Joe Biden and his Democratic allies in government have successfully gotten their signature stimulus package through Congress. Despite many compromises to the right wing of the Democratic Party along the way, the package is still one of the most expensive in U.S. history, totaling $1.9 trillion. With the pandemic passing into its second year and an economy that is still far from recovered, the Democrats passed (without any Republican votes) a stimulus that is double the size of the Obama stimulus in terms of percentage of GDP, signaling what might be an important shift in the government’s approach to economic crisis. While critics and supporters alike are hailing this as the “inequality stimulus,” a closer look reveals a more complex picture. On the one hand, it is true that this package includes many meaningful concessions to the working class, and those concessions should be analyzed in terms of both their content and the method in which they were won. However, on the other hand, many of the more progressive measures were removed from the bill before its passage, and many of the concessions given are only temporary.
The package includes a $300 weekly boost to jobless benefits extended through September, direct stimulus payments of up to $1,400 per person, $350 billion in aid to the states, increased child tax credits, and a 15 percent increase in food stamp benefits through September. In addition, the bill also offers $50 billion in support for small businesses, expands Obamacare, and changes the rules for the direct payments to allow more people to collect, including those with disabilities, students, and those in mixed-immigration status families. The stimulus does not, however, include the $15 minimum wage hike that many had promised it would. Nor does it include any debt forgiveness.
FDR, LBJ, Joe Biden?
The stimulus bill is incredibly controversial with some economists who fear that it will “overheat” the economy by lowering unemployment below the “desired” rate and increasing inflation. That there is a desired rate of unemployment is but one of the many obscenities of the capitalist system; capitalism requires a “reserve army of labor” of unemployed workers whose existence helps keep wages low by keeping the fear of unemployment and demand for limited jobs over workers’ heads. Other fears from the right about the stimulus involve concerns about the national debt, government deficits, and other fears about “fiscal irresponsibility.” Critiques of Biden and the Democrats using this stimulus to enact “policy initiatives” and “combat inequality instead of the pandemic” run rampant in right-wing circles. Still others are concerned that by improving unemployment benefits, the bill deters workers from re-entering the workforce, possibly stagnating the growth of the economy.
Setting aside the more theoretical discussions about what impact the stimulus will have on the debt and deficit, it is important to engage with the question of how far-reaching the stimulus bill is in addressing the economic problems of the working class and poor people. The New York Times took the position that the stimulus signaled that Biden was becoming a “crusader for the poor” and that the bill was the “biggest antipoverty effort in a generation.” Jacobin Magazine took the more moderate approach that the bill is “good but not good enough” but also asserted that the bill signals “that the Democratic Party is finally willing — at least for a moment — to turn on the money hose and for once aim it not at Wall Street moguls, but instead at the raging wildfire of poverty and desperation incinerating the poor and middle class.” The more right-wing Wall Street Journal unfavorably compared the bill to Lyndon Johnson’s famous (or infamous, depending on who is asked) Great Society programs.
So is this the anti-poverty bill of our generation? The only reason these publications can even seriously debate this position is because the last generation of politics was characterized by attacks on the working class and tax cuts for the wealthy, creating the vast wealth inequalities that led to destabilizing political phenomena from Sanderism, Trumpism, Occupy Wall Street, and Black Lives Matter. And it’s true. This bill is focused around short term help for the working class.
But the most progressive measures in the bill, which would have actually helped working people over the mid- and long-term, were killed in the crib, leading to a stimulus that more or less aims to give a “shot in the arm” to the economy rather than doing anything to address longer term trends. This can be seen in the fact that many of the more sweeping provisions (such as unemployment extensions and tax credit reform) will expire after a year at most. This means that any measure of support that those policies provide for working people will disappear as soon as the capitalists feel like the economy is back on its feet.
By cutting checks for Americans, Biden and his allies are hoping that consumer spending will restart the economy without many lasting scars. This ignores the true scope of the current crisis. For decades, wealth inequalities have been spiking, with the United States having the highest level of inequality of any G7 nation. In addition, the working class never fully recovered from the 2008 economic recession, so the economic devastation that we are currently seeing is merely the tree that is bearing fruit from seeds that were planted almost 13 years ago.
For example, even before the pandemic started, many working people struggled to afford rent. Once the pandemic started and many lost work or had a reduction in hours, it became impossible to pay. While Biden has provided some money to help provide emergency rent support, he hasn’t done anything to address the larger trends of rent becoming unaffordable for working people in the long term or even taken steps to cancel rent in the short term. There are no rent control measures in the bill, nor is there a wage hike. Indeed, the bill also doesn’t extend the eviction moratorium, which will now expire on March 31. In these examples, we can see that these concessions in the bill are just a stop-gap measure meant to tide the workers over for a few more months until the pandemic is resolved and everything can go back to how it was before.
Dropping the $15 minimum wage from the bill is the perfect example of this. Despite $15 an hour being far below an actual living wage, it would have represented a sizable increase in income for low-wage workers. That provision was dropped largely because the Democrats didn’t have the support from within their own party to pass it. This gives lie to all of their playacting as “crusaders of the poor.” They could have actually passed a bill that gave long-term help to working people, and they chose not to. This is obscene, and all of the applauding of the bill is quietly brushing over the fact that the most helpful concession for working class people was taken out of the bill.
However, it would also be inaccurate to simply write off this stimulus as more of the same from Washington. This is a far-bigger concession to working people than we’ve seen in decades.
For example: the stimulus does increase the earned income tax credit (EITC) and the child tax credit (CTC)— though both are only increased for one year. This change is impactful insofar as it represents a relatively major extension in “welfare” for working families. Indeed, the changes to the tax credits are the rationale for all the Democratic back-patting for supposedly lifting half of impoverished children out of poverty. These changes, while they may very well be helpful while they last, go away after a year — this is not some sort of lasting measure to minimize poverty. In addition, as Matt Bruenig wrote for Jacobin: “the new tax credit regime continues to exclude the poorest kids from the majority of the nation’s tax credit benefits…. the poorest kids will only receive $3,000 from the tax credit system, while kids with incomes right around the poverty line will receive more than twice that amount, $6,618.”
To return to the more theoretical debates among economists, this is the point that underlines them all: the U.S. economy is fundamentally unstable, and Biden must take increasingly desperate measures to stabilize it. How exactly he ought to go about this is a debate among bourgeois economists, but they all fundamentally agree that too much in either direction (be it spending or austerity) could tip the economy into even greater instability. This brings us to another fundamental fact of the economy: that the capitalists have very few solutions to the crisis facing them. So, they are offering half-measures and one-time payments in hopes that an injection of capital into the economy will artificially speed up recovery.
In this, we should be very hesitant to hail this as the second-coming of FDR and the New Deal. For all of its many flaws, the New Deal created lasting social programs that are far harder to undo than this or that temporary provision. In general, the New Deal was a much greater concession because Roosevelt was able to convince the capitalists to give up some of their rate of exploitation in order to avoid very combative (and possibly revolutionary) class struggle. In this, we cannot consider the Biden stimulus, no matter how sweeping it may be, to be comparable to FDR’s New Deal. Biden’s stimulus is a one-time steroid injection into working class and poor households in hopes to get the economy up and running. There is essentially nothing lasting in this bill.
How Concessions Are Won
Biden helped shepherd the Obama stimulus package along, which was mostly a Wall Street bailout with very little for the working class. This stimulus bill is distinctly different in that it is primarily directed at working class people. Why did Biden pass a Wall Street bailout then and this stimulus now?
Biden was elected with broad support ranging from Wall Street and much of the Bush administration to the BLM movement. This coalition was always going to be an unstable one that would leave Biden in a very complex position as president. He has to both be a servant to capital, which bankrolled his election, and also keep the more progressive elements of the Democratic party in the fold. Add to this the fact that the polarization between the left and the right has only increased as a result of the economic crisis. In this sense, members of the Biden coalition supported him for very different reasons. Wall Street wants enough stability to go back to normal, Bush-era neocons want to re-establish American hegemony abroad, and BLM and progressives supported Biden to stop a dangerous and far-right Trump.
Biden’s presidency, then, takes on a very contradictory character, mixing some progressive reforms with “back to normal” capitalist politics. One day he’s rejoining the Paris Climate Accords, and the next he’s bombing Syria. One day he’s ending the ban on trans* people serving in the military, and the next he’s keeping the concentration camps open. This stimulus is in many ways another element of this vacillation, with Biden offering some crumbs to his base to keep them believing both in him and the institutions of government (whose reputations were severely damaged by four years of Trump). In other words, Biden wants to pass a huge stimulus so that he can say that he is a friend to working people and that the government can still work on the side of working people. In addition, some sectors of capital believe that stimulating the economy in this way will help get consumer spending up again, which will restart the economy. The concessions offered to the working class in the stimulus are an attempt to ensure greater earnings for the capitalists.
It should also be noted that, if this package seems better than average, that is in large part a result of the threat of class struggle. In other words, like FDR and others before him, Biden is offering some preemptive concessions to the working class in a time of economic strife in order to kill any potential of class struggle that could win more sweeping concessions, while also hoping to abort any radicalization that may happen inside or outside of the Democratic Party. Conversely, we also have to acknowledge that if there was more class struggle happening currently, then the concessions in the bill would be even stronger. The relatively low level of class struggle right now resulted in less pressure on the Democrats to actually pass lasting reforms, which is another reason why the benefits are going to expire as soon as the pandemic is over.
If Biden and the Democrats hadn’t offered up some level of conciliation to their working class base, then they would run the risk of both losing that base in the next election and threatening the very stability that Biden was elected to ensure. Biden is trying to soothe the working class so that they are more demure in the eventuality that austerity comes along down the line. He wants to toss us some crumbs so that we think he’s on our side so that we fight less when he comes to knife us in our sleep.
Biden has already failed to deliver the $15 minimum wage hike (which is already a massive step down from what would actually constitute a living wage), and his promises of student loan forgiveness have yet to materialize.
It should also be noted how absolutely undemocratic the process of passing this stimulus was. Much of the bill was tailored to win support from one single senator (the notoriously right-wing Democrat Joe Manchin), allowing him almost total veto power over the contents. In general, this stimulus process shows the failings of bourgeois democracy. It should make us sick to watch these people with six-figure salaries sit in expensive suits and argue on television about whether we deserve to make more than $7.25 an hour. That is shameful, as is the debate over whether or not giving unemployed folks more money during a pandemic and economic crisis will discourage them from finding work. The fact that we have essentially no say in the policies handed down from Washington should be crystal clear, no matter what Biden and his allies want to say on cable news.
What We Need
Working people can win reforms from the Biden administration (just as they could win reforms from the Trump or Obama or Bush administrations), but they must understand that Biden will never offer reforms open-handed. We have to fight for every needed reform and can’t trust any member of the capitalist parties — even progressive ones like AOC or Sanders — to give us the reforms we need. Struggles of this kind pose a threat to the capitalist order, so the capitalists, their politicians, and their allies in the union and social movement bureaucracies do whatever they can to ensure that class struggle never develops. Sometimes that looks like brutal repression, and sometimes it looks like concessions in hopes we’ll take what amounts to a buyout. Biden et al are trying to buy our passivity for $1400 and an extra $300 a week. We can’t make that bargain.
Instead, we need to raise demands for the working class that will actually go a long way towards resolving the crisis. We don’t just need one-time payments of $1400; we need a monthly quarantine wage paid to all workers who are unable to safely return to work. We don’t just need a $300 weekly bonus added to unemployment benefits; we need federal jobs programs that distribute working hours amongst all available workers without reduction in pay. We don’t just need more money for testing; we need a public health service run by the healthcare workers and the patients, not the bosses who want to enrich themselves off of our diseases. There is money for this; in fact, just the money that billionaires have gained since the beginning of the pandemic could pay for two-thirds of the entire stimulus bill. But to get these reforms, we will have to fight for them. We can’t trust Biden and his cronies in capital to give them to us.
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