Biden’s big bill is necessary, but temporary
BridgeND | Wednesday, March 3, 2021
President Biden’s massive virus relief bill heads to the Senate after passing the House on Saturday. Currently, it is $1.9 trillion in aid meant to stimulate the lagging U.S. economy and bolster employment. Even if the Senate whittles it down somewhat, it will still be roughly twice the size (after inflation adjustments) of the stimulus bill signed by President Obama in 2009 to respond to the economic recession. That’s one big bill.
Democrats are hoping to get the bill passed in the next two weeks, before benefits like unemployment insurance expire. They argue that the size of the package reflects an understanding of recent history, in which the economy has struggled to grow at a normal pace for the past 20 years, and previous attempts to stimulate it have failed.
But many economists who tend to support aggressive governmental action to counteract an economic downturn criticize the $1.9 trillion bill as too big. Olivier Blanchard, formerly of the IMF, believes the bill could “overheat the economy” and become counterproductive to recovery. Steven Pearlstein castigates the bill’s attempts to permanently expand the economic safety net as underprioritized in favor of ramming it through on a party-line vote.
Here’s a breakdown of the bill’s core elements:
The big ticket item is the inclusion of $1,400 checks for most households, with bonuses for children. Most families with an annual income under $150,000 would be eligible for the full amount. These checks will give people the flexibility to decide how to spend the money, be it for tuition, medical expenses or retirement savings. Beyond being a relatively simple stimulus program, the checks are an ambitious mechanism to combat poverty and expand equity. However, many recipients who don’t urgently need the money will save it, which won’t help the economy recover or put people back to work. Further, giving people money doesn’t address deeply systemic issues like climate change and the underlying causes of inequality. These issues must be tackled by coordinated government action that places faith in straightforward, inclusive programs.
Other major elements include an expansion of jobless benefits ($240 billion); an expansion of tax credits for parents and low-income workers ($130 billion); health insurance subsidies ($65 billion) and housing assistance ($40 billion). The remaining pieces would deliver aid to local and state governments and provide resources for schools, coronavirus testing and vaccination.
Despite over 70% of Americans supporting the program, including a large share of Republican voters, not a single House Republican voted for the bill and Senate Republicans are likely to follow suit. Their argument centers around a belief that this amount of federal spending is unnecessary when the number of new cases is receding. But Biden is aware of the risks. He doesn’t want to repeat the mistakes of the 2009 bill, which suffered from a lack of ambition and was too small to allow for rapid economic recovery. Americans need help, and this bill will begin to deliver it.
However, the package should by no means be championed as a long-term solution. It’s not enough to try to reverse an economic regression. There also needs to be a restructuring of budgetary operations, as was seen with FDR’s creation of federal programs and bolstering of unions, and Reagan’s transformation of the tax code. Most of the bill’s provisions, if approved, will expire in the next few months. While some Democrats hope that initiatives like the Family Security Act and unemployment benefits will garner enough popular support to receive congressional extension, there’s still a lot of work to be done. Throwing money at Americans won’t cut it in the long run; the solutions lie in examining issues of inequality and poverty through a systemic lens.
Lucie Kneip is a sophomore living in Ryan Hall. She is the vice-president of BridgeND, a non-partisan political education and discussion group committed to bridging the partisan divide through honest, respectful and productive discourse. BridgeND meets weekly on Mondays at 5:30 p.m. You can contact the club at [email protected] on Twitter @bridge_ND.
The views expressed in this column are those of the author and not necessarily those of The Observer.