(C) Common Dreams
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Bring Back the COVID Welfare State [1]

['Nick French', 'Tyler Austin Harper', 'Jared Abbott', 'Fred Deveaux', 'Cori Bush', 'Shawn Fain', 'Luke Savage', 'Branko Marcetic', 'Stephen Semler']

Date: 2024-09

By many major indicators, the economy under President Joe Biden is doing great. Real GDP has grown 5 percent since 2019. Unemployment has fallen to a low of 3.7 percent after a peak of around 15 percent in the early days of the COVID-19 pandemic. And inflation, although still higher than pre-pandemic levels, appears to be receding. Real wages are up by 3.5 percent since Biden took office, with low-wage workers seeing the biggest of those gains between July 2022 and July 2023. Yet many Americans still seem decidedly unhappy with economic conditions today. Several recent polls have found that people in the United States hold negative views of the economy and of how President Biden has been handling it, despite the rosy macroeconomic indicators. For instance, the Michigan Consumer Sentiment Index, which has been measuring consumer confidence levels nationwide since 1978, found that consumers’ feelings about the economy and their personal finances — although up from an all-time low last summer — were still quite negative in August 2023. And a July New York Times poll found that only 20 percent of Americans would rate economic conditions today as ​“excellent” or ​“good.” (By contrast, 49 percent rated the economy ​“poor.”) This disconnect has led many pundits to wonder what’s going on, with some chalking up Americans’ low opinion of ​“Bidenomics” to partisanship or ignorance. Look beyond top-line metrics like GDP growth or unemployment, though, and you’ll find a more complicated story. Many Americans report struggling financially, in part because of the discontinuation of many early pandemic welfare policies. So even as the US economy has reaped continued benefits from those programs and is seeing a jobs boom driven in part by the federal government’s historic investments in clean energy and domestic manufacturing, many people are understandably resentful at feeling like the ladder’s been kicked out from under them. The situation shows that high-level metrics like GDP growth and unemployment are not good proxies for Americans’ quality of life — or for economic justice. It also demonstrates the need for a progressive economic program of combining ambitious ​“demand-side” welfare policies with ​“supply-side” investment programs like the Inflation Reduction Act (IRA). That combination is likely to be more conducive to actually helping people — while also being politically popular.

Bidenomics: Success and Failure We can’t dismiss the high points of today’s economy or the role Biden and national Democrats have played in rebuilding it. Real GDP and job growth have not just rebounded from the early COVID recession — they have outpaced the recovery of many other advanced capitalist countries. The United States has also been outperforming most of these nations in lowering both inflation and unemployment. The resulting tight labor market has even helped lower income inequality for the first time since the 1980s. Biden and Democrats in Congress can take some credit for all this. The relatively generous welfare policies they passed at the beginning of the pandemic helped stimulate demand, making the recession shorter and the recovery from it stronger than would have been the case otherwise. More recent policies, like the Bipartisan Infrastructure Bill, the IRA, and the CHIPS Act, have made major investments in domestic manufacturing, further buoying the economy. So why aren’t Americans celebrating Bidenomics? In a perceptive article at the New Republic, Kate Aronoff points out that many people simply aren’t aware of — and probably don’t viscerally care about — the administrations’ efforts to address climate change and create jobs, including the IRA. The problem is that many of these policies are ​“pretty boring,” Aronoff says: ​“Few people get up in the morning excited about the U.S. share of manufacturing employment, or tax credits to install heat pumps.” She goes on to argue that such projects should be married to more visible public investments in things like parks, swimming pools and national forests, and government support for the arts and culture — making sure that ​“people are having a nice time,” and that they know the government is responsible for it. Fair enough. Creating communal spaces for leisure has long been an important element of progressive and left-wing political projects. But disapproval of Biden’s economic record isn’t just about ignorance or indifference to his policy achievements. Lots of Americans today really are dealing with economic hardship. Consider a few results from the Federal Reserve Board of Governors’ 2022 Survey of Household Economics and Decisionmaking (SHED): 73 percent of adults said they were doing OK financially — down 5 percent from the year prior.

The share of adults in 2022 who said they were financially worse off than a year ago stood at 35 percent, the highest level recorded since the SHED started asking the question in 2014.

23 percent of adults said that their spending had increased in the past year but that their income had not. The Census Bureau’s Household Pulse Survey contains similar revelations: food insecurity, for instance, is at its highest level since Biden was inaugurated.

Giving With One Hand, Taking With the Other It is not too hard to find an explanation for all this, as writers Stephen Semler and Branko Marcetic have argued. The Biden administration allowed the temporarily expansive welfare policies and economic protections enacted during the pandemic to expire. Those included emergency Medicaid and food stamp expansions, eviction moratoria, increased child tax credits, and many other anti-poverty measures. With these policies’ expiration, it’s no wonder that many people are struggling. Homelessness is up by nearly 40 percent in big cities including New York and Chicago, eviction filings are on the rise; more adults have been skipping medical treatment due to cost; and only 63 percent of adults said they could cover a hypothetical $400 emergency expense with cash, down from 68 percent in 2021. The imminent end of the pause on federal student loan repayments threatens to make things much worse. Biden and the Democratic Party did succeed in breaking with prior policy orthodoxy in two ways. The first was by passing the American Rescue Plan in early 2021, a relatively generous enlargement of the welfare state in response to the COVID-19 crisis, which focused largely on providing direct support to households. The second break came with the Bipartisan Infrastructure Bill, the IRA, and the CHIPS Act — investments focused on boosting supply-side production, including green industry. These policies aim to boost domestic manufacturing and job growth and to help speed the country’s decarbonization. But by letting the COVID welfare state collapse, the economic and political benefits of this new industrial policy are being muted. Instead of combining necessary investments in green manufacturing and infrastructure with social safety net provisions to protect the vulnerable, the federal government seems to be giving with one hand and taking with the other. From a policy perspective, this doesn’t make much sense. The ​“demand-side” and ​“supply-side” policies serve different goals, and both sorts of programs are necessary for creating an economy that serves everyone’s needs. We need the government to invest aggressively in clean energy and green jobs. We also need programs that guarantee people health care, food, and housing.

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[1] Url: https://jacobin.com/2023/09/democrats-covid-welfare-state-joe-biden-economy-bidenomics

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