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14 March 21
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FOCUS: Nicholas Lemann | The Most Economically Liberal Legislation in Decades
Nicholas Lemann, The New Yorker
Lemann writes: "Biden's bill is a sign that our democracy isn't completely broken, and may convince Americans that government can solve problems."
raditionally, every new Democratic President starts out by passing a big economic package (and every new Republican President starts out by passing a tax cut). Jimmy Carter’s, in 1977, cost twenty billion dollars. Bill Clinton’s, in 1993, was mainly a tax increase, aimed at eliminating the federal deficit. Barack Obama’s, in 2009, which passed during the worst economic crisis since the Great Depression, cost eight hundred billion, some of it spending increases, some tax relief.
The American Rescue Plan, which President Joe Biden signed last week, is on an entirely different scale. It will cost the government $1.9 trillion, even though the economy today is in better shape than it was when Obama took office; and, unlike Clinton’s opening economic initiative, it is proudly indifferent to the size of the federal deficit. The law’s most famous feature, its fourteen-hundred-dollar payments to individuals (meaning that many families will wind up with much more), is only the beginning. There are also extensions of eligibility for unemployment benefits and food stamps; debt relief for renters; subsidies for state and local governments that are out of money, so that they can continue to provide services; a bailout for insolvent pension funds; health-care subsidies; and a nearly universal child-care benefit.
The left’s disappointments with the adjustments necessary to get the bill through the Senate—it doesn’t raise the federal minimum wage, and the cash value of unemployment benefits was reduced—should not obscure the important point. This is the most economically liberal piece of legislation in decades. It is not just much bigger than but different in kind from the Obama Administration’s version, which helped people mainly through end-of-year tax credits. Biden’s bill was designed to send regular monthly checks to millions of American families, so it will be palpable that the government is helping them in a tough moment. Gone are the work requirements, the sensitivity to the risk of inflation, and other centrist concerns that have been at the heart of Democratic programs for decades. The side that always seemed to lose the argument within the Democratic Party has finally won.
In 2009 and again in 2020, the Federal Reserve drew the assignment of staving off a depression, which it did by keeping interest rates low and by buying many billions of dollars in financial instruments to prevent the markets from collapsing. Those maneuvers meant that people in finance, and, more broadly, people who have secure employment and assets in the markets, were spared the severe pain felt by millions of working people. Only Congress has the tools to provide direct help to the people most in need. That it is now able to act, quickly and effectively, is a sign that our democracy isn’t as completely broken as a lot of people have been assuming, and that government can moderate the grotesquely unequal effects of the pandemic on people’s well-being.
A year ago, nobody was predicting that Joe Biden would be presiding over a neo-New Deal. His long career didn’t seem to indicate it, and he was clearly not on the way to having large majorities in both houses of Congress, as Franklin Roosevelt did. So how did this happen? The obvious answer is the pandemic, which generated the sense of urgent, universal crisis that the American system requires in order to make major changes. It’s less obvious, but just as pertinent, that the response to the 2008 financial crisis is now seen as having been woefully insufficient, in ways that led to years of unnecessary suffering and a populist political revolt that disrupted both parties. It feels as if half a century’s effort to reorient the political economy away from the state and toward the market may finally have run its course.
No Republicans voted for the American Rescue Plan—it would not have passed if the U.S. Senate runoffs in Georgia had turned out differently—but the G.O.P. still played a part in what happened last week. The Party’s new sense of itself as a competitor for working-class votes meant that it was supporting major covid-relief programs through last year; the Democrats had to top the Republicans’ performance. And, their votes aside, the Republicans have chosen not to wage a full-scale rhetorical war on the new law, perhaps because polls show it to be highly popular. Because the law provides such immediate and tangible help to most Americans, it’s more difficult to campaign against than the 2009 relief effort was. Two generations’ worth of modest Democratic anti-poverty programs have foundered because their opponents portrayed them as mainly benefitting minorities; Lyndon Johnson’s War on Poverty and the welfare benefit that primarily assisted children of single mothers that Bill Clinton ended, both representing tiny fractions of the federal budget, are leading examples. Now, because the economic pain is so widespread, the new law has a very large and racially diverse group of beneficiaries, which ought to make it less vulnerable to the familiar attacks on social programs.
Yet the American Rescue Plan is actually a kind of economic appetizer. Its most progressive provisions—notably the child allowance, a monthly check of up to three hundred dollars per child, which would be the first true guaranteed family-income program in the United States, and would cut child poverty nearly in half—are temporary, expiring by the end of the year. The main course is what may be called “the Build Back Better bill,” soon to be unveiled by the White House. It will be bigger and more permanent, representing a real remaking of the government’s role in the economic lives of ordinary Americans. But that’s only if it passes.
The bill that Biden signed into law last week had the advantage of a deadline, because the Trump Administration’s pandemic-aid programs were due to expire in March. Build Back Better may contain large infrastructure programs, green-energy programs, and wealth taxes—a long list, with most of its items lacking the rescue plan’s pandemic-induced sense of crisis management. The new bill’s fate will depend on Americans embracing the idea that the reason the misery of the pandemic may finally be abating is that government can solve problems. Republicans, accustomed to caricaturing Democratic programs as élitist schemes created by a party that doesn’t care about ordinary people, will have to feel too intimidated by their constituents’ appreciation for the American Rescue Plan to stage an all-out assault on the new bill.
It is not yet time to celebrate. It is time to prepare for a months-long campaign with the highest possible stakes: a new social compact, which might finally bring an end to forty years of rising inequality.
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