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“Say it loud, say it proud: We’re all Keynesians now.” This riff on public spending attributed to free-marketeer Milton Friedman is also a good description of US senators and White House officials negotiating over the third stimulus package amid record unemployment claims totaling 3.2 million and little prospect of a recovery anytime soon.
At more than $2 trillion, the bill proposed earlier this week is the largest single stimulus in US history. Republicans in the White House and Senate clearly aren’t the deficit hawks they claim to be. Nor should they be. The deep, economic problems in the United States, exacerbated by the global spread of the novel coronavirus, have made it clear that larger deficits are not only an inevitability but a necessity.
A handful of conservative politicians are even taking unexpected political stances: Take Mitt Romney pushing for cash transfers or Chuck Grassley defending a generous expansion of unemployment insurance. But beware: Their positions don’t pave the path for a political realignment in progressives’ favor. The provisions in this package—industry bailouts, cash assistance, expanded unemployment insurance, and emergency support for educational institutions—instead represent an effort to return the economy to the way it was a few months ago. The big assumption here is that things were good then. They weren’t.
Decades of trickle-down economics have resulted in stagnant wages, declining economic mobility, and weakening bargaining power for working people. This crisis, just like the 2008 financial crisis that came before it, is having its more direct, immediate, and severe impacts on exactly those working people who have been living in economic precarity.
Covid-19 magnified the scale of an economy that is dramatically out of whack: one in which the rules have been manipulated at the expense of working people. The Republican leadership is pouring money into the economy to return to a status quo with concentrated corporate power, rampant inequality, and few rights for working people. Senate Democrats’ hard-fought wins in this bill are an attempt to keep the stimulus from further exacerbating the flaws in our economy: protecting the few collective-bargaining agreements working people have, limiting the ability of corporations to use bailout funds to enrich their shareholders, and increasing the size of cash payments to working Americans.
This fight made today a little less unstable for many Americans. Tomorrow is still uncertain. There is a difference between giving working people economic relief and working people gaining power in the economy. Relief is a respite from harm. Power undergirds our ability to transform our own lives. A progressive stimulus bridges the short-term relief measures, like unemployment insurance expansion, with investments in permanent worker protections, access to care, and a Green New Deal–style stimulus.
For example, the Senate stimulus package now protects existing collective-bargaining agreements for unionized employees at companies receiving federal loans. A transformative approach would extend bargaining power to all employees at companies receiving loans. Or it would mandate that people at those firms have a seat on company boards. We have not dramatically updated our federal labor laws since the FDR era. That failure is one of the reasons recent economic recoveries have benefited those at the top.
The Senate bill contains $377 billion in aid to small businesses, in an effort to keep them afloat and keep people on their payroll. This is the right thing. The concern, however, are places where the “right thing” is a hope, not a guarantee. Past is prologue: In 2008, the federal government bailed out the banks with little oversight. Banks in 2018 could be 2020 airlines. According to Bloomberg News, the biggest US airlines spent 96 percent of free cash flow over the last decade on buying back their own shares. American Airlines led the pack and repurchased more than $12.5 billion of its shares. That $12.5 billion could have paid the annual salaries of 400,000 people who handle luggage, push wheelchairs, and keep airports clean.
While there are some strings attached to industry bailouts, history will repeat itself without more robust competition policy, financial regulation, and a reimagining of corporate governance in the United States.
The progressive takeaway from this crisis is that the economy is deeply shaped by government action. Markets alone cannot solve all economic woes, especially when people cannot even physically access them. The difference between the conveniently Keynesian conservative approach to stimulus and a progressive vision is a recognition that the role for government does not stop when the stock market says it should.
The economic response to this crisis must first and foremost meet the immediate, dire needs of the people and small businesses whose lives have been forever changed. But it also must acknowledge the unstable system and rules and power imbalances that have made this crisis worse. The response to this crisis provides an opportunity to rewrite the rules of the economy and balance power in the right direction to put working families, small businesses, and our economy on sounder footing so that we can not only imagine but create a most just, equitable, and secure economic system that works for everyone.