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Economic relief from the Federal government has run dry, with few prospects for its renewal. And the results have been catastrophic.
Stimulus packages passed in the spring had provided an economic lifeline to tens of millions, but key pieces, including supplementary unemployment benefits, expired by August. Now many of the 25 million people currently receiving unemployment aid are not collecting enough to cover rent, bills and groceries. An estimated 30 to 40 million people are facing eviction in the coming months, during a pandemic that requires staying home for safety. Last week, researchers reported that 8 million people have fallen into poverty since May, including 2.5 million children.
But while Rome burns, Republicans and Democrats are playing a months-long game of chicken with stimulus bill negotiations. Our billionaire president and Congressional legislators, the majority of whom are millionaires, are more concerned with their own political gains than with the dire conditions faced by an electorate they ostensibly represent.
In May, House Democrats passed a $3.4 trillion “Heroes” relief package, summarily ignored by Senate Republicans and the White House. Negotiations have since begun and then collapsed several times. Most dramatically, President Donald Trump abruptly called them off upon his return to the White House from Walter Reed National Military Medical Center.
Now, with economic “recovery” stalled out and Trump’s chances of reelection crumbling, his twitter tune has changed from rejection to “Go big or go home!!!” The president is facing the possibility of a drubbing on election day and losing Republican control of the Senate, and is increasingly desperate to sign a new round of stimulus payments before November 3.
The lion’s share of responsibility for failed negotiations surely lays at the Republican’s door, but the reality is that desperately needed economic relief is being treated as a political football on all sides. While Trump’s election-day desperation is prompting “go big” tweets, and Congressional Republicans cynically think ahead to ways to undermine a President Biden, the Democrats, for their part, are betting on stalled negotiations to provide the nail on Trump’s reelection coffin.
It’s tempting to think that the Democratic Party leadership has finally grown a backbone, or a sense of political principles, and is standing up to the White House. Instead, Nancy Pelosi and congressional Democrats are using a moment in which Trump’s desperation has given them increased leverage to further hobble the Republicans at the polls, even if it means risking no deal at all. If negotiations don’t result in a deal by November 3, it is unlikely that Trump (whether he wins or loses) will have any motivation to pass another bill. In the probable — but still not guaranteed — outcome of a Biden win, this would at best mean that economic relief won’t come until February. How many more millions will have fallen into poverty by then?
For 30 weeks in a row, the number of new U.S. jobless claims has been shockingly high, unrivaled by any other time since the Department of Labor started keeping track in 1967. Beginning on March 21, 3.3 million people newly filed for unemployment. That number more than doubled to 6.8 million the following week. For context, during “normal” times, new weekly claims typically hover around 210,000. The previous record for new weekly claims was 665,000 during the Great Recession. Now that states have reopened businesses, jobless claims over the last few months have come down from their initial peak, but still hover near 900,000 per week, well above anything we’ve seen before the pandemic.
This unprecedented disaster was only mitigated by a package of stimulus bills passed in the spring. Four bills in March and April — including the largest and most well-known among them, the CARES Act — together dedicated almost $3 trillion in stimulus spending, providing a lifeline for workers and the economy. The stimulus bills were a mixed bag, which combined a significant financial cushion for working people and aid to small businesses with corporate slush funds and tax breaks for the rich. But whatever their problems, the bills temporarily warded off disaster through the disbursement of $1,200 “stimulus checks” and by providing federal unemployment benefits to supplement woefully inadequate state benefits. These expenditures were so effective that personal income actually rose over 9% in April and May from this time last year.
Now the $1,200 checks have long since run dry, and federal unemployment benefits expired in July — just as mass layoffs and state budget cuts begin to hit, and the uptick of jobs recovery in the summer has slowed to a crawl.
Parsing the drama
The latest White House proposal offers a $1.8 trillion bill, up from the initial $1 trillion offer, and edging closer to the Democrats’ $2.2 trillion proposal (itself down from the $3.4 trillion proposal in May).
The two sides both agree to additional $1,200 stimulus checks, more aid for small businesses, and a renewal of federal unemployment benefits (albeit at different levels: Democrats propose $600 as they had been in the spring, the White House has agreed to $400). The White House has also conceded to increased funding for the Affordable Care Act and has signaled that it may, too, sign on to a national testing plan. However, the administration’s proposal includes liability protections for businesses, and limited spending for state aid and child care tax credits.
Whether or not a deal is reached between Democrats and the White House, it’s unclear whether congressional Republicans will comply with their boss, now that he is falling behind badly in the polls. According to Washington Post reporters, “multiple GOP senators denounced the proposal,” on a call with White House negotiators, “attacking the price tag as too big, questioning the overall direction and criticizing individual proposals.” Senate Majority Leader Mitch McConnell has advanced instead a narrow $500 billion bill that he says will come to the senate floor next week.
In part, the most conservative wing of the GOP is entrenched in anti-big government principles and balk at the prospects of large stimulus spending. But in part many are reading the writing on the wall of the diminished prospects of a Trump reelection, and are switching tacks. As journalist Greg Sargent noted, “Republicans may already be laying the groundwork to try to destroy a Joe Biden presidency, should he win the election.”
“Direct, public criticism of Trump is still rare,” analysts at Bloomberg News argue. “GOP candidates need his fervently loyal base in an election where Democratic voters are motivated. Yet if they don’t try to create some distance with the White House they fully tie their fates to Trump.” According to a GOP strategist, the article continues, “Republicans have been carefully laying the groundwork to restrain a Biden administration on federal spending and the budget deficit by talking up concerns about the price tag for another round of virus relief. The thinking, the strategist said, is that it would be very hard politically to agree on spending trillions more now and then in January suddenly embrace fiscal restraint.”
It shouldn’t be surprising that Republican lawmakers are preemptively setting their sights on ways to hobble a future President Biden. Nor is it a new approach for them to go hard on an anti-deficit campaign, while simultaneously supporting ongoing deficit-inducing tax cuts for the rich.
But the Democrats, too, need to stop playing chicken.
There is no doubt that the White House proposal falls short, and that a genuinely Left proposal would go much further than the Democratic proposal as well. The $1,200 “stimulus check” is less than what socialists and progressives have called for, states and local services will need much greater support, and of course we’re a long way from the kind of proposals that climate activists have articulated in the form of a Green Stimulus.
In the short term, it makes sense for Democrats to continue to push against cynical liability protections, which could cost workers their lives. On other items, the distance between the two sides is now much smaller than it is made out to be. For instance, $300 billion to states, versus the Democrats’ $436 billion. States, of course, need much more, as local budgets have cratered and cuts to education and health care are already coming as a result.
But it is not difficult to imagine a scenario in which Democrats could agree to a deal, while arguing openly and forcefully that it is insufficient. They could make the case publicly that the economic desperation experienced by millions, alongside GOP intransigence has forced them to agree to an incomplete solution, but that they will push for renewed and greater spending if they win the upcoming elections.
This may be a disappointing, but necessary, conclusion for the time being. Just as labor negotiations are always constrained by both structural inequality and subjective organizing power, here too, we have to soberly assess the ability of the Left to force a more far-reaching solution within the next two weeks. We’re simply not there. It will require more time, more organizing, and more elected officials from within the ranks of our movement to put forward — and fight for — a more far-reaching proposal. In the meantime, the economic imperative to return federal unemployment benefits and stimulus spending is urgent, and it must move forward.
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Hadas Thier is an activist and socialist in New York, the author of A People’s Guide to Capitalism: An Introduction to Marxist Economics, and a regular contributor to Jacobin Magazine. She tweets at @HadasThier.