March 8, 2021 | Reading Time: 5 minutes
American Rescue Act is the BFD that we’ve been waiting for but that everyone misunderstands
The old stories no longer align with the new facts.
The needle on the John-Stoehr-O-Meter is reading “annoyed” this morning due to the fact that our political discourse is so upside down, so backwards and so prolapsed I’m compelled to defend someone I don’t feel like defending. My annoyance is doubled by knowing that defending him just makes our discourse even more upside down, even more backwards and even more prolapsed (assuming that’s even possible). Everything would be better if the narrative of politics were based on facts, not meta-narratives.1
Before I get to that certain someone, let me lay out those facts. The United States Senate passed Saturday a covid relief package worth about $2 trillion.2 It is a giant piece of legislation, in size and scope, akin to the Social Security Act of 1935 in terms of impact on the farthest corners of our society. It is the sixth of six spending bills passed by the United States Congress during the covid era. Compared to the previous five combined, however, it “includes more generous direct payments for low-income Americans,” according to the Times’ Jim Tankersley. “It is more focused on people than on businesses and expected to help women and minorities in particular.”
Progressives fighting for regime change are not recognizing that regime change is happening.
As much as it is a relief bill, it’s an anti-poverty bill. It represents, according to the Times, a bid by Joe Biden and the Democrats to use government to “tackle the pandemic and invigorate the economic recovery by pouring immense amounts of money into initiatives to help low-income and the middle class.” In addition to $2,800 per married couple earning less than $150,000 a year,3 the American Rescue Act extends $300 per week unemployment benefits through Labor Day4; it includes $350 billion of states and cities5; $12 billion for nutritional assistance (food stamps); $45 billion for housing assistance (including utilities); a provision allowing taxpayers to deduct from tax returns half of their childcare costs; and the makings of permanent cash payments6 to kids in order to cut childhood poverty over time by nearly half.
In addition to being a relief bill and anti-poverty bill, the American Rescue Act is a health care bill. For one thing, it would pay for 100 percent of your health insurance costs if you lose your job.7 For another, it would drop the threshold for eligibility for health insurance subsidies from 400 percent over the poverty line to 150 percent. (In other words, 8.5 percent of your income.) This will be a huge boon for middle-class Americans who have been boxed out of the Affordable Care Act because they make too much to qualify. (I tend to agree with those who called that Barack Obama’s “big failure.”) It moreover puts us on course to realizing Medicare for All without having to go through the trouble of arguing about it. Just drop the ACA threshold to zero.8
Here’s the tip jar! Put something nice in it!
But even all this does not capture how monumental this bill is. In a real sense, it takes the last four decades of respectable opinion in economic policy and flips them over.9 Instead of policies starting at the top of society and trickling down, these are policies starting at the bottom and wending their way up. Nearly everything the Republicans and “fiscal hawks” are calling bad, the Democrats are calling good. The stifling fear of inflation among mainstream policymakers, which stymied the Obama administration’s response to the panic of 2007-2008, just doesn’t exist anymore. “It is as far away as you can get from repressive, supply-side economics,” said US Senator Michael Bennett. “This is progressive economics that puts money in the hands of working people who will spend that money.” This is, in other words, the beginning of regime change.10
Robert Reich has been fighting for regime change since the Reagan administration. Now that it’s beginning, however, he can’t quite see it. “We’re in one of those rare periods when Democrats control the presidency, House, and Senate,” the former labor secretary and progressive pundit tweeted. “So there’s no reason to compromise on a $15 minimum wage, or $1,400 survival checks, or abolishing the filibuster. Why are we negotiating with ourselves?” The unsaid target here is none other than Joe Manchin, which is to say, that certain someone I feel I must defend, much to my annoyance.
To Reich and other progressives,11 the conservative Senate Democrat from West Virginia is the problem. Not because of the facts of the American Rescue Act, which I have outlined and which are monumental on their face. Manchin is the problem because he plays the bad guy in a story Reich and others have been telling since the Reagan administration. The reason we can’t have nice things in this country is because some Democrats don’t want us to. They’re too conservative. Ergo, Joe Manchin is bad.
To be sure, Manchin voted against raising the minimum wage. But so did a bunch of other Democrats, some quite liberal. He did negotiate to limit who gets stimulus checks, but so what? Those who get them are going to be middle class and lower. That should make Reich happy. Manchin did insist unemployment benefits be $300 instead of $400 a week, but that’s just keeping it the same as it was the last five times the Congress went through this process. In the end, Manchin looked like the Rebellious Democrat he bills himself as—while leaving Biden’s proposals pretty much intact.
Reich’s narrative of politics isn’t based on facts. (He would be celebrating instead of complaining if it were.) His narrative is about narratives, his story is about stories—stories that are no longer relevant to, or increasingly out of step with, the facts.12 The longer Reich and others tell this story about stories, the more they actually threaten to undermine the public’s understanding of this paradigm-shifting new law. Many people now believe the Democrats caved again. In fact, they have begun changing the world.
The United States House of Representatives will probably pass it this week.
It will be $1,400 for individuals earning up to $75,000 per year. Each dependent gets $1,400, too. A family of four, for instance, could receive as much as $5,600 in direct cash payments. The legislation, moreover, allows people to request their 2020 income tax returns be used to determine eligibility. This matters a lot to those who made more in 2019 than in 2020.
The first $10,200 of unemployment benefits received in 2020 are tax free.
This amounts to a bailout, which will be a relief to anyone who owns property. If states and cities get federal money, states and cities won’t have to raise your property taxes!
$300 per child under 5; $250 per child between 6 and 17. That’s in addition to a new child tax credit of $3,600 per child under 6 and $3,000 per child over 6.
In other words, the government will pay for COBRA.
If you think that would be a handout to insurance companies, ask them what they think of Medicare. They hate it.
It takes the last five covid relief bills and flips them over, too. Under Donald Trump, preference was given to businesses, not people. The American Rescue Act does the opposite.
For more on regime change, see Claire Bond Potter’s piece here.
Not the same thing as “liberals,” mind you. Progressives can be quite illiberal.
Pramila Jayapal, the chair of the House Progressive Caucus, said Manchin’s tweaks were “relatively minor concessions” that will not keep the House from passing the Senate bill. That kind of politics does not fit into Robert Reich’s story of compromising Democrats.
John Stoehr is the editor of the Editorial Board. He writes the daily edition open and available to all. Find him @johnastoehr.