Biden Needs to Spend Big—And Fast. Here Are 4 Immediate Priorities.

Forget about the debt. Boosting the economy and sending people money isn’t just good policy, it’s smart politics.

Max B. Sawicky

(Photo by ROBERTO SCHMIDT/AFP via Getty Images)

Expectations are high for the incoming Joe Biden administration, not because the political circumstances are advantageous, nor because of Biden himself, but because our troubles are so great. 

Tens of millions of Americans are unemployed. The death toll from Covid-19 in the United States now tops 300,000. An avalanche of evictions and foreclosures is on its way. And this is on top of our ongoing political crisis: A stubborn minority of voters refuse to recognize the results of the election, while many of President Trump’s supporters remain unwilling to observe elementary safety measures to reduce the further spread of the virus. In Washington, D.C. last week, a rampaging mob of fascist goons assaulted random passers-by and vandalized black churches — ostensibly as a way to show fealty to Trump. To put it mildly, America is in bad shape.

Much of the Biden administration’s ability to respond to the health and economic crises we face depends on the outcome of the January 5 run-off elections in Georgia that will determine which party controls the Senate. But even with victories in both of those races, centrist Democrats in Congress will continue to oppose major progressive policies. And Democrats’ narrow majority in the House (and, if we’re lucky, the Senate) will make it difficult for President Biden to spend as much money as necessary. 

Nevertheless, there is a lot of new spending we need, and elevating the most urgent priorities is an important political task: It applies pressure on current Democratic officials, including the president himself, and educates and motivates people who can vote for a new, more progressive Congress in 2022

Here are four of the top priorities:

1. Send money now! When it comes to stimulus, there are always dual objectives: boosting the economy, and providing relief for those in the greatest need. Sending checks to everybody, extending unemployment benefits, and bailing out beleaguered small business have already been shown to be effective. The recession and pandemic are far from over, so these policies should continue. The skinny compromise that might be struck in Congress provides no more than a small respite. To speed up a return to economic health, the first step is to avoid sinking deeper into the current rut. 

Just as important is providing relief to state and local governments, which provide services of vital importance to working people. These governments never quite recovered from the Great Recession of 2007-2008. They are obliged to balance their budgets, so unlike the federal government, their borrowing capacity is restricted. The triple hit to state and local finance — reduced tax revenue, added recession-related spending, and additional virus-related expenses — has depleted their reserves.

2. Public investment and the Green New Deal: do everything. A recession is always an opportune time to ramp up public investment on a permanent basis. Many possibilities will compete for funding. Two important angles should be kept in mind.

The traditional sort of investment in infrastructure” — roads, bridges, school buildings, airports and rail systems — has been neglected for decades. A revival, however, needs to be done through the lens of climate change awareness. Among other things, this means a preference for public, mass transit rather than roads; the upgrade of public facilities (including rail systems) with a view towards reducing carbon emissions; and the modernization of the nation’s power grid. 

The other consideration is to take seriously what might be called an infrastructure of care: workers and facilities devoted to housing and caring for those unable to do so for themselves, including the persistently unemployed, the indigent elderly, the differently abled, those in failing mental health, those without housing, the incarcerated, and beleaguered immigrants.

3. The Peace Dividend. Currently, the federal budget devotes $697 billion to national defense. When it comes to the federal government actually doing things other than mailing checks to individuals and medical care providers — what is classified as discretionary spending” — defense takes nearly half. Much of this money is devoted to supporting the capacity to wage war, and we have to ask, against whom? The interventions in Iraq, Syria, Libya and Yemen have not gone well, to say the least. 

It is possible to overstate how quickly a peace dividend could be pried out of the defense budget. Workers and uniformed military cannot be summarily dismissed — they will need transition assistance. Big-ticket hardware contracts that are set for a period of years cannot be instantly canceled. Even so, there is an opportunity to redirect a large quantity of funding to non-defense purposes.

4. Forget about the national debt. In a downturn, the economy loses more than it gains by failing to ramp up federal deficit spending. Of course, Republicans have shown themselves to be comical hypocrites when it comes to worries about deficits. Unfortunately, some influential Democrats may actually believe such nonsense. They would be well-advised to read a recent paper by Jason Furman, Obama’s chief economist, and Larry Summers, omnipresent Democratic Party economist, wherein they basically admit everything they used to say about budget deficits was hogwash and is particularly inappropriate under current circumstances. As far as elite economic thinking is concerned, there should be no obstacle to massive increases in non-defense deficit spending.

Biden will also have important tools that do not depend on Congress. A recent column by Dave Roberts provides a nice overview, both technical and political. Biden can issue executive orders, make recess appointments of nominees the Senate refuses to approve, fumigate Trump’s termites from the woodwork of the federal civil service, re-regulate what has been deregulated, and un-fire good people who were dismissed by Trump. 

Trump flouted every conceivable legal and informal constraint on his rule, to the utter silence of the Republican Party. He has given Biden a license to do likewise. No credibility should go to any Democratic stuffed shirt who bleats about restoring norms. Working people are desperate. This is class war, folks.

Max B. Sawicky is a retired economist and writer in Virginia. He is a Senior Research Fellow at the Center for Economic and Policy Research.

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