The stimulus bill is the most economically liberal legislation in decades

By | March 14, 2021

Nicholas Lemann writes:

Traditionally, every new Democratic President starts out by passing a big economic package (and every new Republican President starts out by passing a tax cut). Jimmy Carter’s, in 1977, cost twenty billion dollars. Bill Clinton’s, in 1993, was mainly a tax increase, aimed at eliminating the federal deficit. Barack Obama’s, in 2009, which passed during the worst economic crisis since the Great Depression, cost eight hundred billion, some of it spending increases, some tax relief.

The American Rescue Plan, which President Joe Biden signed last week, is on an entirely different scale. It will cost the government $1.9 trillion, even though the economy today is in better shape than it was when Obama took office; and, unlike Clinton’s opening economic initiative, it is proudly indifferent to the size of the federal deficit. The law’s most famous feature, its fourteen-hundred-dollar payments to individuals (meaning that many families will wind up with much more), is only the beginning. There are also extensions of eligibility for unemployment benefits and food stamps; debt relief for renters; subsidies for state and local governments that are out of money, so that they can continue to provide services; a bailout for insolvent pension funds; health-care subsidies; and a nearly universal child-care benefit.

The left’s disappointments with the adjustments necessary to get the bill through the Senate—it doesn’t raise the federal minimum wage, and the cash value of unemployment benefits was reduced—should not obscure the important point. This is the most economically liberal piece of legislation in decades. It is not just much bigger than but different in kind from the Obama Administration’s version, which helped people mainly through end-of-year tax credits. Biden’s bill was designed to send regular monthly checks to millions of American families, so it will be palpable that the government is helping them in a tough moment. Gone are the work requirements, the sensitivity to the risk of inflation, and other centrist concerns that have been at the heart of Democratic programs for decades. The side that always seemed to lose the argument within the Democratic Party has finally won. [Continue reading…]

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