In These Times - March 9, 2021

President Biden stands poised to sign a $1.9 trillion rescue bill that throws the priorities of deficit scolds like those at Third Way and the CRFB straight out the window. And while the media class and some members of the political establishment may not be able to kick their addiction to ​“what the CFRB [is selling],” as Alex Yablon writes in The New Republic, the bill’s passage in Congress signals that Democrats are turning left on the issue of deficit financing.

As the U.S. enters the second year of a global pandemic, however, the decades-long stranglehold that market fundamentalism has had on the Democratic establishment and U.S. politics more broadly may finally be loosening. Mainstream economists and politicians have roundly rejected the conventional wisdom that budgets must be managed like those of individual households, arguing instead that circumstances demand the government pay Americans directly and avoid the kinds of private partnerships that have long animated federal policy.

If Donald Trump’s regressive tax code laid bare the bad faith of the Republican Party’s deficit hawks, Democrats now appear ready to use this kind of spending as a mechanism to subsidize working people. This stunning shift suggests Democrats have learned from their past failures and are now willing to exercise the full power of the U.S. government.

The state to the rescue

President Biden stands poised to sign a $1.9 trillion rescue bill that throws the priorities of deficit scolds like those at Third Way and the CRFB straight out the window. And while the media class and some members of the political establishment may not be able to kick their addiction to ​“what the CFRB [is selling],” as Alex Yablon writes in The New Republic, the bill’s passage in Congress signals that Democrats are turning left on the issue of deficit financing.

The American Rescue Plan (ARP), which a Democratic Congress approved along party lines in early March, will directly aid U.S. workers and the poor in a matter of weeks. Key features of the bill include $1,400 direct payments, a $300 weekly boost to federal unemployment payouts, $350 billion in funds for states and local governments, aid for rental and mortgage relief, a massive expansion of earned income tax and child tax credit estimated to cut childhood poverty in half, funding for child care and to safe school reopenings, billions of dollars in relief for bars, restaurants and other small businesses, additional funding for the Paycheck Protection Program to keep workers on payrolls, as well as $20 billion toward a national vaccination program to crush the Covid-19 pandemic, with billions more for testing and contact tracing.

The legislation also contains less-heralded provisions to make healthcare more affordable, reducing the number of uninsured Americans by 1.3 million over the next year, in addition to funding that would rescue the pensions of over one million workers and retirees.

Sen. Bernie Sanders’ (I‑Vt.) push to increase the federal minimum wage to $15 an hour, which would have given a raise to nearly 30 million workers and lifted close to one million Americans out of poverty, failed due to arcane Senate budget rules and a group of recalcitrant centrist Democrats. Nonetheless, the rescue package represents a federal investment in the working class unseen in modern American history. According to the Tax Policy Center, the poorest 20% in the United States are estimated to see around a 20% boost in their income due to the plan. ...
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