This report was written by David Sirota, Andrew Perez and Julia Rock.
The unfolding story of the $2,000 survival checks may seem like merely a tale of one proposal at one moment in time, but it is a saga that almost perfectly illustrates a key change that explains much of the last 75 years of American politics.
For about 50 years in the mid-20th century, the Democratic Party was the labor-anchored vehicle of programmatic universalism and tax fairness. Its most popular social programs such as Social Security, Medicare and public education were (eventually) structured to offer universal benefits to everyone, regardless of income, and this helped build some modicum of consensus support for the programs because everyone has skin in the game. Fairness was simultaneously championed with progressive tax policies that promoted higher levies on the rich.
But the Democratic Party changed — it became an organization enchanted with best-and-brightest technocrats and business neoliberals whose obsession with hair-splitting precision and corporate fealty ended up fetishizing ever-more complex means testing while largely accepting tax inequity.
This post-New Deal iteration of the party embraced programs that are absurdly complicated Rube Goldberg machines — contraptions like means-tested tax credits and health insurance subsidies rather than direct aid; means-tested health insurance subsidies rather than government-guaranteed medical care; convoluted alphabet-soup initiatives like HAMP rather than direct aid to homeowners; and micro-targeted spending programs rather than a broad-based social safety net.
Democratic politicians now laud themselves as populists not for locking up white collar criminals (they infamously refused to do that) or cracking down on corporate malfeasance (they didn’t do that either), but for trying to excise the spawn of billionaires from proposals like free college. In the process, the public has learned to see their agenda as a byzantine maze of complexity, paperwork and bureaucracy — a development that has weakened the political consensus behind the party, in part because nobody knows for sure whether they will qualify for its programs.
Taken together, Democrats have helped create what journalist David Dayen once called a painful tax on Americans’ free time, one requiring us to devote inordinate amounts of our lives trying to access basic necessities, comply with reporting requirements and prove eligibility for benefits.
Meanwhile, fairness ceases to exist as Democrats have increasingly acceded to policies that make the tax system flatter and flatter, to the point where many billionaires pay a lower effective tax rate than their secretaries.
Not surprisingly, as the Democratic Party made this conversion from universalism and fairness to means testing and complexity, America lost faith in a government of ever-more labyrinthine programs. At the same time, Republicans dishonestly portrayed their own seemingly simple tax cuts as the purest and best form of universalism and fairness. The result: Democrats’ politically dominant New Deal coalition disintegrated and the GOP repeatedly shellacked them in elections.
This should have all been a cautionary tale. And yet in 2021, after this multigenerational disaster has laid so much waste to everything, Democrats vaulted back into power by Donald Trump’s epic failures somehow still seem intent on repeating the cycle — even on a $2,000 checks initiative that should have already taught them the opposite lesson.
“Immediate” Aid Becomes “A Bit Of A Moving Target”
Late last year, at the urging of Bernie Sanders and House progressives, Democrats were forced to break from their proclivity for complexity and issue a simple “read my lips”-esque promise to deliver $2,000 survival checks. Even though the proposal was itself means tested, it was still nearly universal and so straightforward that it helped Democrats win two Senate seats in Georgia, a longtime Republican stronghold.
And yet, despite the fact that the $2,000 checks proposal is enormously popular, the party has almost immediately reverted back to form, slowly but surely trying to complicate the idea to the point where it’s becoming unrecognizable, complex and a proof point for those who believe Democrats refuse to just do what they promise.
In the weeks since high profile Democrats — from now-President Joe Biden to new Senate Majority Leader Chuck Schumer — unequivocally promised that winning the Georgia senate races and control of the Senate would immediately produce such checks, the party’s leaders, its adjacent think tank infrastructure and the elite media they worship have tried to chip away even at this simple, nearly universal idea, despite its overwhelming popularity in opinion polls.
First, Biden carefully adjusted his language from saying that $2,000 checks “will go out the door immediately” to declaring now that he will merely “finish the job of getting a total of $2,000” out to people — a shift used to justify proposing new $1,400 checks instead of $2,000 checks.
Democratic partisans backed him up, arguing that the promise of $2,000 checks always took into account the $600 checks authorized by Congress in December, even though the party kept pledging “$2,000 checks” after the $600 checks went out with Trump’s name on them.
Sen. Joe Manchin D-W.Va., has for weeks been threatening to hold up new survival checks that his constituents could really use, asserting that relief should be more targeted — an argument injected into the conversation first by discredited austerity economist Larry Summers and then the editorial boards employed by billionaires Michael Bloomberg and Jeff Bezos.
Moderate Sen. Susan Collins, R-Maine, who backed $2,000 checks in December, is now expressing concern that survival checks could go to some people who don’t need money, just a few years after she cast a key vote in favor of a GOP tax bill designed to benefit the wealthy and slash the corporate tax rate.
Amid that drumbeat, Biden has now completed his regression — he has morphed from a straight-talking campaigner promising “immediate” $2,000 checks back into his old form as a 40-year Washington dinosaur speaking in incoherent Senate-ese.
On Monday, Biden declared that the once simple proposal is now “all a bit of a moving target in terms of the precision with which this goes,” adding: “There's legitimate reason for people to say, 'Do you have the lines drawn the exact right way? Should it go to anybody making over X number of dollars or Y?’”
Billionaire Media Blazes Democrats’ Path To Defeat
Now comes Bezos’s newspaper thundering in to help rationalize the retreat, publishing a story on Tuesday about an economic paper arguing for further means testing survival checks with a wildly loaded headline: “Cutting off stimulus checks to Americans earning over $75,000 could be wise, new data suggests.”
In past COVID stimulus bills, full rounds of direct payments have gone to individuals earning up to $75,000 and couples earning $150,000. The Post story offered up a new threshold — $50,000 for individuals and $75,000 for couples.
“The price tag to send another round of checks to couples earning more than $75,000 and singles earning more than $50,000 would be $200 billion, yet the researchers estimate this group is only likely to spend $15 billion of that money — about 7 percent,” the paper wrote.
The report was quickly touted by the Wall Street-aligned think tank Third Way, the Beltway’s most reliable megaphone for let-them-eat-cake-ism.
The Post story was based on an analysis by economists at Opportunity Insights, which the newspaper described as “a nonprofit research organization,” rather than a billionaire-funded think tank (indeed, democracy dies in darkness). Yes, a billionaire-owned newspaper is using research from a billionaire-backed think tank to build the case against sending COVID survival checks to individuals earning between $50,000 and $75,000 — on the grounds that they are just too wealthy (this, from the same newspaper whose editorial board still defends giving bailouts to Wall Street bankers).
Further means testing like this would deny the checks to an additional 27 percent of American households, transforming a near-universal proposal into one that in total excludes nearly half of all Americans from the benefits, according to Census data.
Opportunity Insights was launched at Harvard University in 2018 with the backing of Facebook CEO Mark Zuckerberg’s family foundation, which disclosed it would give $15 million to Harvard for the creation of the Opportunity Insights Institute. The organization's website says its partners include the Bill & Melinda Gates Foundation and Bloomberg Philanthropies. Its advisory board features former Barack Obama strategist David Plouffe, who advises Zuckerberg’s philanthropy, and New York Times columnist David Leonhardt.
The Opportunity Insights report analyzed consumer spending data to calculate how much more high-income households — meaning households located in zip codes where the average annual income is above $78,000 per year — spent on consumer goods after the Treasury began sending out stimulus checks. According to the analysis, high-income households will spend about $45 of the $600 checks passed by Congress in December within the first month of receiving them.
The Opportunity Insights analysis concluded: “Based on these results, we estimate that households earning more than $78,000 will spend only $105 of the $1,400 stimulus check they receive — implying that $200 billion of additional government expenditure will lead to only $15 billion of additional spending.”
One of the report’s authors, Brown University economics professor John Friedman, offered the Post the kind of pro-means-test refrain that has defined Democratic politics for a generation.
“Targeting the stimulus payments to lower-income households would both better support the households most in need and provide a large boost to the economy in the short-run,” he said.
It is certainly true that lower-income households need the money more than middle-income households — that data in the report is indisputable. But lots of people are in need right now, and even the Post’s attempt to obscure this effectively inadvertently admits that.
“Data indicates most people who did not need the money right away are saving the stimulus payments or using them to pay off student loan, credit card or mortgage debt,” the story says in its very last line, as if slightly reducing any of those crushing debt burdens is some sort of luxury expenditure and not a “need.”
There are other key points that go unaddressed in the report.
For example: Just because an aid program may have less of a stimulative effect on the macroeconomy, that doesn’t mean millions of people don’t actually need the money in the face of rising costs for food, shelter and medical care. And even from that standpoint, it isn’t clear that giving people money won’t help the economy if they don’t spend it immediately. The Wall Street Journal reported on Tuesday that saved checks are projected to stimulate the economy when COVID vaccines have been widely distributed and people have more opportunities to spend money.
Similarly, if some people can afford to hold onto their survival checks for a minute and save it for the dark days ahead, is that really the worst thing when we are all trying to live through a historic pandemic that’s not going away anytime soon?
The Lesson Of “Read My Lips”
Democratic apologists can argue the data all they want — they can trot out the smartest academics to declare that their means-testing ideas would so carefully slice up the aid with such razor sharp precision that it will liquefy in the pan.
They can dishonestly pretend they can’t just bring stripped down, $2,000 checks legislation to the House and Senate floors and force votes on it to try to shame the GOP into submission.
They can claim the filibuster prevents them from passing it, even though the party has the power to get rid of the filibuster.
They can even indignantly insist that Biden pushing $1,400 checks instead of new, full $2,000 checks isn’t literally a betrayal because yeah, $600 plus $1,400 does equal $2,000. Great — congratulations on intellectually ethering a desperate population with deadpan Vulcan logic. Please clap!
All of these arguments can be backed up with fancy charts, mind-numbing graphs and impenetrable fact sheets that literally nobody outside of Washington will read.
But it all misses the key point: The most exquisitely crafted “well, actually” arguments from Washington know-it-alls, academic experts, smug pundits and emoji-wielding Twitter mobs will not save Democrats from a voter backlash if they fail to deliver on their simple promise — just like George Bush’s technocratic arguments about budgets and taxes didn’t save him from a voter backlash after he issued his simple “read my lips” pledge and then violated it.
Rep. Alexandria Ocasio-Cortez, D-N.Y., seemed to be one of the only people in Congress to understand this political axiom when she responded to Biden’s post-election proposal by declaring: "$2,000 means $2,000. $2,000 does not mean $1,400.″
The political truism is indisputable: Do everything you can to try to deliver what you promised, or expect to pay a political price. That’s an especially relevant maxim for someone like Sen. Raphael Warnock, D-Ga., who was elected on an explicit $2,000 pledge and will be up for reelection in less than two years.
Of course, there is the anti-demagoguery argument insisting that just because a proposal like $2,000 checks is popular in the moment doesn’t mean it worthy of enactment — but that misunderstands longer-term implications for the more-than-justifiable cause of both immediately helping lots of people and rebuilding social cohesion in America.
By definition, the more universal a program, the more people have a stake in a policy. This is the principle that has generated transpartisan support for programs like Social Security, Medicare and public schools. Yes, those programs are available to the top 0.1 percent of income earners who don’t need them — but that is the small price we pay for the rock-solid political consensus that has protected the programs from politicians and ideologues who want to destroy them.
The same principle is at play right now — at a moment when extreme partisan polarization resulted in a violent insurrection at the U.S. Capitol, a little universalism could signal that yes, government leaders can actually deliver on their promises and make simple, straightforward material benefits available to most people in the country, without burying them in paperwork, hassle, red tape and confusion.
This is a principle Biden of all people should understand — while he mostly ran a Seinfeld-ish campaign about nothing, he does genuinely seem to crave unity, and the initiatives that tend to be the most unifying are the ones that are, ya know, universal. But he’s clearly caught between his stated desire to unify the country and make bold change, and his competing obsession with Washington bipartisanship — and sorry, he can’t have both.
He’s going to have to choose — and the wrong choice will be disastrous.
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