Congress and the President Do Something Big for a Change

One congressman said he and other longtime Democratic lawmakers feared they’d never do anything consequential in Congress again. But the American Rescue Plan (aka the Covid relief bill) will be extremely consequential. There’s much more in it than $1,400 checks for most Americans and extended benefits for the unemployed.

Paul Waldman of The Washington Post describes some of the bill’s other features, the totality of which make this an historic bill (that, unlike the only major legislation of the past four years, isn’t designed to help corporations or the rich):

If anything, we’ve underplayed how significant this bill is.

Yes, those subsidy checks are important . . . A family of four with a household income under $150,000 will get $5,600, even before other measures, such as the boosted child tax credit, are accounted for. That . . . will provide a tremendous boost of economic activity that will accelerate the recovery; the American economy is now projected to grow this year at a pace we haven’t seen in decades.

But . . . the bill is full of provisions that could have significant or even transformative effects on the country, many of which have gotten little or no attention:

The child tax credit. For the next year, the bill increases the child tax credit and makes more of it “refundable,” which means that more people with very low incomes will be able to get that credit as a refund even if they’re paying little or nothing in taxes. It will also send the child tax credit to families on a monthly basis, rather than having it as something they might or might not get as a lump sum after filing their taxes. . . . 

The Earned Income Tax Credit. The bill expands the EITC for childless low-income workers; 17 million of them could see a boost in their after-tax income.

Pensions. The bill includes a provision championed by Sen. Sherrod Brown (D-Ohio) that bails out a group of 185 multi-employer union pension plans that are in danger of failing. As the New York Times put it, “without the rescue, more than a million retired truck drivers, retail clerks, builders and others could be forced to forgo retirement income.”

Student loan debt. Under current law, if you have outstanding student loan debt that is canceled, the IRS treats your forgiven debt as income, which can result in a huge tax bill. Millions of borrowers on repayment plans pay a set portion of their income every month, and after 20 years the remaining balance is forgiven. The ARP would make that kind of loan forgiveness tax-free, and it would also apply to future loan forgiveness the Biden administration might undertake.

Exploitation of veteran students. The ARP closes a loophole in student-loan rules that has provided an incentive for colleges, particularly for-profit operations, to heavily recruit veterans paying for college with the G.I. Bill; these veterans are often roped in with false promises and then left without a degree or a good education.

Farmers. The ARP provides billions of dollars in assistance to disadvantaged farmers, many of whom are Black. As The Post reports, the bill would benefit “Black farmers in a way that some experts say no legislation has since the Civil Rights Act of 1964.”

Affordable Care Act subsidies. Under the ACA, only those earning up to 400 percent of the federal poverty level, or $106,000 for a family of four, are eligible for any subsidies to help afford health insurance they buy on the private marketplaces. The ARP removes that limit, meaning those at higher incomes could get some help if their insurance costs more than 8.5 percent of their income. In addition to removing this “subsidy cliff,” it also enhances the subsidies for those at lower incomes, which will mean significant premium cuts for many people.

Medicaid expansion. Twelve states have still refused to accept the ACA’s expansion of Medicaid, leaving huge numbers of poor citizens without health coverage. The ARP boosts the federal contribution to Medicaid so that holdout states will actually make money if they accept the expansion. According to the Kaiser Family Foundation, if Texas accepted the expansion, it would [improve] its state budget [and provide] coverage to 878,000 uninsured, low-income Texans.

Mass transit. The bill includes $30 billion to shore up mass transit systems that were hit hard by the pandemic, forestalling service and maintenance cuts. As Mike Konczal of the Roosevelt Institute says, “Where we’d normally see the recovery worse from cuts, and financial weakness used as a cynical excuse to slash, privatize, and never restore public functions, the ARP moves to stop that dead in its tracks.”

There’s plenty more, including funds for child care, rental assistance and food assistance, among other things. Some of these provisions, including the student loan forgiveness provision, the pension bailout and the “subsidy cliff” fix, will only be in effect until 2025. Democrats are hoping that they’ll prove popular and effective enough that they can be made permanent. It’s a good bet that at least some of them will.

There’s a lot more to say about this bill, especially how it represents a rethinking of fiscal policy and the incentives government provides citizens. . . . But the big picture of the American Rescue Plan is that, to paraphrase a former vice president, this is a seriously big deal. And the more we learn about it as it gets implemented, the bigger it will probably look.

Helping Children Thrive (and Giving Parents a Hand)

From The New York Times:

Obscured by other parts of President Biden’s $1.9 trillion stimulus package, which won Senate approval on Saturday, the child benefit has the makings of a policy revolution. Though framed in technocratic terms as an expansion of an existing tax credit, it is essentially a guaranteed income for families with children, akin to children’s allowances that are common in other rich countries.

The plan establishes the benefit for a single year. But if it becomes permanent, as Democrats intend, it will greatly enlarge the safety net for the poor and the middle class at a time when the volatile modern economy often leaves families moving between those groups. More than 93 percent of children — 69 million — would receive benefits under the plan, at a one-year cost of more than $100 billion.

The bill, which is likely to . . . be signed by Mr. Biden this week, raises the maximum benefit most families will receive by up to 80 percent per child and extends it to millions of families whose earnings are too low to fully qualify under existing law. Currently, a quarter of children get a partial benefit, and the poorest 10 percent get nothing.

While the current program distributes the money annually, as a tax reduction to families with income tax liability or a check to those too poor to owe income taxes, the new program would send both groups monthly checks to provide a more stable cash flow.

By the standards of previous aid debates, opposition has been surprisingly muted. While the bill has not won any Republican votes, critics have largely focused on other elements of the rescue package. . . . Senator Mitt Romney, Republican of Utah, has proposed a child benefit that is even larger, though it would be financed through other safety net cuts.

While the proposal took center stage in response to the pandemic, supporters have spent decades developing the case for a children’s income guarantee. Their arguments gained traction as science established the long-term consequences of deprivation in children’s early years, and as rising inequality undercut the idea that everyone had a fair shot at a better life. . . .

Mr. Biden’s embrace of the subsidies is a leftward shift for a Democratic Party that made deep cuts in cash aid in the 1990s under the theme of “ending welfare.” As a senator, Mr. Biden supported the 1996 welfare restrictions, and as recently as August his campaign was noncommittal about the child benefit.

The president now promotes projections that the monthly checks — up to $300 for young children and $250 for those over 5 — would cut child poverty by 45 percent, and by more than 50 percent among Black families.

“The moment has found us,” said Representative Rosa DeLauro, a Connecticut Democrat who has proposed a child allowance in 10 consecutive Congresses and describes it as a children’s version of Social Security. “The crystallization of the child tax credit and what it can do to lift children and families out of poverty is extraordinary. We’ve been talking about this for years.”

The campaign for child benefits is at least a half-century old and rests on a twofold idea: Children are expensive, and society shares an interest in seeing them thrive. At least 17 wealthy countries subsidize child-rearing for much of the population, with Canada offering up to $4,800 per child each year. But until recently, a broad allowance seemed unlikely in the United States, where policy was more likely to reflect a faith that opportunity was abundant and a belief that aid sapped initiative.

It was a Democratic president, Bill Clinton, who abolished the entitlement to cash aid for poor families with children. The landmark law he signed in 1996 created time limits and work requirements and caused an exodus from the rolls. Spending on the poor continued to grow but targeted low-wage workers, with little protection for those who failed to find or keep jobs.

In a 2018 analysis of federal spending on children, the economists Hilary W. Hoynes and Diane Whitmore Schanzenbach found that virtually all the increases since 1990 went to “families with earnings” and those “above the poverty line.”

But rising inequality and the focus on early childhood brought broader subsidies a new look. A landmark study in 2019 by the National Academies of Sciences, Engineering and Medicine showed that even short stints in poverty could cause lasting harm, leaving children with less education, lower adult earnings and worse adult health. Though welfare critics said aid caused harm, the panel found that “poverty itself causes negative child outcomes” and that income subsidies “have been shown to improve child well-being”. . .

Under Mr. Biden’s plan, a nonworking mother with three young children could receive $10,800 a year, plus food stamps and Medicaid . . . Full benefits extend to single parents with incomes of $112,500 and couples with $150,000.

. . . Samuel Hammond, a proponent of child allowances at the center-right Niskanen Center, said the politics of aid had changed in ways that softened conservative resistance.

A quarter-century ago, debate focused on an urban underclass whose problems seemed to set them apart from a generally prospering society. They were disproportionately Black and Latino and mostly represented by Democrats. Now, insecurity has traveled up the economic ladder to a broader working class with similar problems, like underemployment, marital dissolution and drugs. Often white and rural, many are voters whom Republicans hope to court. . . .

Bottom Up, Not Top Down

One party wants more people to vote, while the other party wants fewer. One party helps people at the economic bottom, while the other helps those at the top. It’s almost as if we should support one party, not the other!

From The New York Times, “Biden Bets on the Poor” (and the middle):

To jump-start the ailing economy, President Biden is turning to the lowest-paid workers in America, and to the people who are currently unable to work at all.

Mr. Biden’s $1.9 trillion economic relief package, which cleared the Senate on Saturday and [will] be headed for the president’s signature in a matter of days, 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.

For the president, the plan is more than just a stimulus proposal. It is a declaration of his economic policy — one that captures the principle Democrats and liberal economists have espoused over the past decade: that the best way to stoke faster economic growth is from the bottom up.

Mr. Biden’s decision to take that approach in his first major economic legislation is in stark contrast to [the former occupant of the White House and unindicted co-conspirator], whose initial effort in Congress was a tax-cut package in 2017 that largely benefited corporations and wealthier Americans.

The “American Rescue Plan” advanced by Mr. Biden includes more generous direct benefits for low-income Americans than the rounds of stimulus passed last year . . . It is more focused on people than on businesses and is expected to help women and minorities in particular, because they have taken an outsize hit in the pandemic recession.

Researchers predict it could become one of the most effective laws to fight poverty in a generation. Columbia University’s Center on Poverty and Social Policy estimates that the plan’s provisions, including a generous expansion of tax credits for low-income Americans with children, would reduce the poverty rate by more than a quarter for adults and cut the child poverty rate in half.

. . . The new legislation contains provisions intended to attack the virus itself, including money for Covid testing and vaccine distribution.

But it also includes elements of longstanding Democratic priorities that will apply widely to lower-income Americans whether they are hurting financially from the pandemic or not. In addition to the tax credits, the bill increases subsidies for child care, broadens eligibility under the Affordable Care Act, and expands food stamps, rental assistance and unemployment benefits, among other provisions. . . .

Mr. Biden’s economic team is betting that a mix of $1,400 checks to individuals, more generous jobless aid and other safety-net benefits in the plan will help power a rapid increase in economic growth by aiming money at people who need help right now to pay their bills, buy groceries and stave off eviction or foreclosure — as opposed to higher earners who would be more likely to save the money.

Many economists predict that the increase in consumer spending would spur more hiring and business production, helping to lift the economy to its fastest annual growth rate since the mid-1980s. . . .

What [some] call wasteful, untargeted or counterproductive spending in Mr. Biden’s bill are, in the eyes of Mr. Biden and his allies, the key ingredients for a roaring recovery once widespread vaccine distribution restores a sense of normalcy across the nation.

“Focusing on marginalized workers,” said Janelle Jones, the chief economist at the Labor Department, “is really the way to make sure we are lifting all boats” . . .

High earners and large companies show little sign of needing government help today. On the whole, the pandemic recession and recovery have made them richer. Workers earning higher wages and those able to work remotely are far less likely to have been thrown off the job, and they have stockpiled savings in the recovery. Companies like Amazon have gained market share as consumer habits have shifted.

But at the bottom end of the income spectrum — and in particular, among Black and Latino families — millions of Americans are still feeling the deep pain of the recession. The economy remains nearly 10 million jobs short of its prepandemic peak, with women of all races and men of color struggling the most to regain employment. The unemployment rate for Black men remains above 10 percent.

Data from the Census Household Pulse survey, . . . shows that the lingering economic distress of the crisis is concentrated among low earners and those who remain out of work. Nearly half of households earning below $35,000 a year reported falling behind on housing payments. One quarter reported not having enough food.

Mr. Biden’s plan would shower those households with government assistance. Elizabeth Pancotti, the policy director at Employ America, . . . has calculated the benefits for several different hypothetical hard-hit Americans under the bill.

For a working single mother of a 3-year-old who earns the federal minimum wage — just under $16,000 a year — the bill would provide as much as $4,775 in direct benefits, Ms. Pancotti estimates. For a family of four with one working parent and one who remains unemployed because of child care constraints, the benefits could total $12,460.

The Tax Policy Center in Washington estimates that the direct payments and expanded tax credits in the bill would, by themselves, increase after-tax income this year by more than 20 percent for an average household in the lowest quintile of income earners in the United States. It previously had forecast that Mr. Trump’s tax cuts would raise that same group’s income by less than 1 percent in the first year.

“It is as far away as you can get from regressive, supply-side economics,” said Senator Michael Bennet, Democrat of Colorado, a longtime champion of an expanded child tax credit to fight poverty. “This is progressive economics that puts money in the hands of working people who will spend that money” . . . .

What the Majority Wants vs. the Minority Rule Party

The American Rescue Plan the House of Representatives passed early Saturday morning has so much in it that one amazing provision is hardly being mentioned:

President Biden and Democratic lawmakers want to fight child poverty by giving U.S. families a few hundred dollars every month for every child in their household — no strings attached. A kind of child allowance. . . . Experts say it could cut child poverty nearly in half (NPR).

It’s understandable, therefore, that polls say an overwhelming majority of Americans support the Democrats’ Covid relief bill. One poll says 76% — even 60% of Republicans — support it. But not a single Republican in the House of Representatives voted for it. 

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Paul Waldman and Greg Sargent of The Washington Post both have columns about the bill and the politics. Here’s a mixture from what they wrote:

If I asked you to explain the Republican case against the Covid relief bill, what would you say? Well, they think it’s too expensive, and they’d rather not give too much help to states and localities. But their arguments against it seem halfhearted, anemic, almost resigned. . . .

This ought to be a moment when the GOP is back in its comfort zone. It’s not a party built for governing; Republicans no longer have much of a policy agenda, their leaders have become much more skilled at obstruction than at passing laws, and they have an enormous propaganda machine with a talent for creating fear and outrage. The party’s specialty is opposition.

One of the things they’ve done in the past is cast every new Democratic or liberal move as a harbinger of an impending apocalypse. Obamacare, they said in 2010, would destroy the American health care system. If gay people are allowed to marry, they said in 2004, the result would be the end of families and the breakdown of society. Both predictions proved ludicrously wrong, but at the time, they were highly effective means of motivating opposition. Today you can still find such rhetoric, but you have to look for it. . . .

Back in 2009, [Republican congressman Paul Ryan] made a very public case against a stimulus a fraction this big, making an actual argument (if a fraudulent one) about what debt Armageddon would mean for American society.

These days it’s harder to make that case. Republicans blew up the deficit with a huge tax cut for the rich, and cheered along as the pre-Covid economy was rocket-fueled with stimulus. Economists no longer fear the long-term risks of massive deficit spending amid big crises.

As a result, there’s nothing close to the same kind of public argument this time. As Paul Krugman points out:

Republicans appear to be losing the economic argument in part because they aren’t even bothering to show up

It’s as if they know they don’t have to.

They may well fully expect Democrats to . . . get the economy booming again, even as the vaccine rollout and other policies successfully tame the pandemic.

Yet Republicans know that even if this happens, they still have a good chance at recapturing the House at a minimum, helped along by a combination of voter suppression and other counter-majoritarian tactics and built-in advantages.

[Outside of Washington] they’re racing forward with an extraordinary array of new voter suppression efforts. Such measures are advancing in Georgia, Florida and Iowa, and in many other states.

In a good roundup of all these new efforts, Ari Berman notes:

After record turnout in 2020, Republican-controlled states appear to be in a race to the bottom to see who can pass the most egregious new barriers to voting.

On top of that, Republicans are openly boasting that their ability to take back the House next year will gain a big lift from extreme gerrymanders. Some experts believe they can do that even if Democrats win the national House popular vote by a margin similar to that of 2020.

So is there any reason to doubt that they’re primarily counting on more of the same as their path back to power this time?

[But controlling the White House and both houses of Congress] presents an extraordinary opportunity for Biden and congressional Democrats if they can see their way clear to take advantage of it.

Right now, Democrats are tying themselves in knots trying to figure out how to increase the minimum wage, something President Biden ran on, their entire party believes in, and which is overwhelmingly popular with the public. Some want $15 an hour, while others would prefer $11.

Yet the Senate parliamentarian has ruled that a straight minimum wage increase can’t pass via the reconciliation process — the only way to pass a bill with a simple majority vote — the details of which are incomprehensible, or endlessly maddening, or both.

So Democrats have to find some kind of fiscal somersault to try to get the minimum wage increase into the Covid relief bill. 

This is no way to make laws. And what’s even worse is that it’s happening at a moment when Republicans — who in the past have been nothing if not skilled at undermining, vilifying, and sabotaging Democratic presidents — have seldom looked more feckless.

Republicans just haven’t been able to take the hatred and fear their hardcore base feels for Biden and scale it up and out, which then affects their ability to whip up frenzied opposition to the things he’s trying to do. And the broader context matters, too: When we’re caught in a pandemic and an economic crisis, only so many people will get worked up about whether a transgender girl is allowed to play softball.

That gives Democrats the chance to move forward confidently with their agenda, an agenda that is enormously popular. Yet some in the party are still in the grip of the nonsensical belief that it’s more important to retain a Senate procedure whose purpose is to thwart progress than to pass laws that solve problems.

In every American state legislature and in most every legislature around the world, if there’s majority support for a bill, it passes. In almost all cases supermajorities are only required, if ever, on things like constitutional amendments.

And every argument the filibuster’s defenders make about it — that it produces deliberative debate, that it encourages bipartisanship, that it makes for cooperation and compromise — is simply wrong, as anyone who has been awake for the last couple of decades knows perfectly well.

The Covid relief bill will pass, because it’s the only thing Democrats can do without a supermajority. It’s a vital, popular bill that could have been done in cooperation with Republicans had they wanted, but instead they’ve decided to oppose it. Which is their right, but it also shows how a simple majority should be the requirement for more legislating — which can only happen if the filibuster is eliminated.

The first weeks of the Biden presidency show the path Democrats can take: Push forward with the popular and consequential parts of your agenda, don’t be distracted by bleating from Republicans, act as though the public is behind you (because it is), and you might find that the Republican opposition machine isn’t as potent as it used to be.

But none of that will be possible unless Democrats can deliver on their promises. If they let themselves be handcuffed by the filibuster, the Biden presidency will fail and Republicans will take control of Congress. In other words, Democrats will have done the job Republicans couldn’t do themselves.

Unquote.

Neither of the columnists mentioned two key parts of the Democratic agenda.

The John Lewis Voting Rights Advancement Act would strengthen the Voting Rights Act of 1965. It would protect voters from racial discrimination and voter suppression.

The For the People Act would expand voting rights, overhaul our campaign finance system, and end extreme partisan gerrymandering.

All that stands in the way of these bills becoming law is the current requirement that ten Republican senators vote for them. That’s why the 50 Democratic senators need to end or severely limit the filibuster, thereby restoring majority rule to the US Senate. That’s how we can help restore majority rule to the United States of America.

In a Crisis, Bigger Is Better

Paul Krugman explains why Biden’s Covid relief package has to be big (I’ve left out some of the economics discussion, but left in the history):

. . . No, the Biden plan isn’t too big. While [some] pundits’ concern that the size of the package might produce some economic stresses isn’t silly, it’s probably overwrought. And they have the implications of an expansive plan for the future completely backward: Going big now will enhance, not reduce, our ability to do more later.

. . . What policymakers are trying to do here is like fighting a war — a war both against the pandemic itself and against the human fallout from the pandemic slump.

And when you’re fighting a war, you don’t decide how much to spend by asking “How much stimulus do we need to achieve full employment?” You spend what you need to spend to win the war.

Winning, in this case, means providing the resources for a huge vaccination program and for reopening schools safely, while limiting the economic misery of families whose breadwinners can’t work and avoiding gratuitous cuts in public services provided by fiscally constrained state and local governments.

And that’s what the American Rescue Plan mostly involves; it is, as Biden’s economists say, a bottom-up plan that starts with estimated needs. Using numbers from the Committee for a Responsible Federal Budget, here’s the composition of the proposed package:070221krugman1-jumboAlthough discussion is weirdly dominated by those proposed $1400 checks, they’re only a fraction of the total; medical spending, school aid, aid to the unemployed, and help for state and local governments dominate the plan. And there’s a good case for those checks, too; more about that later.

. . . But what about the argument that there are big elements of the Biden plan that aren’t essential relief?

Skepticism about the substance of the Biden plan, as opposed to its size per se, mainly centers on the idea of sending cash to the great majority of American adults — the so-called stimulus checks, although they aren’t stimulus and they aren’t checks. There are other elements; . . . some believe that aid to state and local governments will be bigger than necessary. But the stimulus checks are the big question mark. So let’s focus on them, and with them the broader question of how to set the stage for future policy.

There’s no question that many people receiving stimulus checks will be people who haven’t taken a serious hit to their income and don’t need special help. In that sense the checks will be poorly targeted, certainly as compared to enhanced unemployment benefits.

However, we know that a substantial number of people experiencing significant income losses won’t be helped by unemployment benefits — for example, those who are still working but at reduced hours or wages. Universal basic payments will give such people much-needed help. True, they’re a leaky bucket, and you wouldn’t want them to be the main element of a rescue plan — but they aren’t! They’re a supplement that will do some good.

And they’re also hugely popular, which isn’t an irrelevant consideration.

Actually, every major element in the Biden plan has strong public approval. But support for stimulus checks is through the roof.

[Note: According to a poll taken this month, 68% of voters want Biden and the Democratic Congress to pass a relief package that will do the most to stop the spread of coronavirus and help people economically. Only 32% favor a smaller package that will do less but have bipartisan Republican support.]

Now, policy shouldn’t be driven entirely by opinion polls. But if you care about setting the stage for policy beyond the pandemic, delivering the goods to voters in the first round will be crucial.

Of all the arguments made by critics of a big rescue plan, the one that really has me rubbing my eyes is the suggestion that we should scale the plan back to make room for later policies, like investment in infrastructure. Wasn’t the overwhelming lesson from the Obama years that that’s not how it works? The effective constraint on good policy isn’t financial, it’s political — and as a result underpowered policy in the short run ends up killing the chance of good policy in the years ahead.

A trip down memory lane: Back in 2009 I was more or less frantically warning that the Obama stimulus was too small, and a key part of that warning was my fear that going small would undermine future policy prospects. Here’s what I wrote in January 2009:

“I see the following scenario: a weak stimulus plan, perhaps even weaker than what we’re talking about now, is crafted to win those extra GOP votes. The plan limits the rise in unemployment, but things are still pretty bad, with the rate peaking at something like 9 percent and coming down only slowly. And then Mitch McConnell says “See, government spending doesn’t work.”

“Let’s hope I’ve got this wrong.”

Alas, I didn’t have it wrong.

Circumstances are different now, but the basic logic is the same. If you want effective policy on infrastructure, on the environment, on children and more, Biden has to deliver big, tangible benefits with his rescue plan. Otherwise he’ll squander political capital, and probably lose any chance to do significantly more.

So this plan really needs to go big. The risks, economic and political, of falling short are huge, and should [end the discussion].