Joe Biden has presided over the most radical change in the nation’s political economy since Franklin Roosevelt’s’ New Deal. And done it in about half of FDR’s famous One Hundred Days. He has expanded the reach of government and the welfare state by as much as, or more than, Lyndon Baines Johnson’s “All the Way With LBJ” and Great Society. In the process, he has made his former boss, Barack Obama, seems a timid centrist by comparison.
No surprise that with trillions of checks “in the mail” Biden is riding an approval rating, with 70% of Americans (41% of Republicans) saying they favor his bill. Consumer confidence has shot up – Americans know a coming boom when they see it, and, if they have thought about it, are trusting their grandchildren to pick up the bills for the borrowing-fueled party. They know, too, that their median net worth has risen by 25% since 2017, to $121,411, that their credit cards have been paid down, and that they have record savings salted away during the lockdowns. In fact, their cash and cash equivalent pile rose by $2.8 trillion during 2020, if spent, making Biden and his $1.9 trillion a veritable piker when it comes to boosting the economy. Yes, lots of people have been hurt – lost jobs and crushed businesses – but that’s no reason to send checks to the unneedy, who are not likely to return the money with a polite thanks, but no thanks, note.
Cynics attribute the President’s popularity in part to the shrewd strategy of his handlers — unlike FDR and every President since Ronald Reagan, Biden has not held a press conference to defend his revolution in the over-50 days he has been in office. Best to delay a press conference until after the Covid-relief bill became law, rather than risk Presidential gaffes that could threaten narrow passage of a bill that had less to do with Covid than long-held wishes of America’s Left to change the demography and electoral arithmetic of the country, redistribute income, remodel the health care system, resuscitate the moribund union movement, take the first step towards disconnecting income from work, directing capital to uses considered more desirable than does the market in order to reduce inequality – and more. Covid is the serious crisis the Left could not let go wasted. Treasury secretary Janet Yellen, her inner radical unleashed, put it more elegantly, “The passage of the American Relief Plan will finally allow us to do what most of us came into government for – not simply to fight fires and resolve crises, but to build a better country.”
Start with recasting the nation’s political demography. Last week the President provided work permits and stays of deportation – “temporary protected status” – to an estimated 320,000 Venezuelan immigrants here illegally. Add a route to citizenship, and these new voters, beholden to Democrats, will be a force in Florida, a swing state that Trump carried by about 370,000 votes in 2020.
Throw in Biden’s decision to open the southern border to what the governor of Texas estimates will be one million immigrants before the year is out. Many in this “catch-and-release” group will fade into the population rather than appear for hearings to review their asylum claims. Many wear newly minted “Biden Please Let Us In” t-shirts; some will join the labor force: about half of Mexican immigrants have less than a high school education and will put downward pressure on the low-end of the wage scale; some are Covid-infected or in debt to drug gangs; all will have access to education, health care and nutrition programs. Most meet Statue of Liberty humanitarian qualifications: “tired, poor” yearning for a better life. All will eventually tilt the arithmetic of elections to favor Democrats, and – there’s irony in this – labor markets to benefit employers.
But that’s for the future. More immediately, Biden has restructured the flow of the federal government’s benefactions to benefit Democratic constituencies, and not only with cash, but with power. Some $86 billion of the so-called Covid relief bill will go to bail out 185 union pension funds, deemed unable to meet their bloated commitments long before the virus appeared. Union leaders also appreciate the President’s unmistakable hint that if Amazon wants government contracts it would be wise not to oppose the unionization of its warehouse workers, and his appointment of regulators disinclined to allow workers to tear up the union cards if they want to end membership. “We’ve been waiting on him,” one union organizer at an Amazon warehouse told The New York Times, when asked about Biden.
An additional indication that union interests are now paramount is the President’s refusal to lean on teachers’ unions that have kept schools closed to the detriment of the future of lower-income students, even though the new relief package includes $123 billion to help K-12 schools re-open to add to the $67 billion unspent from earlier packages to make the schools safe to re-open. All evidence is that restoration of in-person education does not increase the metrics by which the severity of the pandemic is measured. Private and parochial schools over which teachers’ union do not hold sway, are operating safely
Then there is a transfer of wealth from Republican to Democratic states, a pre-Covid Democratic objective. The President’s $1.9 trillion Covid relief bill will send $350 billion from federal taxpayers to state and local governments that already have received between $217 billion and $360 billion (estimates vary) from earlier packages. Recipients may “not use the funds to offset a reduction in the net tax revenue” of the state or city or “to delay the imposition of any tax or tax increase” either directly or indirectly. Tax increases yes; reductions, never, a philosophy that contributes to flight of businesses, wealth and people from New York to more hospitable climes. Allocation of funds will be based in part on local unemployment rates, which advantages states that imposed the tightest lockdowns on their economies – Democratic states.
Biden also used the so-called Covid relief bill to realise another dream that pre-dates the virus: resurrecting and extending the reach of Obamacare. The bill funds increased subsidies that make Obamacare spectacularly more affordable to 14 million people now insured on the private market, and is expected to attract 1.7 million new participants at a cost of $34 billion over ten years. The Kaiser Foundation reckons that a 60-year-old with a $55,000 income would see premiums drop by 50% to 80%, depending on the plan selected. Like other features of the Biden benefactions, this is scheduled to expire in 2022, in time to become an issue in the congressional elections. Vote Democratic and keep your child care payments and health-care subsidies.
Most immediately important to the economy are the so-called stimulus payments. Individuals earning up to $75,000 per year get $1,400, couples $2,800, with $1,400 more for each dependent, including the elderly. A middle-class couple with two children, earning up to about $150,000, will receive $5,600 in addition to the $2,400 received from prior relief bills, even if fully employed during the pandemic, adding to the tsunami of cash about to descend on the economy.
Then there are programs that well might create disincentives to work. Weekly state unemployment benefits are topped up by $300, bringing their total to about $600, or $31,200 annually, as much or more than many earned while employed. Child tax credits rise from $1,050 to $4,000 per child. Most parents will also receive a monthly cash payment of $300 per child: “the makings of a policy revolution…essentially a guaranteed income for families with children,” applauds New York Times columnist and anti-poverty crusader Jason DeParle. Payments for food stamps, rental and utility assistance increase. No work required.
On to an infrastructure bill, aimed at creating green, “good paying union jobs” says the President, although union members constitute a mere 6.3% of the private sector work force. To be financed by $2 trillion of new taxes, probably on the better-off and corporations. Biden’s Building Back Better won’t come cheap.