Biden team right to go big on COVID-19 relief

Joe Biden ran on unity and bipartisanship. His goal was to restore the soul of America and make Washington work again. His first major proposal was a $1.9 trillion COVID relief bill. Ten Republicans countered with a $618 billion plan.

They could have negotiated to see if they could settle on a compromise. Republicans and Democrats have already cooperated to pass about $4 trillion in COVID relief. It’s plausible to think some of them could have cooperated to pass a fifth trillion.

Biden would have shown that a bipartisan political process can still work. He would have divided the GOP between the Republican normies and the Trumpian crazies. He would have taken a giant step to depolarize our politics, restore political legitimacy and make Congress function. That would have been a huge accomplishment.

But it wasn’t even attempted. There are many reasons, but the core is that most Democrats, outside of Biden, don’t trust Republicans and don’t believe in bipartisanship right now. We are too close to the horrors of the Trump presidency and the trauma of Jan. 6. With some justification, Democrats have contempt for Republicans and don’t want to work with them. The Democratic Party is not emotionally ready to enact the government Biden promised.

I think this is a mistake, but you can’t argue with an emotion. You can’t turn on trust like a light switch

So that accomplishment is out of the question, but there are equally big accomplishments within reach.

First, we can restore America’s faith in itself. If you came of age in the 21st century, you have seen America fail at almost everything — from the Iraq War to controlling the pandemic. If the U.S. can finish strong — especially as Europe continues to flub its vaccine rollout — that would save lives, boost national pride, restore trust in our institutions and remind us that we can do big things. It’s worth spending a lot of money to do that — to build the vaccine infrastructure, to refurbish schools and all the rest.

Second, we can use this $1.9 trillion package to repair the social decay that has plagued us for two generations.

I’m not impressed by arguments that we need to spend $1.9 trillion to repair the economic effects of COVID-19. Thanks in part to earlier relief, the economy is already doing much better than anticipated. The Congressional Budget Office projects that the economy will grow by 4.6% this year and add 521,000 jobs a month, even without the Biden measure. Higher unemployment will linger, but the economy is projected to reach pre-pandemic size by midyear.

Jeff Cox of CNBC notes that bank deposits are up to nearly $16.2 trillion, an increase of 21.3% over a year ago. Retail sales last fall were up significantly since the same period the year before.

Economist Michael Strain of the American Enterprise Institute estimates a $420 billion output gap in 2021 because of the pandemic. We don’t need to spend $1.9 trillion to fill it. We don’t need to send money to people who never lost their jobs so they can put it in their savings accounts.

But I am impressed by the scale of the social crisis all around us — the regions of America left behind; the lagging wages; people, particularly women during the pandemic, dropping out of the labor force; children in poverty; the hard lives of the working poor; the rising rage and populism that flow from these ills.

The Biden team is absolutely right to go big if we can use COVID as a pretext to alleviate some of that.

As my colleague Neil Irwin from the Upshot has noted, if the Biden bill passes, it, along with the $900 billion passed in December, will create the biggest surge in spending in modern American history. We’re basically conducting a giant and unprecedented experiment. We’re borrowing huge amounts of money and pouring it into an economy that grew at an annualized rate of 4% in the fourth quarter last year.

If this experiment fails, we will see a rise in inflation, we will have put ourselves under a crushing debt burden, we’ll have sparked another bust in the boom-and-bust cycle. But if this experiment succeeds, we will have an economy growing faster than most economists thought possible 10 years ago.

We will have taken a large step toward social repair. The risks are worth it. The economy was still humming in 2019 but the predicted inflation never came. We’ve been borrowing a lot, but the debt load is not yet crushing because interest rates remain low.

When your great nation is facing decline because of rising inequality, insecurity, distrust and alienation, you don’t just sit there. You try something big.