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Jan. 27, 2021, 10:33 a.m. EST

Biden’s economic rescue plan is bold enough to actually work

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By James K. Galbraith

AUSTIN, Texas ( Project Syndicate )—In the space of less than three months, events have conspired to transform the American political scene.

First, the COVID-19 pandemic defeated Donald Trump—not because public sentiment in this deeply polarized country changed, but rather because the virus forced open the gates of ballot access. Owing to a vast upsurge of early voting and mail-in ballots, the 2020 election’s turnout surpassed that of 2016 by 20 million votes, and featured a greater share of the electorate than any U.S. presidential election since 1900. 

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Second, thanks to 10 years of local organizing by voting-rights activists led by Stacey Abrams, Georgia replaced both of its Republican senators with Democrats in the Jan. 5 runoff elections, thus handing narrow control of the U.S. Senate to President Joe Biden’s Democratic Party.

Finally, Trump and some of his fellow Republicans incited a rabble to ransack the U.S. Capitol. That catastrophic political miscalculation resulted in the death of five people (including a police officer), Trump’s second impeachment, and the lasting disgrace of the defeated president’s most aggressive would-be successors, Sens. Josh Hawley of Missouri and Ted Cruz of Texas.

Clear sense of what’s needed

The moment was ripe for Biden to tell the country about his own economic plans . And when he spoke, it was with focus, precision, and a clear sense of the scale and range of action that the situation requires.

Biden has proposed a rescue plan that will advance a number of urgent objectives at once. His first priority is public health, a long-neglected issue that can be met in part by creating community vaccination centers and medical clinics, and by training and employing at least 100,000 new public-health workers in the basics of epidemic control. Essential elements of this plan will reach into low-income and minority communities, as well as into prisons and jails.

A second goal of the Biden plan is income support, which will take the form of extra cash for households below a certain threshold, extended and expanded unemployment insurance, emergency paid leave, grants to renters and small businesses, and tax credits for child-care costs. 

Third, the Biden plan aims to stabilize federalism with some $350 billion in support for state and local governments whose tax bases have imploded. Such funding is urgently needed to keep teachers, firefighters, police, and other essential public servants on the job—as is the additional $20 billion that would go to keep public transit operating through the crisis.

Finally, the Biden plan has a fair-play element, proposing a long-overdue increase of the federal minimum wage to $15 per hour, which would raise wages for some 30% of all American workers.

Rescue first, then recovery

Biden has correctly billed his plan an “American Rescue Plan,” rather than as a “recovery” or “stimulus” program. If successful, the package will stem the pandemic, stave off a variety of social calamities, and prevent the collapse of state and local government services.

Economic reconstruction is important; but it is a separate objective that can be advanced in a second package. Biden has made sure to acknowledge this point: once the rescue plan has been implemented, the reconstruction can begin, with an emphasis on infrastructure, energy, and climate policy. 

Among other things, this second phase can be used to put America’s advanced sectors back to work in the service of public purpose and social need.

This sequencing is crucial, because these sectors will not simply revive and return to their previous positions in the economy. Now that the pandemic has upended aerospace, commercial and retail construction, the energy sector, and much else, a wide array of skills and resources will need to be reallocated. A second-phase economic program can guide the way.

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