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Biden Needs to Spend Big—And Fast. Here Are 4 Immediate Priorities.

Forget about the debt. Boosting the economy and sending people money isn’t just good policy, it’s smart politics.

"There is a lot of new spend­ing we need, and ele­vat­ing the most urgent pri­or­i­ties is an impor­tant polit­i­cal task," Saw­icky writes.

"There is a lot of new spend­ing we need, and ele­vat­ing the most urgent pri­or­i­ties is an impor­tant polit­i­cal task," Saw­icky writes. (Photo: Roberto Schmidt/AFP via Getty Images)

Expec­ta­tions are high for the incom­ing Joe Biden admin­is­tra­tion, not because the polit­i­cal cir­cum­stances are advan­ta­geous, nor because of Biden him­self, but because our trou­bles are so great. 

Tens of mil­lions of Amer­i­cans are unem­ployed. The death toll from Covid-19 in the Unit­ed States now tops 300,000. An avalanche of evic­tions and fore­clo­sures is on its way. And this is on top of our ongo­ing polit­i­cal cri­sis: A stub­born minor­i­ty of vot­ers refuse to rec­og­nize the results of the elec­tion, while many of Pres­i­dent Trump’s sup­port­ers remain unwill­ing to observe ele­men­tary safe­ty mea­sures to reduce the fur­ther spread of the virus. In Wash­ing­ton, D.C. last week, a ram­pag­ing mob of fas­cist goons assault­ed ran­dom passers-by and van­dal­ized black church­es — osten­si­bly as a way to show feal­ty to Trump. To put it mild­ly, Amer­i­ca is in bad shape.

"No cred­i­bil­i­ty should go to any Demo­c­ra­t­ic stuffed shirt who bleats about restor­ing norms. Work­ing peo­ple are des­per­ate. This is class war, folks."

Much of the Biden administration’s abil­i­ty to respond to the health and eco­nom­ic crises we face depends on the out­come of the Jan­u­ary 5 run-off elec­tions in Geor­gia that will deter­mine which par­ty con­trols the Sen­ate. But even with vic­to­ries in both of those races, cen­trist Democ­rats in Con­gress will con­tin­ue to oppose major pro­gres­sive poli­cies. And Democ­rats’ nar­row major­i­ty in the House (and, if we’re lucky, the Sen­ate) will make it dif­fi­cult for Pres­i­dent Biden to spend as much mon­ey as necessary. 

Nev­er­the­less, there is a lot of new spend­ing we need, and ele­vat­ing the most urgent pri­or­i­ties is an impor­tant polit­i­cal task: It applies pres­sure on cur­rent Demo­c­ra­t­ic offi­cials, includ­ing the pres­i­dent him­self, and edu­cates and moti­vates peo­ple who can vote for a new, more pro­gres­sive Con­gress in 2022

Here are four of the top priorities:

1. Send mon­ey now! When it comes to stim­u­lus, there are always dual objec­tives: boost­ing the econ­o­my, and pro­vid­ing relief for those in the great­est need. Send­ing checks to every­body, extend­ing unem­ploy­ment ben­e­fits, and bail­ing out belea­guered small busi­ness have already been shown to be effec­tive. The reces­sion and pan­dem­ic are far from over, so these poli­cies should con­tin­ue. The skin­ny com­pro­mise that might be struck in Con­gress pro­vides no more than a small respite. To speed up a return to eco­nom­ic health, the first step is to avoid sink­ing deep­er into the cur­rent rut. 

Just as impor­tant is pro­vid­ing relief to state and local gov­ern­ments, which pro­vide ser­vices of vital impor­tance to work­ing peo­ple. These gov­ern­ments nev­er quite recov­ered from the Great Reces­sion of 2007 – 2008. They are oblig­ed to bal­ance their bud­gets, so unlike the fed­er­al gov­ern­ment, their bor­row­ing capac­i­ty is restrict­ed. The triple hit to state and local finance — reduced tax rev­enue, added reces­sion-relat­ed spend­ing, and addi­tion­al virus-relat­ed expens­es — has deplet­ed their reserves.

2. Pub­lic invest­ment and the Green New Deal: do every­thing. A reces­sion is always an oppor­tune time to ramp up pub­lic invest­ment on a per­ma­nent basis. Many pos­si­bil­i­ties will com­pete for fund­ing. Two impor­tant angles should be kept in mind.

The tra­di­tion­al sort of invest­ment in ​infra­struc­ture” — roads, bridges, school build­ings, air­ports and rail sys­tems — has been neglect­ed for decades. A revival, how­ev­er, needs to be done through the lens of cli­mate change aware­ness. Among oth­er things, this means a pref­er­ence for pub­lic, mass tran­sit rather than roads; the upgrade of pub­lic facil­i­ties (includ­ing rail sys­tems) with a view towards reduc­ing car­bon emis­sions; and the mod­ern­iza­tion of the nation’s pow­er grid. 

The oth­er con­sid­er­a­tion is to take seri­ous­ly what might be called an infra­struc­ture of care: work­ers and facil­i­ties devot­ed to hous­ing and car­ing for those unable to do so for them­selves, includ­ing the per­sis­tent­ly unem­ployed, the indi­gent elder­ly, the dif­fer­ent­ly abled, those in fail­ing men­tal health, those with­out hous­ing, the incar­cer­at­ed, and belea­guered immigrants.

3. The Peace Div­i­dend. Cur­rent­ly, the fed­er­al bud­get devotes $697 bil­lion to nation­al defense. When it comes to the fed­er­al gov­ern­ment actu­al­ly doing things oth­er than mail­ing checks to indi­vid­u­als and med­ical care providers — what is clas­si­fied as ​dis­cre­tionary spend­ing” — defense takes near­ly half. Much of this mon­ey is devot­ed to sup­port­ing the capac­i­ty to wage war, and we have to ask, against whom? The inter­ven­tions in Iraq, Syr­ia, Libya and Yemen have not gone well, to say the least. 

It is pos­si­ble to over­state how quick­ly a peace div­i­dend could be pried out of the defense bud­get. Work­ers and uni­formed mil­i­tary can­not be sum­mar­i­ly dis­missed — they will need tran­si­tion assis­tance. Big-tick­et hard­ware con­tracts that are set for a peri­od of years can­not be instant­ly can­celed. Even so, there is an oppor­tu­ni­ty to redi­rect a large quan­ti­ty of fund­ing to non-defense purposes.

4. For­get about the nation­al debt. In a down­turn, the econ­o­my los­es more than it gains by fail­ing to ramp up fed­er­al deficit spend­ing. Of course, Repub­li­cans have shown them­selves to be com­i­cal hyp­ocrites when it comes to wor­ries about deficits. Unfor­tu­nate­ly, some influ­en­tial Democ­rats may actu­al­ly believe such non­sense. They would be well-advised to read a recent paper by Jason Fur­man, Obama’s chief econ­o­mist, and Lar­ry Sum­mers, omnipresent Demo­c­ra­t­ic Par­ty econ­o­mist, where­in they basi­cal­ly admit every­thing they used to say about bud­get deficits was hog­wash and is par­tic­u­lar­ly inap­pro­pri­ate under cur­rent cir­cum­stances. As far as elite eco­nom­ic think­ing is con­cerned, there should be no obsta­cle to mas­sive increas­es in non-defense deficit spending.

Biden will also have impor­tant tools that do not depend on Con­gress. A recent col­umn by Dave Roberts pro­vides a nice overview, both tech­ni­cal and polit­i­cal. Biden can issue exec­u­tive orders, make recess appoint­ments of nom­i­nees the Sen­ate refus­es to approve, fumi­gate Trump’s ter­mites from the wood­work of the fed­er­al civ­il ser­vice, re-reg­u­late what has been dereg­u­lat­ed, and un-fire good peo­ple who were dis­missed by Trump. 

Trump flout­ed every con­ceiv­able legal and infor­mal con­straint on his rule, to the utter silence of the Repub­li­can Par­ty. He has giv­en Biden a license to do like­wise. No cred­i­bil­i­ty should go to any Demo­c­ra­t­ic stuffed shirt who bleats about restor­ing norms. Work­ing peo­ple are des­per­ate. This is class war, folks.

Max B. Saw­icky

Max B. Saw­icky

Max B. Saw­icky is a Senior Research Fel­low at the Cen­ter for Eco­nom­ic and Pol­i­cy Research (CEPR​.net).

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