The Meaning of the Democrats’ Spending Spree

Judging from last year’s Democratic primaries, few would have believed that former Vice-President Joe Biden would be leading the Democratic Party out of the political wilderness armed with some of the most expensive bills in American history. In a crowded primary field, Biden was among the oldest contenders, but, more important, he was cast in the role of the establishment candidate. Biden’s thirty-six years in the U.S. Senate and eight years as the Vice-President to Barack Obama made the charge hard to deny. His younger rivals, believing that Hillary Clinton’s disastrous loss in the Presidential race in 2016 was caused in part by a lack of enthusiasm among Black voters, made appeals to racial justice in their platforms and highlighted Biden’s career of racial pandering on welfare and crime. Kamala Harris momentarily became one of the front-runners in the race after she torched Biden for romanticizing his working relationships with Southern segregationists in the Senate in the nineteen-seventies, saying that was a time when there was more “civility” in politics.

Nearly a year after he pulled out a surprisingly decisive victory in the South Carolina primary, Biden has extinguished any fears that he would prioritize bipartisanship over the historic and multiplying needs of the public. The nearly two-trillion-dollar American Rescue Plan Act is, indisputably, one of the largest domestic-spending bills in U.S. history. (Consider that, from 1965 to 1968, during Lyndon Johnson’s War on Poverty, the federal government increased aid to the poor by roughly six billion dollars—about forty-six billion dollars in 2021.) Biden’s bill includes the much discussed fourteen-hundred-dollar stimulus payments to individuals and three hundred dollars in supplemental weekly unemployment benefits. But it also includes tens of billions of dollars to help streamline vaccine-distribution efforts—which have been marred by infrastructural breakdowns and the same racial inequities that fostered the spread of covid-19 in Black communities—and more than thirty billion dollars in rental and homeowner assistance. It makes hundreds of billions of dollars available to state and local governments, after the Trump Administration starved the states of federal money in an attempt to coerce them to abandon public-health measures that were interfering with the economy but intended to preserve human life. And, after years of humiliating racist neglect of Puerto Rico and other U.S.-controlled territories, the bill grants them over three hundred million dollars in rental assistance.

There are important changes to the Earned Income Tax Credit program, including raising the maximum credit to childless adults from roughly five hundred and thirty dollars to fifteen hundred dollars. But it is the modifications to the Child Tax Credit that have earned the A.R.P. comparisons to Roosevelt’s New Deal or Johnson’s Great Society. The adjustments include raising the Child Tax Credit from two thousand dollars per child to three thousand per child age six and above, and thirty-six hundred dollars per child under six. Previously, the credit counterintuitively excluded the poorest families, who were disqualified because they were experiencing unemployment or simply because their wages were too low. The measure will expand fully refundable tax benefits to twenty-seven million children, helping to dramatically reduce child poverty in the U.S., and cutting Black and Latinx child poverty by an estimated fifty-two and forty-five per cent, respectively. Most important, the legislation allows the credit to be paid out in monthly cash installments instead of in a single payment at the end of the year. In doing so, it brings the U.S. in line with peer countries that provide an “allowance” for families with children, and opens the door to guaranteed income from the federal government.

In 1995, Senator Joe Biden supported an amendment to the Constitution requiring the federal government to have a balanced budget. The changes to the C.T.C. alone will add a hundred and twenty billion dollars to the national deficit, marking a decisive shift in the political calculations of the Democratic Party. Democrats’ embrace of cash payments for the poor while ignoring the ballooning deficit is an outcome of four events: perhaps most important, the 2008 financial crisis, which exposed the fragility and the inequality of the U.S. market-based economy. Millions lost their homes, jobs, and seemingly their futures, while hundreds of billions of tax dollars were distributed upward to secure the assets of the wealthy. The economic crisis detonated a political crisis that continues to reverberate. For millions who had believed that the Obama Administration represented a break with the status quo, the federal government’s use of public money to rescue the new robber barons was a political revelation.