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Dissent - March 26, 2020

"The New Deal’s first wave of public programs mirrored those from the First World War. During a crisis, people go to what is already on the shelf. But even if the stuff on the shelf is bold and new, as it is in our current moment with a new progressive coalition becoming more assertive, there need to be mechanisms to click things into place. It requires work on both ends of the equation: the big ideas, but also the mundane reforms, like a database of addresses where we can send checks, that we need to execute them. Though many will be better off from this bill, it represents a real failure to secure long-lasting reforms. The goal now is to take the fragments of the better world suggested here, and try to build on them next time."

... I feel exhausted, disappointed, and angry. Part of this is just a response to the situation we face, which is worse than we all had imagined—a shock to our social, economic, and political lives. No doubt, I, like many under social distancing and isolation, am feeling the slow fatigue and grief of fighting this disease. But that doesn’t explain it all. Something was missed in this moment. This bill will help a lot of people and do a lot of necessary things, and perhaps Congress will pass another bill to supplement it in a month, as many hope. But it doesn’t feel like enough. It doesn’t come anywhere near to meeting the challenge that we face.

What has been frustrating is to see so many ideas—ideas that once seemed impossible to imagine in our political system—suddenly emerge into the realm of possibility, only to collapse once they hit the hard reality of a system hostile to radical change and serious economic reforms. The ideas were there, and were heard. Universal unemployment insurance, a coordinated national labor policy, and a basic income were all discussed at a level that was unthinkable a month ago. All are necessary to freeze the national economy, with the government paying expenses in the meantime, so it could thaw out after the pandemic is over. But trying to get them over the finish line of legislation forced me to see how difficult it is to carry out serious programs in a system that is innately hostile to reform and has become less and less responsive to everyday people in recent decades. This isn’t to excuse the political choices that were made this week. Nor is it to downplay the real benefits that this bill will bring. But we need to recognize that this crisis, or any crisis, isn’t enough to win the policies we want and need.

Consider the idea of a massive expansion of unemployment insurance, as economist Arindrajit Dube had proposed. It is a simple, yet radical, response to the crisis. Everyone goes furloughed for a few months, the government picks up the tab, and then everyone goes back to work. People continue to get paid, at an income replacement level of 100 percent. Employers lose their biggest budget line item, meaning they are much more likely to stay in business while they close as needed.

I believe Senator Chuck Schumer when he said he wanted to do “unemployment insurance on steroids.” But this idea ran straight into the ugly reality of our actually existing unemployment system, which is dominated by state governments that often have little interest in making the system work well. States determine eligibility terms (how many people who become unemployed use the program), as well as replacement rates (how much of their prior income they receive). According to the National Employment Law Project, states have been driving down these rates since the Great Recession, starving them of resources. They are being creative in how to limit the programs, instead of how to modernize them for our current digital age.

These trends reflect dysfunctional elements both old and new. The creators of the Social Security Act, which included both old-age pensions and unemployment insurance, understood that this system was a mess. But in 1935 they believed a hostile Supreme Court would likely kill the law, but might spare components that operated at the state level. The system was a hedge against a conservative court system. More recently, the status of workers has become more legally precarious. The employment relationship, along with unemployment insurance, has been whittled away. In this “fissured workplace,” as public policy professor David Weil describes it, millions of workers that were once directly employed by their actual bosses have been legally reclassified as contractors and other arm’s-length contractual relations. Workers are likely to receive less of the gains of what they produce. And if they aren’t employees who can be laid off, they don’t have the infrastructure of unemployment insurance to protect them.

What can you do when you want to provide unemployment insurance to people not within the system, and in a system hostile to expansion at that? The workaround Congress found is quite simple and smart. First, to boost replacement, add $600-per-week onto what people would normally get if they qualify for unemployment insurance. This allows a massive increase in the replacement rate across the board, without having to fight states on their specific mechanisms for determining what that rate is. Second it is extended for those who don’t normally qualify like contractors and the self-employed, using a simple formula that then gets the $600-per-week added to it. This system, duct-taped as it may be, does get social insurance to those normally excluded, and also does more wage replacement for lower-income workers. (That it might leave workers better off not working than working almost caused Republican senators to kill the deal.) It’s $260 billion dollars’ worth of social insurance straight to workers.

It’s a tradeoff that accomplishes much now at the expense of creating a long-term solution. This is the theme of the entire congressional relief effort—victories were won for things that can pass and work immediately, but not for policies that would be able to continue in the aftermath of the crisis, or at least provide a basis of support for that continuation.

Take the new paid sick leave policy for those dealing with coronavirus that passed last week. There have been decades of efforts to pass this sort of legislation, and here a temporary version of it emerged and passed in the span of two weeks! But instead of a general social insurance fund, as advocates called for, it’s a mandated employer benefit that the government reimburses after the fact. Will workers enjoy this benefit? Will they see it as an important part of their economic security? Will it open a door to a larger conversation about rethinking care and health, or simply be another disappointing stopgap in this crisis? ...
Read full commentary at Dissent