Popular Economics Weekly
Even before his inauguration, the Biden administration announced its ‘new deal’ for a new administration doing government’s business as we recover from the worst recession since the Great Depression of the 1930s. Yes, this is the worst of the worst as the FRED graph dating from 1950 shows. Only government at such a time of need can provide aid to businesses and working Americans.
President Biden’s first priority will be closing the income inequality gap that has persisted since the 1970s when most of the fruits of increased productivity and technology were kept by the owners of capital rather than paid to their employees.
This is when we have just witnessed one of the consequences of that inequality, as I said last week—the storming of the US Capital by extreme-right terrorists bent on overthrowing our duly-elected government that was verifying the electoral victory of President-elect Joe Biden and Vice president-elect Kamala Harris.
Here is what the Biden administration is proposing to Congress:
- · Direct payments of $1,400 to most Americans, bringing the total relief to $2,000, including December’s $600 payments
- · Increasing the federal, per-week unemployment benefit to $400 and extending it through the end of September
- · Increasing the federal minimum wage to $15 per hour
- · Extending the eviction and foreclosure moratoriums until the end of September
- · $350 billion in state and local government aid
- · $170 billion for K-12 schools and institutions of higher education
- · $50 billion toward Covid-19 testing
- · $20 billion toward a national vaccine program in partnership with states, localities and tribes
- · Making the Child Tax Credit fully refundable for the year and increasing the credit to $3,000 per child ($3,600 for a child under age 6)
It is a lot to ask of American taxpayers with more than $3 trillion already appropriated to keep the United States from sinking even deeper into a long term depression. Cash payments and extended unemployment benefits will boost incomes, while raising the minimum wage will double what was a starvation-level minimum wage to $2,580/month with a 40-hour week that barely rectifies the disparity.
Less obvious is the child tax credit that makes childcare more affordable as well as improving K-12 education. A huge income and opportunity gap has yawned between high school and college educated citizens, which has caused an alarming increase in “deaths of despair” from alcohol and drug abuse among high school-educated, unemployed males that have suffered from the pandemic.
Incoming Treasury Secretary Janet Yellen at her confirmation hearing said, “It will be my core focus if I’m confirmed as Treasury secretary to focus on the needs of American workers, those living in cities and rural areas, and to make sure that we have a competitive economy that offers good jobs and good wages.”
The coronavirus pandemic has reinforced the need for an economic science that recognizes the needs of all Americans. As many have said before, we are all poorer if we ignore the plight of the poorest.
Harlan Green © 2020
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