economics

Biden’s Covid Relief Plan: Not Just Neoliberal “Austerity”

Joe Biden announcing his Covid Relief/Build Back Better plan, with Kamala Harris in the background.

Senator Everett Dirkson once said “You take a billion here, a billion there, and pretty soon you come up with serious money.” So, what in the world has come over Joe Biden? He’s not talking about a billion here and there. Not even tens of billions; he’s talking about hundreds of billions, to the tune of $1.9 trillion in his Covid relief package. When added to the previous $2 trillion back in March and the more recent $900 billion in December, that is seriously serious money. Biden’s $1.9 trillion is 8% of one forecast for the total GDP for 2021. By way of comparison, in 2009 under then-president Obama the government passed a $787 hundred billion bailout – less than half of what Biden is proposing. Not only that, but Biden’s proposal would go mainly to workers, small businesses and local and state governments, not the banks and major corporations.

Many socialists were expecting more “austerity” – economic attacks on workers – from Biden from day one. Partly for that reason, they are not coming to grips with his Covid Relief Plan proposal. That is a mistake. Among other things, Biden is proposing spending:

  • $170 bn. to help schools reopen
  • $440 bn. in aid for state and local governments
  • $160 bn. for a national Covid vaccination program
  • $1400 one time payment for everybody in addition to the $600 passed under the Republicans
  • $400 per week supplemental unemployment benefit
  • $4,000 child family tax credit
  • $3 bn. additional for Women, Infants, Children (WIC) and extend the 15% SNAP (Supplemental Nutrition Assistance Program) benefit increase
  • He is also calling for raising the minimum wage to $15.00 per hour; extending the eviction and foreclosure moratorium through September of 2021; and requiring employers to provide hazard pay to frontline “essential” workers, including grocery workers, and provide emergency medical leave to 106 million workers.

Comparable to the New Deal?
Serious money, indeed. So serious that Nicolas Kristof of the NY Times compared
 Biden’s proposal to FDR’s New Deal. That is a great exaggeration compared to a program that established Social Security, a widespread federal works program (the WPA) and took other steps. Nor was the New Deal all it was cracked up to be. For example, Art Preis explains in his book Labor’s Giant Step, “Roosevelt’s works program never provided jobs for more than 25% of the jobless.” Preis quotes a Harvard graduate who got a job working in a national park through this program who expressed gratitude “for a job which paid $15 a week and kept him from starving to death.” Nor did the New Deal end the Great Depression; it took WW II to “accomplish” that. But it was something; it kept millions from literally “starving to death.”

Child poverty will be lessened but will still continue to be massive.

Large Shortcomings
Similarly, there are some serious shortcomings in Biden’s Build Back Better proposals:

His proposal for a $400 supplement to weekly unemployment benefits (vs. the December package’s $300 week) is still a 1/3 cut from what it had been ($600/week).

His plan would reduce child poverty by 45%. That would still leave something like 6 million children living in poverty.

State Budget shortfalls: Biden’s plan will alleviate some of this crisis but far from all.

His proposal of $440 bn. in aid to state and local governments is woefully inadequate. The Brookings Institute predicts that revenue to state and local governments’ revenues will decline by $467 bn. from 2020 to 2022. Another report estimated already existing debt of state and local governments to be a minimum of $2.5 trillion and might be as high as $7 trillion.

As for Biden’s call for a minimum wage of $15/hour, that demand was first popularized over five years ago. It was actually inadequate even then and is even more so now. Furthermore, Biden has not specified when that should be introduced, meaning it will probably be phased in over 3-5 years if at all.

The Hoovervilles of the 1930s. FDR’s New Deal did not end massive poverty.

Will be watered down further
A
nd, as the game is always played, the Democrats will be sure to have just enough senators jumping ship to ensure that further watering down of Biden’s proposals will be necessary for it to pass the Senate. Senator Joe Manchin of West Virginia will likely be the one of the first to threaten to jump, and that’s all they’ll need: Just one.

A Change Nevertheless
But still, it is a change, however temporary, from previous policies, including Biden’s. Starting in the 1970s, capitalist politicians of both parties spent decades unwinding the reforms brought about under the New Deal and then under LBJ’s anti-poverty programs. So, what is happening this time?

FDR the conservative originally
We must remember that FDR did not start out as a liberal reformer. Preis reminds us of FDR’s campaign for president in 1932, in which he said that “For three long years I have been going up and down this country preaching that Government – federal, state and local – costs are too much.” He said that the primary responsibility for dealing with unemployment “rests with localities”. In fact, even the term “New Deal” was just a “happy phrase… coined during the campaign” to make people feel better, according to FDR’s Labor Secretary Frances Perkins (as quoted by Preis).

Biden Too
And Biden?

This is the same man who introduced the Federal Spending Control Act in 1977. In introducing the act, he called for “less government, more efficient government [a code word for budget cuts], less costly government.” This is the same man who, when he was running for Democratic Party presidential nominee in 2007 said he was open to what amounted to cuts in social security (by requiring workers to wait longer to start collecting).

Joe Biden and Bernie Sanders
Now Joe is talking like Bernie.

Bernie Sanders
Now, not only is he calling for spending big bucks, he’s talking like Bernie Sanders. Biden said about food workers from the farm to the store: “They have kept the country running during the darkest days of the pandemic. A number of large employers, especially in the retail and grocery sectors, have seen bumper profitability in 2020 and yet done little or nothing at all to compensate their workers for the risks they took.”

Not only is Biden talking like Bernie Sanders; the man who is probably the second most powerful in the US government – the Senate Majority Leader Chuck Schumer – has placed Sanders in a position far more powerful than the one he coveted – Labor Secretary. He’s placed Sanders (who technically isn’t even a Democrat) in the chair of the Senate budget committee. Normally, Senate rules require 60 senators to vote in favor of a spending bill like what Biden is proposing. However, the budget committee chair is empowered to bypass those rules and allow a simple majority. That means that with VP Harris’s tie breaking vote, the Democrats theoretically can push through what they want.

 What caused the shift
At the time that Biden was elected, many socialists (although not this one) were arguing that he would
immediately be pushing austerity. These claims do not recognize what is happening. They are based on what Biden did in the past, not where he is at for the moment. They fail to recognize that Biden is a very adept representative of what the US capitalist class needs and can accomplish. 2021 is very different from 1977.

FDR’s transformation was brought about by the labor uprisings of the 1930s. Then, there were the series of anti-poverty programs of LBJ. These were in response to the black uprising and the anti-war movement of the 1960s. And today?

The Black Lives Matter protests. Up to 26 million participated.

According to the NY Times up to 26 million people participated in the Black Lives Matter protests in 2020. That makes it the largest protest movement ever in US history. Although the BLM protests did not touch on the economic issues (it should have), those issues were still in the background. Then we had the election of the two Democratic candidates in the Georgia runoff election. The Democrats will not resolve any of the problems US workers face, but it was the process through which Ossoff and Wernok were elected that matters. They were elected through the mobilization of the black community in general and in particular of black women. Surely, those women and their community in general must be feeling a sense of empowerment. And who is feeling the economic catastrophe the most? Communities of color, especially black workers. And foremost among them would tend to be women, who in general have to be responsible for the family as a whole.

“Pitchforks are Coming”
Nearly seven years ago, billionaire Nick Hanauer issue
d his famous “memo” to his “fellow zillionaires”. The Pitchforks are Coming… For US Plutocrats was its title. In it he talked about the unsustainable levels of inequality. “You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when,” he wrote. In 2020 we didn’t exactly get a workers’ “uprising”, nor did we exactly get a police state, but we started to head

January 6 lynch mob/coup attempt:
It threatened a breakdown of stability

in the direction of both. Then, as the new year came in, we got the mass attempted lynching/attempted coup on January 6. That, too, was a warning of the extreme instability if US capitalism continued on its course of recent decades.

Weakening of US capitalism globally
F
urthermore, the recent course has exacerbated the weakening of US capitalism’s influence abroad. It was exactly that course that brought Trump to power. It was as much the weakening of US imperialism abroad as the collapse of the American Dream at home. MAGA speaks to both processes. But what has been the result? Richard Haass, president of the prestigious Council on Foreign Relations, writing in that group’s magazine Foreign Affairs, explained that Trump’s actions “would result in a marked [further] decline in U.S. influence, to the benefit of China, Iran, and Russia….. What took place last week was a distinctly American failure, but the consequences go far beyond American shores. A post-American world, one no longer defined by U.S. primacy, is coming sooner than generally expected—less because of the inevitable rise of others than because of what the United States has done to itself.” He was referring specifically to the lynch mob/coup attempt but also to Trump’s policies in general. And if the US capitalist class and their strategists wish to avoid a new Trump, then they have to do something about economic inequality.

In other words, yes the “pitchforks” were coming. However, because the union leadership has been able to hold the working class in check for the time being, those “pitchforks” came out largely from extreme right wing, even fascist, forces. Next time, it might not be that way. But in any case, Biden’s Covid relief plan is an attempt to forestall such developments in the future. It shows what concessions to the working class can be made even before a mass working class movement develops.

A protest in London against austerity. A return to neoliberal austerity is inevitable.

Change only temporary
Be not
confused, however. This does not represent a long term return to the days of “Keynesianism” during the period after WW II. Those concessions were made possible by the rebuilding from the destruction of WW II itself plus the fact that at that time US capitalism was more or less unchallenged throughout the capitalist world. It was made necessary because of the global competition with the Soviet Union. Those days are long past. Biden’s Covid relief proposal represents a temporary pause in the long term neoliberal attacks on US workers, a blip on the radar screen. However, we must recognize it for what it is.

Joe Biden announcing his Covid Relief/Build Back Better plan, with Kamala Harris in the background.

3 replies »

    • Thanks. Did you ever see the old TV show “Dragnet”? It was about an FBI agent and his pursuit of the “bad guys”. The comment he was famous for was his asking witnesses for “just the facts, ma’am (or sir)” I think that’s a good motto to keep in mind (even though it comes from a suspect place).

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