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We Must Reject Austerity Politics: Economist Darrick Hamilton on Why $900B Stimulus Is Not Enough

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As Congress passes a $900 billion coronavirus relief package, the first new aid since April, critics say the bill does not go far enough in providing direct aid to those most impacted by the economic downturn. “It needs to be thought of as a relief bill, as a bridge to get us to a Biden presidency, where we can do something that is far more intense and larger in scale,” says Darrick Hamilton, professor of economics at The New School and founding director of the Institute for the Study of Race, Stratification and Political Economy.

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This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Congress voted Monday night to pass a $900 billion coronavirus relief package, the first new aid since April. The measure is part of a $2.3 trillion package that includes $1.4 trillion to fund the government. The combined legislation is among the largest relief packages in U.S. history. President Trump has until December 28th to sign it.

The coronavirus relief part of the bill includes $300-per-week federal unemployment assistance for 11 weeks; a round of $600 stimulus checks for people who earn up to $75,000, with another $600 per child; more money for schools and hospitals; and an extension of an eviction moratorium by a month. It also includes $284 billion for another round of small business aid through the Paycheck Protection Program, as well as $20 billion to buy vaccines and make, quote, “the vaccine available at no charge for anyone who needs it.” It offers an additional $8 billion for vaccine distribution.

The package includes a ban on surprise medical bills from out-of-network medical providers; a restoration of Pell grants for incarcerated students; $35 billion for fund wind, solar and other clean power sources; and $15 billion to U.S. airlines to bail them out. The government funding part of the bill also allocates nearly $1.4 billion for the border wall.

Independent Senator Bernie Sanders of Vermont told CNN the COVID relief bill is a step forward but does not go far enough.

SEN. BERNIE SANDERS: Now, this bill, to be honest, has a lot of very important stuff in it. I mean, we worked very hard — I worked with Senator Hawley — to make sure there would be direct payments. I wanted 1,200 bucks; we ended up with $600, which, for a family of four, the average family of four, will be $2,400. Will that help? Yes, it will. Is it enough? No, it is not.

We managed to extend unemployment for another 11 weeks at a supplement of $300 on top of normal unemployment. Is that enough? No, it should have been for four months, and that number should have been higher.

We provided zero financial aid to states and localities all over this country who are suffering devastating financial problems, which will mean they’ll have to lay off firemen and police officers and teachers and so forth and so on.

So, this is a step forward. It is better than nothing. But it is nowhere near, in my view, where it should be going.

AMY GOODMAN: Meanwhile, Treasury Secretary Steven Mnuchin said on CNBC hundreds of dollars in direct payments could begin reaching people as early as next week.

TREASURY SECRETARY STEVEN MNUCHIN: So, I think, as you know, you know, we were worried about, you know, something like a Great Depression again, earlier in the year. But this is now much more targeted. I expect it’s needed in a short period of time. And I think this will take us through the recovery.

AMY GOODMAN: To talk more about this $900 billion stimulus package, that’s half the size of the $2.2 trillion stimulus law passed in March, we’re joined by Darrick Hamilton, professor of economics at The New School, where he’s also founding director of the newly created Institute for the Study of Race, Stratification and Political Economy. He was a surrogate and economic adviser on Bernie Sanders’ 2020 presidential campaign, also one of Sanders’ appointees to the Biden-Sanders joint task force.

Darrick, welcome back to Democracy Now! Can you start off by just reacting to the overall stimulus bill? What’s in there? What do you feel needs to be in there?

DARRICK HAMILTON: Well, it’s long overdue. I’m glad it’s here. It needs to be thought of as a relief bill, as a bridge to get us to a Biden presidency, where we can do something that is far more intense and larger in scale and — here’s the key point — that becomes leading into transformative policy, so that we will be less vulnerable to the next pandemic or the next economic crisis for everyday vulnerabilities that many Americans live with.

JUAN GONZÁLEZ: My concern is, while I see some excellent provisions in this bill that were not in the previous bill — for instance, there is now an allowance for a family where perhaps one person, one wage earner in the family, does not have a Social Security number, may possibly be undocumented, that they would be able to count in terms of being able to get payments and actually even retroactively claim it on their next year’s taxes for the previous stimulus that they were not eligible for — but at 5,600 pages, this bill obviously has a lot of stuff that we have not yet clearly heard about. We’re told we’re not going to get the final version possibly until sometime next week.

And I’m wondering: Do you have any concerns about some of the stuff that’s already come forward? For instance, apparently now they’re increasing the deductions that businesses can take for business meals to 100% from 50%. They’re allowing controlled foreign corporations to be able to bring back their income from abroad without having to pay taxes that they’ve been sheltering abroad. There’s all kinds of other provisions, including an expansion of the new markets tax credit, which has always been, to me, a scam for real estate investors to make super profits — a $5 billion expansion of the new markets tax credit. And we don’t know much of what’s still in the bill. Your concerns about that?

DARRICK HAMILTON: I mean, you’re spot-on, Juan. We certainly know that Washington politics includes pork-barrel politics and some cronyism, where we’re going to get things into the bill, and that’s problematic. And the fact that it is so long, and we just — it just got released, and we haven’t had a chance to dissect it, these are all problems.

But there are also some positive things in there that we should recognize. And the politics of having those positive things in the bills becomes very useful as we get rid of that politics of the past where we load bills with all sorts of special interests that aren’t aimed at the American people. You know, for example, a recognition that education itself needs to be an industry that we invest in, so there’s $82 billion in there for education. There’s a relief set aside for transportation.

You and I both know that there needs to be some money in there for state and localities, as well, and that’s not in the bill. So there’s a lot of problems.

It was definitely necessary that we had this bill passed. And what I like is the precedent of interventions in some areas — like you pointed out, undocumented people, families having access to some relief; like you also pointed out, having a bill that includes gig workers when we think about the unemployed. In fact, why should that ever be a distinction? Going forward, we need to provide unemployment relief for all American workers, period. We know this new classification of putting vulnerability onto workers, where they’re not formally employed in firms as we traditionally employ them, the fissuring of the workforce. We need to rethink how we design unemployment, so that all American workers, documented and undocumented — in fact, we need pathways to having citizenship for people that are undocumented.

But the last point I’ll make — and I’m sorry if I’m rambling on — is that this sets a precedent for us to build upon. And that’s what it needs to be thought of. It is inadequate. Senator Sanders is exactly right. But we need a new politics. And there’s optimism, because if we look at people going into Congress, they are, I think, standing firm and promoting industrial policy that focuses on workers.

JUAN GONZÁLEZ: I’m wondering if you could talk a little bit more about the lack of provisions for local governments and state governments? New Jersey, for instance, is just this week having to deal with borrowing over $4 billion to deal with its expected budget gap this year. Could you talk about the plight of states and municipalities right now?

DARRICK HAMILTON: Yeah. I mean, the plight is such that state and localities are constrained to balance their budget in a way that the federal government is not. The federal government has the power of the purse and can fund us through a relief, but yet we’ve imposed a great deal of burden on state and localities to take care of their citizens, with our increasing federalism, where state and localities are responsible for their residents, as well as balancing their budget. It’s really problematic, that.

And the impact is going to be dramatic, if we think about who is receiving the benefits at local levels, as well as who is employed and what austerity is going to mean. It’s going to mean layoffs for teachers if we don’t get relief from federal government. It’s going to be reductions in benefits such as contributions to food security, such as contributions to school. So it is critical and vital that when we get the next package, when Biden takes office, that there’s relief directed to state and locality.

AMY GOODMAN: Professor Hamilton, last month Public Citizen tweeted a comparison of the wages subsidized by different governments during the coronavirus crisis. Whereas Japan stood at close to 100%, the U.S. has subsidized 0% of wages due to the pandemic.

DARRICK HAMILTON: Yeah. I mean, a Paycheck Protection Program is what we have right now. But if we had a paycheck guarantee, that would be more direct, bigger in scale, and provide more security. So, if we look at our international comparisons, we’re not doing what we should be doing. And we have a greater public power to do so. So, I think the clear narrative is that this was a necessary ingredient, but it’s still far short, that there’s a lot more work we need to do. I think that’s the resounding message.

AMY GOODMAN: Now, the issue of corporate liability, what Mitch McConnell and others were holding up this bill for, that corporations would be protected from consumers or workers during the pandemic, being sued, that ultimately was dropped out of this. There are many interesting things in this. If you could respond to that, and also the no-surprise-medical-bill procedures? This is an amazing accomplishment, pushed by grassroots health advocates around the country. They’ve worked on this for years. When you go to an emergency room, you’re getting an operation, you have no idea which doctors are working on you. Some can be out of network. And then you end up with, instead of a $600 emergency room bill, something like $10,000. Private equity groups have bought up emergency room doctor groups just so that they could go out of network and make this fortune. This is now becoming illegal?

DARRICK HAMILTON: Yeah. I mean, ideally, Medicare for All would address all of this, if we had a single-payer health insurance system. But we know we don’t have that at this point.

And I agree with you, Amy. I think that we have made some progress on the progressive side. So, there is a lot to be disturbed about in this bill, and, you know, Juan started off the conversation describing some of this pork-barrel politics that still exists. But progressives should be vigilant and steadfast and also feel some sense of accomplishment, and the sense of accomplishment that we were able to keep out corporate liabilities as an emphasis, so, you know, it signals that we need to put workers first. And with the provision that you just described, so that people aren’t hit with a surprise medical bill that they didn’t anticipate, that’s an accomplishment. I mean, the fact that we’re sending direct checks to American people as relief, that’s an accomplishment, albeit too small. Three hundred dollars is not enough — yeah, $600 is not enough; neither is $300 supplemental for [unemployment] compensation. But the fact that we’re doing it sets a precedent and can set a tone of what government can actually do.

What we should not be concerned about right now is austerity politics, some notion of deficit constraint. And I think both sides of the aisle, particularly the left side of the aisle, needs to recognize that PAYGO is a problem, particularly in pandemic, that constraining the use of the public purse for relief for Americans is absolutely not what we should be doing. In fact, we need to be doing more to ensure, as I said earlier, that not only will we have protections during a pandemic, that we have a structure that — when we’re not in a peculiar economic crisis, where people can have social mobility, a moral economy.

JUAN GONZÁLEZ: One of the other positive aspects of the bill, it seems to me, and that can be credited to the pressure of the Sanders campaign and the left of the Democratic Party, are the provisions on addressing climate change, in terms of actually, apparently, expansion of credits for solar installations and for research into wind power and longer-serving batteries. Could you talk about some of those provisions?

DARRICK HAMILTON: Yeah. I mean, to be frank, Juan, I don’t know the specific details on it, but I think it goes right back to that narrative that, you know, we were — there was ridicule directed at Bernie Sanders as if he was holding the bill up. But as we can see, there are provisions in there, and he’s not alone. There’s a whole conglomerate within Congress right now that’s fighting for the rights of Americans. And I think that momentum is illustrated in this bill. And that, to me, is what we should be celebrating and focusing on also, the fact that we do have a pathway forward. And you cited one: climate change. Clearly, if we think about this pandemic in isolation, that’s a missed opportunity, that this economic despair, this health risk, we’re still going to be vulnerable after this pandemic, after the dissemination of the vaccine. We have climate catastrophe looming and waiting if we don’t do anything about it.

AMY GOODMAN: Finally, Professor Hamilton, what do you think the Biden administration should do, President Biden should do first thing when he is in office, both through executive action and just pushing forward economic recovery? What’s most critical?

DARRICK HAMILTON: Yeah. I mean, in earnest, there is no silver bullet policy, so we need to be thinking about economic protection across almost a Bill of Rights, various aspects. But if I were to single out some, well, one, he can address student debt, right? We’re going to have this benefit cliff even — you know, the pandemic legislation included a moratorium on evictions, moratorium on foreclosure, as well as some relief for students with regards to paying back their debt. So I would certainly recommend, through executive order, if Congress doesn’t act, some relief with regards to student debt that’s been accumulated. But if I have to focus on something, it is jobs, public jobs, public jobs that are building a better human and physical infrastructure for Americans, as well as putting Americans to work with a decent wage and benefits, that put pressure on the private sector to ensure that they also have to have decent wages and benefits if they want to compete in the marketplace for American workers.

AMY GOODMAN: Darrick Hamilton, thanks so much for being with us, professor of economics at The New School, where he’s also founding director of the Institute for the Study of Race, Stratification and Political Economy.

Next up, as hospitalizations from COVID hit another record high here in the United States, and as Britain is cut off from the rest of Europe because of a variant of the coronavirus, we’re going to speak to a Virginia doctor who was among the first to receive the Pfizer-BioNTech vaccine. We’ll ask him a lot of questions. Stay with us.

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