As President Joe Biden prepares to sign the sweeping $1.9 trillion COVID relief package into law, we speak with economist Stephanie Kelton, author of “The Deficit Myth,” about how the bill could help cut child poverty in half and provide a historic economic boost to the poorest people in the United States. “This is a piece of legislation that recognizes the immense pain that exists all across this country, and it delivers help,” says Kelton, a professor at Stony Brook University and former adviser to Bernie Sanders.
AMY GOODMAN: The Democratic-controlled House is voting today to approve the final version of the $1.9 trillion COVID relief package today, then send it to the White House for President Biden to sign. Democratic Congressmember Pete Aguilar of California hailed the bill as the, quote, “boldest action taken on behalf of the American people since the Great Depression.” Democrats managed to pass the American Rescue Plan without support from any Republican lawmakers even though the vast majority of Americans support it.
Key provisions of the bill include $1,400 payments to tens of millions of adults, child tax credits worth as much as $3,600 per eligible child, extended federal supplemental unemployment benefits worth $300 a week, $160 billion for COVID vaccine and testing programs, $170 billion to help schools open, more than $360 billion in aid for state and local governments, and $86 billion to help protect the pensions of many unionized workers. The bill also includes an extension of health insurance subsidies and nutrition and rental assistance
The final bill differs from the one initially passed by the House in some significant ways. It does not include raising the federal minimum wage to $15 an hour over five years. It also reduces the number of people eligible for stimulus checks. Despite these changes, independent Senator Bernie Sanders of Vermont praised the final bill during an interview on CNN Tuesday night.
SEN. BERNIE SANDERS: In my view, this is the most significant legislation for working people that has been passed in decades. … What this legislation does, Anderson, is it addresses a crisis that this country has ignored for too long. We have one of the highest rates of childhood poverty of any major country on Earth. This legislation will expand the child tax credit and lower childhood poverty in America by up to 50%. Yeah, we’re going to pay attention to the kids in America, many of whom are struggling for a variety of reasons.
This legislation says that in the richest country in the history of the world, people should not be going hungry. In my community, Burlington, Vermont, a few months ago, hundreds of cars lined up for emergency food packages taking place all over this country. This legislation provides help, so that when the moratorium on evictions ends, people will get assistance to stay in their homes, whether it’s a rental unit or your own home. This legislation more than doubles funding for community health centers.
AMY GOODMAN: Senator Bernie Sanders, speaking Tuesday night on CNN.
We’re joined now by the economist Stephanie Kelton. She’s a professor at Stony Brook University here in New York and author of The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy. She’s a former Bernie Sanders adviser who served as chief economist to the Democrats on the Senate Budget Committee between 2015 and ’16.
Welcome to Democracy Now!, Professor Kelton. It’s great to have you with us. Can you simply lay out the significance of what is being passed today, the possibility that child poverty will be cut in half, the level of worker relief, etc.? Talk about the foundations of this bill.
STEPHANIE KELTON: Yes. Well, thank you for having me.
You know, Senator Sanders said it exactly right. This is a piece of legislation that recognizes the immense pain that exists all across this country, and it delivers help. I mean, President Biden has said, “Help is on the way.” And this piece of legislation is absolutely going to change the lives of tens of millions of people in this country, people who, for the first time in their lives, are going to see more money in their bank account at one time. They’re going to be able to pay all of the bills that they have, instead of trying to figure out which one to put off this month and how to try to catch up later.
You know, the legislation is groundbreaking. There’s no question about it. And yes, it didn’t include everything that progressives had hoped would be in this bill, but, you know, I think there is no denying that this is a major, major victory for the party and for many progressives, who pushed very hard to make sure that the legislation sent the relief exactly where it was most needed.
JUAN GONZÁLEZ: Well, Stephanie Kelton, could you be a little more specific in terms especially of what has to be the most — the newest part and the potentially most far-reaching part, is this child tax credit, and explain how it would work? Because there had been a child tax credit passed in December in the last stimulus package, but this would extend it for another year, throughout 2021, as a monthly payment per child to families in America. Explain the mechanics. And also, it’s only for last year and this year. What about the future?
STEPHANIE KELTON: Yeah, you’re right. So, this is a temporary expansion and an increase, as well. And so, what many families are going to see is a check show up in the mail. And for each child, on average, people would be looking at something like $300 per child per month. It’s a significant increase over what was done in the past, which was $200.
And you’re right to point out that it’s temporary. And Democrats definitely hope that it will not remain temporary, that this is something that they can move forward to make permanent in the years to come, because, you know, Juan, a lot of countries have programs like this. They have a child dividend. They provide monthly support for families with certain income levels. And it’s pretty generous. Most families will, in fact, benefit from this. So, this is something other wealthy countries have done for a very long time. The U.S. has been a laggard in this respect. And so, we’re beginning to catch up with many other wealthy countries around the world. Sending direct payment to families with children allows them to, you know, cover child expenses, which, of course, are incredibly high in this country.
JUAN GONZÁLEZ: And could you respond to the criticism we’ve been hearing quite a bit from Republicans who have opposed this legislation, that there was a huge portion of this stimulus package which was aimed at bailing out state and local governments, many of whom they claim, like California, don’t really need the support from the federal government? Could you respond to these issues of the aid to municipal governments and state governments in the package?
STEPHANIE KELTON: Well, sure. So, state and local governments have taken a hit. There’s no question about it. And when the economy turns down and revenues fall off a cliff, state and local governments are in real stress, because they are very reliant on tax revenue to cover the expenses, you know, state and city services and so forth.
So, it isn’t just a blue state issue. I know that’s what Republicans like to say, that this is somehow a bailout for blue states, this is a bailout for governors who’ve mismanaged the public finances and overpromised with pensions and so forth. But the reality is that six of the 10 states most in need of federal assistance are red states. So, this is going to provide relief for state and local governments across this country, red and blue, and it’s just simply not the case that this is something that’s only going to benefit blue states and governors that have mismanaged finances.
AMY GOODMAN: Stephanie Kelton —
JUAN GONZÁLEZ: There’s also —
AMY GOODMAN: Oh, go ahead, Juan.
JUAN GONZÁLEZ: There’s an expansion of the Affordable Care Act coverage, isn’t there, in terms of providing federal subsidies for health insurance for unemployed workers? Could you talk about that part, as well?
STEPHANIE KELTON: Yeah, absolutely. This is a beefing up of the Affordable Care Act. It extends subsidies and makes it easier for people who are buying healthcare to purchase healthcare on the exchange. It increases the amount of support that you get from federal government to buy health insurance. It caps the amount, the maximum amount, that you have to pay out of pocket for health insurance at 8.5% of your household income. So, this is — and it expands Medicaid. So there are all kinds of things that this piece of legislation does in terms of healthcare, providing state and local governments with some additional relief, because the federal government is stepping up with more dollars for Medicaid and for expansions of the Affordable Care Act.
AMY GOODMAN: If you can talk more about the significant shift of what this means for the American people? And even though the Republicans aren’t joining in and supporting this, there’s actually little fundamental criticism of this shift, the whole idea of a kind of European socialism, that’s very well accepted throughout Western Europe, and the idea that, I mean, you have parents of 93% of American children, 69 million people, will be getting monthly checks, you know, really particularly will impact the poorest children, children of color, though it will help most everyone in the country. And whether you think this can continue, which, of course, is the fundamental hope of many, not just a bailout this year, but a new model for guaranteed income, a floor for families in this country?
STEPHANIE KELTON: I think so, Amy. I mean, it would be — in some sense, you know, it would be cruel to demonstrate that the federal government has the capacity, with one piece of legislation, to change the lives of tens of millions of Americans, to just lift half of all the kids in this country who are today living in poverty — will not be living in poverty in the coming weeks and months because of this piece of legislation. Now, so many of the provisions that we’ve been talking about are temporary, and that means that when they expire, if they are allowed to expire, those very same families, many of them, will fall back into poverty.
So, what the government is doing with this bill is demonstrating that, in a sense, poverty is a policy choice and that Congress can step up and change that with a piece of legislation, with a further commitment, with a doubling down on some of these programs that make them permanent and that demonstrate the government is committed not just to alleviating strain in a time of crisis, but to fundamentally eradicating poverty in this country.
AMY GOODMAN: And I also wanted to ask you about the labor provisions in this $1.9 trillion package, the bailout for a long list of key labor pension funds and what this means.
STEPHANIE KELTON: Well, I think, you know, a lot of people, for many years, have been extremely worried that the day would one day come when their employer tells them, “I’m very sorry, but the pension is underfunded, and you are not going to receive the promised benefits that you’ve been relying on as you worked for this company, didn’t make other choices, remained an employee here because you had a stake in the company and you were going to work and earn your pension at the end of your retirement.” A lot of people thought, “You know, it looks like there’s going to be a possibility that states are going to renege on these promises, that they’re going to cut pensions.” And, you know, this may change that for a lot of workers, who now can have a sense of security that in fact they are going to receive, at the end of their working life, the pension that they were promised.
JUAN GONZÁLEZ: I wanted to ask you — the president is about to embark, first, on an address to the nation. Then he’s going to do some, in essence, campaigning around the country around the importance of this bill. Given the fact that the Senate is so evenly divided and that the prospects of any other major legislation passing without Republican support are pretty dim, isn’t this bill, in essence, the main accomplishment that the Biden administration will try to head into the — into the midterm elections, telling to the American people, “See what the Democrats can do? If you give us a sufficient majority in the Congress, we can continue along this way”?
STEPHANIE KELTON: I hope not, Juan. I really do. I hope that President Biden can be successful in — you know, he’s referred to this as a down payment. And he’s made it very clear that this is the rescue package. This is just to get us through the immediate emergency with the pandemic and the economic fallout. And once we get a sort of stable footing on that front, then he wants more. He wants a recovery plan. He’s talking about trillions of dollars in additional spending for the “Build Back Better” agenda. He wants infrastructure and climate and a whole range of other things. So, I really do hope.
And I understand, you know, the politics involved. I did work in the Senate for a period of time, and I know it’s going to be difficult. And I know that people like Senator Manchin have expressed a desire to get the next package on a bipartisan basis, to not rely on reconciliation to do that. He has talked about believing that somehow he can get to 60 votes, that he can get Republicans on board, even if it includes some tax increases to offset some of the spending. So, that’s where I get nervous. I don’t see that as a very realistic path forward. I think if Democrats are prepared to come in with one more reconciliation package toward the end of this year and do it on, in all likelihood, a party-line basis, then I think that’s the best chance. And then you’ve got a double whammy going into the midterms.
AMY GOODMAN: And can you talk about the loss by progressives of including the minimum wage increase to $15 an hour over five years and how you see that being accomplished?
STEPHANIE KELTON: Yeah, that one stung, obviously. That really hurt. Progressives are not giving up on this. You probably heard Senator Sanders talk about it in videos and in interviews in recent days. He said, “This thing is not going away, and the fight is not over.” And he promised that we were going to pass an increase in the minimum wage. He’s not giving up on 15 bucks an hour. I know many Democrats and all progressives aren’t giving up on that.
So, I don’t know, Amy, how you get there. I really don’t. I don’t know that we’re going to manage to see $15 an hour done on a stand-alone bill this year. Maybe we get up to $11 in two years, and then we come back again with a — maybe picking up seats in the House and the Senate, you strengthen the numbers, and then you go back and take another bite at the apple. I don’t know how it will play out. But I think there are enough Republicans who want to raise the minimum wage, so we may get something. But, you know, whether we get to $15 is — it’s a tough fight.
AMY GOODMAN: Also, we just talked, in headlines, about the recent naming of two antitrust leaders to top government positions. Tim Wu, who coined the term “net neutrality,” has argued for the breakup of Facebook, has been appointed to the National Economic Council. And Columbia law professor, antitrust scholar Lina Khan is expected to be nominated for a seat on the Federal Trade Commission. Professor Zephyr Teachout tweeted, “antitrust is not just about big tech. It’s agriculture and hospitals. It’s about democratic/economic policy broadly. About how private power is dispersed or centralized. Khan & Wu are not 'tech critics,' they are visionary anti-monopolists across the board.” The significance of this? And in a broader picture, if you can talk about what you see needs to be done?
STEPHANIE KELTON: Well, I think it’s significant. This is not my unique area of expertise, but I know that Zephyr does not hand out praise lightly, and that she is this enthusiastic about both of these individuals says a great deal. I think that, you know, Biden’s willingness to appoint people like this to positions like these strengthens the case that he is going to take seriously consumer protections and antitrust, more broadly, but the growth of monopolies and pricing power and abuses and all of the rest of it. So I think it speaks well. I know there were some appointments early on that raised eyebrows and gave progressives some cause for concern, but I think this is a nice way to balance some of those. And the FTC appointment is obviously a very, very significant one.
AMY GOODMAN: Stephanie Kelton, we want to thank you so much for being with us, economist, former Sanders adviser, author of The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy.
Next up, Dr. Cornel West on Biden’s first 50 days in office and about West’s unsuccessful fight for tenure at Harvard. Stay with us.