President Biden’s $1.9 trillion coronavirus response plan is better thought of as a stimulus bill designed to lift the economy out of the recession caused by the pandemic. In that manner it serves the same purpose as the Trump economic stimulus plan of 2018. In contrast to the Trump program, the Biden plan stimulates the economy through government spending and redistribution of the wealth towards the poor and middle-class rather than tax cuts and regulatory relief.
A good way to understand and justify the over 500-page bill is to distill it down into four subject areas:
Social welfare – The bill essentially implements Biden‘s promise to expand Obamacare coverage during the campaign, but also increases the child tax credit to $3,600 per child and allows those payments to be paid monthly rather than once a year. It also expands the earned income tax credit for childless individuals. In addition, $86 billion is earmarked for shoring up approximately 200 underfunded pension plans. This is essentially a rescue of the federal Pension Benefit Guarantee Corporation, which is currently insolvent because of past rescues of bankrupt employee pension plans.
Education – The legislation grants $130 billion to K-12 schools and $40 billion to colleges and universities. The K-12 money could be used for long-overdue classroom expansion and capital improvements to schools.
State and local government aid – Probably the most controversial provision of the bill is the $350 billion in aid to state and local governments to make up for revenue losses caused by the pandemic. These grants come with no strings attached.
I criticized Washington last year for wrangling over political details and delaying help for those suffering from the pandemic-caused recession (see here). Despite the excesses of the bill, Roosevelt’s advice remains sound. Assisting the poor and lower middle class who have borne the brunt of this crisis is the best form of politics because it is decent thing to do. The remainder of the bill should simply be considered the fulfillment of a four-year set of Democratic and Biden spending promises in one year.
It now falls on Congress to oversee these new programs and prevent them from expanding into new entitlements that institutionalize these huge expenditures and thus risk inflation and a collapse of the dollar. Today, however, we should concentrate on the aid to those in hardship due to the pandemic and the programs necessary to defeat it. This bill accomplishes this goal and is thus worth celebrating.
A nation-state’ s power has traditionally been measured by the size of its military and economy. As the attached article points out, the COVID-19 pandemic highlights a new and crucial source of national power – a nation’s resilience. Resilience is defined as the ability to sustain and adapt to a systemic shock, or, as the old Timex watch commercial put it, the ability to take a licking and keep on ticking. It is based on adequate infrastructure and governmental legitimacy more than material resources.
Resiliency, however, comes in many forms. China’s centralized communitarian culture allowed it to bounce back faster from the pandemic, but only by using the same totalitarian governmental repression that caused the crisis in the first place. In contrast, the individualistic culture of America hobbled our ability to control the spread after it arrived, but our decentralized federalist system gave state and local leaders the flexibility to create the necessary controls when the federal government failed to provide leadership. Our freedom to innovate also helped foster development of reliable treatments and vaccines faster than China.
At the same time, the weaknesses exposed by the pandemic must be addressed, especially those in our manufacturing capacity and health infrastructure. By prioritizing efficiency over resiliency in our economy, we ended up dangerously dependent on China and other governments for vital materials, and not just in the medical field. The article touts strong alliances as a solution, but they cannot replace onshore local capacity in a crisis. Building national vigor means identifying and protecting resources we need to survive a future shock, whether it be from a disease, cyberattack, or climate change.
Theodore Roosevelt advocated “the strenuous life” of exercise and outdoor activity as a way of achieving personal resilience. Both require short- term sacrifice and effort to build the stamina necessary to meet future challenges. Similarly, we Americans will need to be willing to pay higher prices for domestically-produced goods or higher taxes in order to create the national resilience to remain a great power and a shining example of freedom. The immediate pain will be well worth it in the long run.
As this helpful article from the Smithsonian Magazine illustrates, the debate over the use of presidential executive orders to end-run Congress originated with Theodore Roosevelt. In his conservationist zeal to protect unique land and monuments, TR pushed the limits of the Antiquities and Reclamation Acts. While we are all blessed by the resulting preservation of sights like the Grand Canyon, his expansive view of presidential power also resulted in abuses like FDR’s internment of Japanese-Americans and President Truman’s attempt to seize the steel mills to prevent a strike. President Trump’s recent orders to provide partial relief for workers hit by the COVID-19 pandemic shows the limitations of the practice and its danger to our constitutional democracy.
This story from CNN sets forth the problems with these orders and why congressional action was required. The new $400 per month unemployment benefit may never materialize since it was not authorized to be distributed through the current unemployment insurance system. The payroll tax cut is really a deferral and so worker could be on the hook for a huge catch-up payment next year. Finally, the eviction protections simply consist of a study by the Secretary of Health and Human Services of ways to provide such protection.
When the last coronavirus relief effort stalled in March, I criticized both the President and Congress over their failure to reach agreement under the headline “Leaders Don’t Dither. They Decide”. This relief bill should be more targeted toward the unemployed and essential workers on the front lines of combating the disease and supporting American society in dealing with it. However. dangling partial relief for them by a questionable legal method is not real leadership. Leadership in our system of separation of powers often involves compromise. TR’s sympathy for those workers would probably drive him to swallow his pride to provide a “square deal” for them in time for destitute and heroic workers to receive the meaningful help they need.