thing, though, provides for furthering long term structural changes, perhaps the most radical of which is the monthly child payment that at present is expected to last for a year but which might get extended and become permanent.
Every nation, of course, has a policy about children, whether to encourage or discourage having more children. Hitler gave bonuses for children; India pushed for vasectomies; China had for a few generations a one child policy. The United States is much milder in its policies than do other nations in that the United States enlarges child financial assistance. This time, there will be a monthly tax allowance sent each month to each child, more so for those under five years old. If there are three children in a family, the family would get $800 a month for six months plus an additional stipend of $4800 when filing taxes for 2021. A tidy sum that will go a long way to support the family. It is a way to defray the money not earned because of the coronavirus epidemic but also can be made permanent as a way for the government to always support its families. Research over many years has shown that if poor people are given free money, they do not spend it frivolously on beer and cigarettes but on grocery staples and consumables. Their food and their well beings improve. So an entitlement for child care is not the same as a guaranteed income but it is an incremental down payment on that larger endeavor. Families will be on more solid economic footings because of the money given to children and even if they are having children so as to get the money, that is a good thing because the United States has always and still needs more population so as to meet its economic needs. We rely on immigrants, legal or otherwise, to serve as farm workers and to mow our lawns and to work at meat processing factories. People are imported from Asia and Mexico. While the shorelines, whether the Atlantic or the Pacific, or the Great Lakes or the Gulf of Mexico, are relatively crowded, the heartland is emptying out, towns closing down, and people are needed to replenish or newly staff those factories, including the new ones such as solar and wind turbines, that are now dotted throughout the great plains. And those families with more assurance of their income are likely to be stable enough so that children are more likely to prosper in school in that education is a delicate flower that does not thrive with basic anxieties felt by both adults and the children. This is a win-win for all. Pay families rather than pay for remedial education.
Both Liberals and Conservatives have long argued that income need not be tied to employment, a breadwinner doing relatively well because of how responsible is a job. Rather, as Talcott Parsons put it, there is a difference between the production function and the distribution function. Institutions that create products, services and wealth while other institutions, primarily the government but also banks, dispense income in a manner that is considered equitable. Dispensing money is also done by giving money to relative prestige. People of wealth hire their wealthy friends and get the perquisites of being in a club. The Liberal John Kenneth Galbraith said that the United States did very well at individual purchases from corporations and businesspeople who design something to be marketed as an individual transaction, as when people buy candy bars or cars or tickets to movie houses, but do not do very well at collective purchases, those that have to be purchased for everyone in the public interest, such as is the case in national parks, police departments and libraries. These are two different economies, the so-called private sector (“so called” because corporations, after all, are government created and regulated), which is very productive and the public sector which is always hard pressed and the balance of the two is better balanced if the government gives money to family life.
A second major structural innovation in the American Recovery Act, though not as grand as the significant child allowances that are to be granted, are the changes in the Obama Affordable Care Act. The new law will allow subsidies for health insurance to cover people with up to 150% of the poverty level. That means that health insurance will cover another ten million or so people, and that leaves only twenty million without coverage and those would do, presumably because they are young people, with only low cost catastrophic health insurance whereby those clients would have to pay for checkups with their own money should they bother to get that service, while having coverage if run over by a truck, however healthy. All taken together, an expanded Obamacare would achieve more or less total coverage, even if it did not accomplish Medicare for Everyone, as Bernie Sanders had envisioned the program, and Sanders had been too rosy about having cut down private sector inefficiencies in the Socialist belief that competition costs money and creates needless frills, when the cost of medical care is ever more expensive because people are sick from newly discovered things and require fancy new gadgets, however much medicine tries to cut costs by moving to outpatient health care centers and relying on technicians and telephone operators and data portals to use up as much of the work as doctors can do without. The race is for organizational efficiency to replace the time of high skilled people so as to cut costs. Biden’s proposal, for his part, is the Liberal view that incremental changes, if done long enough, will lead to a qualitative change in the extension and quality of a service, such as medical care, or, someone hopes eventually, in finding ways to provide education so that students don’t have to sit in small numbers in small classes led by masterful teachers, but rather education will someday be much more efficient and effective through distance learning and programmed learning.
Another program of the American Recovery Act that seems particularly curious and only very indirectly related to the coronavirus pandemic is the rescue of union pension funds. Whether it is the result of the rampant corruption that has plagued unions since before Jimmy Hoffa, or because the union pension funds were always underfunded in that contributions from employers were never enough to pay off funds, even though employers thought that agreeing to pensions through collective bargaining was cheaper than increasing wages, or that employees were fewer in number while retirees were growing larger, union pension funds have not worked very well in a large number of their plans. Biden could have decided an overhaul of the pension system to make it economically sound. Rather than that, he decided to pay pensions off because the employees were not at fault because the system is collapsing. That means that the pension funds will be a drain on the public coffers until these schemes end when the union retirees are all dead, and so is a way to include these as part of the overall pension obligations of the government, which seems fair. The union pensions are not a transitional device until the money of ins and outs are stabilized, but rather a replenishment of a sinking fund because those pension funds are a remainder of an old antiquated system. The government comes in to pay when other devices can’t manage. That is done for corporations all the time, and so Biden’s radical liberalism says to do the same thing for workers. Why not?
How is Biden to proceed after the American Recovery Act? Perhaps with infrastructure because historically such projects are bipartisan. Everyone wants their own roads and bridges repaired. But there might be a stumbling block because of the details about the public purse projects and those contracted out to corporations. After all, the Union Pacific was given a large right of way to make building the transcontinental railroad feasible. Even more difficult would be the George Floyd Act on police violence, the John Lewis Act on ending voter suppression, and a comprehensive immigration act, none of the three subject to reconciliation. So how to get the Republicans to get on board? Maybe they won’t and the Democrats will alter the filibuster rule so as to get bills passed. After all, the value of the filibuster is that it gives a minority of senators to argue their points. But the Senate is no longer a great deliberative body, where minds get changed, as perhaps happened when republicans crossed the aisle to join in support of Lyndon Johnson’s Voting rights Bill and Equal Accommodations Bill. Not likely today where there are only party line votes whipped by the various leaderships. No Republican supported the American Recovery Act and Joe Manchin was sweet-talked back into supporting it. So there is no reason to maintain the filibuster under these circumstances. Strict party rule, meaning a tie decided by the Vice President, will rule for the next two years and the American people will decide if Biden’s legislative agenda is the proper one, presuming that Biden makes sure that voter suppression does not keep Democrats from voting and that the shifting demographics will give Democrats ever increasing majorities.