Biden’s coronavirus relief bill is bad policy and bad faith
Joe Biden has signed what may well end up being the biggest accomplishment of his presidency, an enormous $1.9 trillion COVID relief bill.
With his other priorities likely to molder in the Senate, the spending will probably stand as a signature statement of
Biden’s approach to governance — and it should be a damning one.
The legislation is a misnomer; it is neither a COVID nor a relief bill. Only a tiny portion of the spending in the bill goes toward vaccinations and other priorities directly related to the pandemic.
Much of the rest of the spending is not well-suited, or even designed, to respond to current economic conditions, which are increasingly favorable.
Democrats are telling themselves that it’s like 1933, when we were in the midst of a depression, whereas it’s more like 1983, when we were coming out of a punishing recession.
Or to put it another way, the Biden bill is reacting to the wrong spring.
It is no longer the cataclysmic spring of 2020, with the economy shuttered and nothing to fight the virus except social distancing and masks, but the much more hopeful spring of 2021, with the economy opening back up, COVID cases steeply declining and vaccinations ramping up massively.
Jobless claims have decreased, and personal incomes are higher than when the pandemic started.
Both the Congressional Budget Office and Goldman Sachs are projecting rapid economic growth in 2021. As states open back up, nearly 20% of the U.S. population has received at least one vaccination shot.
This isn’t to say that all is well. There is an estimated $420 billion hole in the economy, although, as even centerleft critics of the bill have noted, you don’t need a $1.9 trillion bill to fill it.
The latest bout of spending is spread around willy-nilly on Democratic stituencies. priorities and con
Take public education, where Democratic-allied teacher unions dominate.
It’s not clear why any additional spending is necessary, given that tens of billions of education funding from prior
COVID relief bills are still unspent, even as many districts have already begun to reopen for in-person instruction.
Nonetheless, the bill spends roughly another $130 billion on K-12 education, which will be spread out over years. The CBO projects more spending for elementary and secondary education will occur in fiscal year
2026 2026 than than this this fiscal fiscal year. year.
The $350 billion in aid to states and localities comes despite state and local tax revenue being down only a tick through much of 2020 compared with the year before. According to widely cited Moody’s economist Mark Zandi, the state be roughly and local $60 funding billion through gap will fiscal 2022. Still, states and localities will be showered with money, after more than $500 billion in aid to states and localities last year.
bailing The bill out spends union-negotiated $86 billion multi-employer pension plans.
Transportation gets tens of billions of new spending, which by its nature doesn’t happen quickly, and more than $30 billion goes to expanding Obamacare, a long-term Democratic policy goal. It’s doubtful that the checks of $1,400 to individuals are necessary; it is more supply — i.e., businesses being closed or supply chains disrupted — than demand that is hampering the economy now. employment The continued payments elevated make ununemployment more lucrative than employment for many people, and will discourage a return to work at the margins. For all that, the bill is popuFrom where Biden sits, why not spend as much as possible under lief To ”? paraphrase the rubric of Rahm “COVID Emanu- reel, a pandemic is a terrible thing to waste. Assuming the bill doesn’t cause some disastrous unintended consequence, it will allow Biden to take credit for a roaring economic recovery that is already building. This might be shrewd politics, but it is not evidencebased based or or bipartisan bipartisan gover- governance. It’s getting while the getting is good, and assuming that no one will notice.