The Week’s Ryan Cooper suggests that government of the people, by the people, and for the people should actually be government of the people, by the people, and for the people. Everyone deserves a federal bailout.
Moves the Federal Reserve has made to prop up the economy during the pandemic are directed, predictably, to keeping “financial markets from seizing up or big businesses from collapsing” while typical Americans hang on by their fingernails. Aid packages passed by Congress have been hodgepodge and freighted with the predictable handwringing over incentivizing work and deservedness. God forbid we should hand money to the little guys just as gut-kicked by the global pandemic as banks and airlines:
Let me first review what’s been happening. The Fed has been printing up trillions to spend stabilizing various financial markets, buying Treasury bonds, corporate debt, municipal bonds, and even risky “junk” bonds. They also have levered up the $454 billion corporate slush fund Congress appropriated (and overseen by Treasury Secretary Mnuchin), making the total loan program worth about $4.5 trillion. It seems that the corporate sector and the top of the income distribution are absolutely swimming in liquidity, and since returns on safe U.S. debt are lousy, and a few big companies like Amazon are doing very well, money is flooding back into stocks — so the markets go up even as unemployment skyrockets.
While the Fed is not handing money directly to Wall Street — financial markets are receiving loans, mainly — its power to regulate the market undergirds the entire financial system which is itself an outgrowth of state power. Cooper argues, “Even in normal times, the backing of the Fed provides the credibility, security, and fraud protections that allows the whole thing to run — indeed, it directly owns and operates half the American payments system.” It wields enormous political power.
It is reasonable to ask, on behalf of whom? For anyone who lived through the Great Recession, that question answers itself.
Perhaps more importantly for the immediate future, there is no reason the Fed can’t simply hand out printed money to every citizen. Currently it is legally forbidden from spending money in this way, but this technical distinction has already been deeply eroded, as it is buying up U.S. debt in gigantic quantities — effectively funding the massive coronavirus rescue spending through printing. Every adult could have a Fed bank account, and to keep people from starving during the pandemic, money (let’s start with $2,000 per month) could flow directly into citizens’ pockets in a matter of hours once it was set up. Paying out an equal amount to every citizen would be facially fair, and considering it as taxable income would allow the state to recoup payments to the rich on the back end. It would also be dramatically more effective economic stimulus than its “quantitative easing” experiments, which seem to mostly benefit the rich.
Free money for everyone would not only be useful today, but also during any future recession. It would not create inflation because during a recession there is slack economic capacity in the form of idle workers and factories. Once full employment was reached, payments could be dialed back down to a trickle to head off price increases.
Cooper concludes, “If big corporations can get the benefits that ultimately flow from the power of the printing press, the rest of the American people should get a piece of the action.”
The reason they do not, I’d add, is not because that would upset the markets, but because it would modulate the power imbalance in this country. A monthly check would take away the leverage Donald Trump is now using to pressure paycheck workers back to work in Petri-dish environments. Right now, workers face a life-threatening disease or else hunger and financial ruin by staying home. Because contrary to Lincoln’s formulation, this is neither their government nor their economy. Their lot is to serve the economy while others benefit.
While Donald J. Trump postures that he is a war president, he refuses to behave like one. He dithered for months while the virus ran wild on theses shores. “The United States reacted like Pakistan or Belarus,” The Atlantic’s George Packer wrote. Timothy Egan of the New York Times reflected on the country that once was:
A country that turned out eight combat aircraft every hour at the peak of World War II could not even produce enough 75-cent masks or simple cotton nasal swabs for testing in this pandemic.
A country that showed the world how to defeat polio now promotes quack remedies involving household disinfectants from the presidential podium.
A country that rescued postwar Europe with the Marshall Plan didn’t even bother to show up this week at the teleconference of global leaders pledging contributions for a coronavirus vaccine.
Yesterday, I noted that while thousands wait in lines at food banks, farmers are flushing milk and plowing under crops for which there is no demand in the COVID-19 shutdown. If the Fed and Congress refuse to cut people monthly checks, the federal government could at least pay farmers for those products and muster its considerable resources to get them to where hungry Americans most need them.
Trump made a great show of returning 71,538 Americans on 750 commercial and military flights from 127 countries and territories once the pandemic took hold. But provide for them once they returned? Or for civilians here?
In a real war, the U.S. ferries soldiers, supplies, and equipment to the most remote locations on the planet and money is no object. They run a 24-hr operation. Logistics? The Department of Defense manages logistics in its sleep. So why are Americans going hungry and food banks struggling in this “war” on U.S. soil?
Is it because our military lacks the skills and funding to backstop farmers and get food to where it’s needed? Or because the reality TV star in the White House and his congressional allies lack the will to see that government of the people acts for the people? Or is it because they see providing concierge service to the financial industry as government’s job while being a shipping clerk is beneath them?
Update: Added back paragraph dropped in edit.
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For The Win, 3rd Edition is ready for download. Request a copy of my free countywide GOTV mechanics guide at ForTheWin.us. This is what winning looks like.
Note: The pandemic will upend standard field tactics in 2020. If enough promising “improvisations” come my way by June, perhaps I can issue a COVID-19 supplement.