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Biden’s COVID Relief Bill Is the Biggest Anti-Poverty Program in…Months

By
Seth Ackerman

The Biden administration is selling its COVID relief bill as a historic milestone in the war on poverty. In reality, it's a temporary measure whose anti-poverty impact is roughly the same as last year's CARES Act signed by Trump. For Biden to claim an anti-poverty legacy, he needs to make the child benefit permanent.

US president Joe Biden walks to the White House on March 17, 2021. (Demetrius Freeman / the Washington Post via Getty Images)

“Barack was so modest,” Joe Biden told a recent gathering of House Democrats. “He didn’t want to take, as he said, a ‘victory lap.’”

Biden was talking about Obama’s reticence to make political hay out of the 2009 stimulus bill.

“I kept saying, ‘Tell people what we did.’ He said, ‘We don’t have time, I’m not going to take a victory lap,’ and we paid a price for it, ironically, for that humility.”

Biden isn’t making the same mistake again. This time, the administration has made it clear: it wants its policies presented as “transformational” and “paradigm changing,” not as temporary patches or incremental tinkering.

And it shows, because since last Thursday, when Biden signed the American Rescue Plan Act, an amazing factoid has been plastered all over Twitter and peppered through Democrats’ cable news talking points:

The data point is from a report by Columbia University’s Center on Poverty and Social Policy, which estimated that in 2021 the COVID relief bill’s cash-benefit provisions — especially the expanded child tax credit — will cut the number of children living households with incomes below the poverty line by more than half, from 9.9 million to 4.4 million.

In the mouths of the bill’s promoters, the figure has a majestic ring to it, conjuring breathtaking vistas of reform on the scale of a Great Society or New Deal. And from a PR perspective, that’s the intended effect.

But the rhetoric is misleading, of course. As anyone who follows the news will know, the bill’s cash-dispensing provisions — including the child tax credit expansion and expanded unemployment insurance — are scheduled to end after just one year.

Intoxicating vistas notwithstanding, the bill’s poverty-fighting measures, as written, provide for a series of checks to be mailed out for twelve months and then they shut down.

In that respect, the closest historical parallel to Biden’s ARPA isn’t Roosevelt’s Fair Labor Standards Act or his Old Age Insurance plan, or Lyndon Johnson’s Job Corps or Medicaid. Those were permanent programs.

The closest historical parallel to the Biden-Schumer-Pelosi plan is the Trump-McConnell-Pelosi COVID package of 2020, also known as the CARES Act.

Back in June 2020, the same Columbia institute that crafted the White House’s go-to poverty stat put out a similar analysis of the recently passed CARES Act.

Here’s how the two measures compare in terms of poverty reduction:

  • Overall, the 2021 Biden-Schumer-Pelosi plan lifts 12.3 million people out of poverty, reducing the poverty rate by 3.8 percentage points
  • The 2020 Trump-McConnell-Pelosi CARES Act lifted 11.5 million people out of poverty, reducing the poverty rate by 3.6 percentage points.

Since this year’s plan funnels a large share of its benefits through the child tax credit, its poverty reduction impact is more concentrated among households with children, hence the talking points. More specifically:

  • The Biden-Schumer-Pelosi plan lifts 5.6 million children out of poverty, reducing the child poverty rate by 7.5 percentage points — more than half of all poor children.
  • The equivalent numbers for the Trump-McConnell-Pelosi plan were 3.2 million children and a 4.6 percentage point reduction in the child poverty rate.

But the flip side of the Biden plan’s greater focus on children is a lesser focus on adults:

  • The Biden-Schumer-Pelosi plan lifts 6 million and 780,000 working-age and elderly Americans out of poverty, respectively, reducing their respective poverty rates by 3 and 1.5 percentage points.
  • The equivalent numbers for the Trump-McConnell-Pelosi CARES Act were 7 million and 1.3 million working-age and elderly Americans, amounting to 3.6 and 2.6 percentage points, respectively.

In other words, Biden’s COVID relief plan is what you would have expected a President Joe Biden to pass in an emergency. Like the 2020 vintage, it’s a collection of temporary expedients to dampen hardship during a crisis. What it’s not — by itself, anyway — is any kind of paradigm shift. Nor does it transform anything in particular, at least not past 2021.

Am I being unfair to the bill and its authors? Here are two reasons why I might be, both of which will be addressed in imminent Substacks:

  • First, by its sheer size alone, in macroeconomic terms the bill frontally violates the strictures of the old Washington Consensus, the economic ideology that reigned in the halls of power through the long years of what Ben Bernanke called “The Great Moderation” and The Clash referred to as “The Clampdown.” That’s just one aspect of its novelty, according to my friend JW Mason, an economist affiliated with the Roosevelt Institute, which is why he says he views the bill as an important victory in the struggle against neoliberalism. You can, should, and must read that essay here.
  • Second, the architects of the BidenBill’s child credit program have made it clear that it was never their intention to set up a one-year child benefit and then chuck the whole thing in the trash once the economy improved. They say they’re committed to an effort to push through a permanent extension of the program.

If that happens, the United States will, for the first time in its history, join most of the rich world in having a fully fledged, quasi-universal cash family allowance. Hence the White House’s frequent references to the bill as representing a “downpayment” on the future.

In this connection, I agree with the judgment of Princeton political scientist Nolan McCarty, who zoomed in on this point on Twitter:

McCarty’s thinking offers a useful marker that we can look to over the next two years to gauge how much of a “historic progressive breakthrough” the Biden administration really represents: “I tentatively side with the con,” McCarty wrote in his next tweet. But he added: “The bill that makes child tax credit permanent would be huge.”

Will Biden manage to do as he promised and create a permanent family allowance?

The choices are stark. If doesn’t, he will have finally invoked cloture on the Great Debate about the current state of the Democratic Party. All his poetry about transformational-this and paradigm-shifting-that will be disposed of in the proper bin for sorting.

If he succeeds, on the other hand, not only will he be able to take credit for boosting the economy and engineering a major reduction in America’s shameful child poverty rate. He will have struck a powerful blow on behalf of this country’s all-too-fragile democracy by shepherding the Democratic Party through its slow and painful transformation into something this country has long been so badly in need of: a responsible, democratic-minded party of the center-right.