Our government is finally willing to fight a crisis at the scale of the problem. But they’ve yet to prove a desire to do it permanently
2021 Stimulus America Recovery and Re-investment Act - cost.
$1.9 Trillion.
Cost of 2017 Corporate Tax cut.
$ 1.9 Trillion over 10 years.
( addition to national debt 2.2 Trillion)
Cost of development of F 35 fighter jet
$ 1.7 Trillion,
David Dayen, American Progress.
When we last left things, there was some breaking news on the unemployment bits in the American Rescue Plan. Directly after publication, we had an impasse, one of the longest Senate votes in history, a refusal and finally an agreement from Joe Manchin, and a compromise of the compromise that amounted to three less weeks of extended unemployment.
It was a lot.
Things progressed smoothly after that, however, and tomorrow the House of Representatives will give final passage to a $1.9 trillion package that, with the exception of the loss of the $15 an hour minimum wage provision, maintains all the basic contours of the plan then-president-elect Biden laid out in January. It even added an important measure to save the retirement benefits of more than a million unionized workers in multiemployer plans; that was not in the initial Biden package.
I said last week that journalists are trained to focus on what’s new and what’s changed in a developing story rather than taking a step back. But I’m actually seeinga lotof stories that actually try to connect with the achievement of the American Rescue Plan. And it does represent a new way forward in American politics; but only if we can keep it.
An eligible family of four—which includes virtually the entire middle class, and 86 percent of the country overall—will receive $7,600 in additional payments beyond current law, $8,800 if their children are both under 6. And another $4,000, instead of coming bundled with tax refunds at the end of the year through the Child Tax Credit, will be a monthly payment.
The balance sheets of sectors of American life that truly struggled in the pandemic, particularly mass transit and child care, are being restored, wiping out the self-fulfilling cycle of austerity and decline. That goes too for state and local governments, who are made whole for the combination of revenue erosion and significantly expanded pandemic costs. Poor schools might finally be able to upgrade facilities with a share of the $130 billion intended to speed reopening.
While it adheres to the health care solutions in the Affordable Care Act, you might say that this bill puts “affordable” back into the equation, by significantly increasing the subsidies available to families on the insurance exchanges. (It also incentivizes holdout states to expand Medicaid, though I doubt that will work.) While there was a colorable argument that the IRS could do this anyway, it clears away taxation for student loan forgiveness, removing an objection to President Biden canceling that debt.
Unlike the CARES Act, all of this aid targets the lower- and middle-income ends of the scale. Small businesses got more in prior bills but they share in some of the bounty here. Most important, it brought aid at the scale of the problem, within the time frame of the problem, and with government firmly at the helm of the solution. And it was massively popular.
My first emotion, paradoxically, was anger. Not at the painful defeats and chinks in the armor of the bill. It was anger that we haven’t been operating this way for the past 40 years, meeting crises—many of them enduring crises—with government-backed solutions, not market nudges or tax-advantaged savings accounts. We didn’t respond to the global financial crisis this way, or the crisis of child poverty, or homelessness, or the uninsured, or really any domestic challenge. And we could have. The political system was not impervious to its allure. It was a choice.
And while this change really is fundamental—deficit hawks really have been cast out of the temple, free-market solutions left on the shelf—it’s also fragile. We have the outline of a child allowance but it expires in a year. The ACA subsidies expire in two years. The massive expansion of unemployment eligibility for a much wider group of workers is now done on Labor Day weekend. There’s a modicum of ongoing public investment, but mostly this returns us to a steady state, with decisions to make from there. Those decisions will be carried out in a booming economy with low unemployment, where desperation and precarity will still be present, but in the shadows where it’s toiled for decades.
We could make all of that permanent, with automatic stabilizers that kick in during downturns, and Federal Reserve bank accounts for every American to fill when needed. We could ensure that federal support sustaining critical features of public life remains in place. We could choose to not build a pop-up safety net but an ongoing one.
There’s a theory out there that, once you give families $300 per month per child for a year, once you make everyone on the exchanges eligible for subsidies, that Congress won’t be able to take that away. I’m not so certain. Members have the logic of emergency behind them, that they could step in when needed but that it’s “appropriate” to step back thereafter. The pandemic changed some thinking about the importance of government action, but there’s no guarantee that will hold beyond a crisis moment. It will require continued vigilance.
The good news is that Americans like this new era. They think it made more sense to make progress than to seek bipartisanship. Republicans ran to the safety of criticizing the cancellation of Dr. Seuss rather than try to combat this. People will get their checks and see the economy roar back in short order, in tandem with vaccinations that appear to emerge from a government authority. And maybe they’ll think that we don’t have to only roll out this kind of policy firepower during a pandemic. We can tackle the crises that happen every day.
The first bill that President Biden introduced, even before taking office, was a $1.9 trillion American Rescue Plan, which really picks up most of the leftover elements on pandemic relief that Democrats were unable to advance in the CARES Act and the December COVID relief bill. Two things stood out in the bill: the topping up of $600 checks in December to $2,000 and funding to get the vaccine produced and distributed.
Those two pieces both probably have enough bipartisan support to pass, even in the Senate with 60 votes. The checks are incredibly popular and Republicans would be playing with fire to hold them up, especially if they know they can be dumped into a majority-vote budget reconciliation bill anyway (in other words, they’d have taken a bad vote for nothing). And there’s literally no amount of vaccine money that would not pay itself back and then some, by leading to reopening the country in full faster.
So there’s an argument being made, within the House especially, to just pass those two elements—what I’m calling "checks and shots"—under regular order, and deal with the rest of the American Rescue Plan later. This has a couple different benefits. First, Biden would get an early, bipartisan legislative win, creating momentum for his presidency. That’s probably the most minor benefit, since "momentum" really isn’t a thing.
More important, a bill under regular order would get checks and shots out quick. Reconciliation takes time, and apparently the House is staying out of session next week. A full bill through reconciliation will run up against the extended unemployment deadline in March. By contrast you could put a checks and shots bill on the floor almost immediately.
Checks will circulate through the economy: the current $600 iteration is already boosting restaurants. With unemployment still high, any amount that can help people needs to get there right away. And vaccine money is vital. I know the private sector—God help us—wants to take over the rollout, but keep in mind that the most failed part of distribution right now is the Walgreens/CVS effort to vaccinate nursing homes. Who distributes the vaccine is less important than if they are funded for the effort in a coordinated way, with a Public Health Jobs Corps of 100,000 strong and a central government standing up mobile clinics and all the rest. And since we’re in a race with the more transmissible variant, time is of the essence.
Third, as I’ve stressed, this is a trust-building exercise. Democrats ran and won in Georgia on checks. The Biden presidency is going to rise or fall on the vaccine rollout. Getting those priorities covered will show the public that promises can be kept. I know there’s a lot of Twitter grousing about $2,000 checks versus $1,400. I think Congress is likely to go with $1,400 but a standalone bill that isn’t risking the rest of the package is also more fertile ground to advocate for bigger checks.
Punchbowl, which has reported a little on this, describes this as a "nibble" or a "big bite." But checks and shots are actually a significant portion of the American Rescue Plan. The estimate for $1,400 checks, especially ones that include adult dependents as the Biden bill does, is anywhere between $435 and $465 billion. Add $600 to that and it’s another $200 billion. And "shots," defined as a national vaccination program, is $160 billion. If you include the Public Health Jobs Corps and scaled-up testing to open schools and investing in COVID treatments, you’re scraping $400 billion, which is what the Biden fact sheet puts toward "critical measures for addressing COVID-19." So this "skinny" bill is anywhere between $595 billion and $1.07 trillion. Not very skinny! You could see it becoming comparable to the $900 billion relief bill passed a month ago.
