Branko Marcetic: When the US Government becomes more economically progressive than NZ

Branko Marcetic: When the US Government becomes more economically progressive than NZ

The Biden Presidency has just implemented a transformational pandemic relief bill to stimulate the economy. Branko Marcetic compares this with what the New Zealand Labour Government are doing and laments with amazement the stark difference.

 

We in New Zealand tend to look with weary eyes at the goings-on in the United States, a country we typically think of as politically way to the right of where we are here. We tisk-tisk at their threadbare welfare state, shake our heads at the private insurer-dominated nightmare that is their health care system, and wonder what the hell is going on with their hands-off pandemic response.

So when the famously corrupt and gridlocked US government passes something monumental, it’s always worth paying attention to. And that’s especially the case when that dysfunctional government comes out with something more bold, transformational, and visionary than anything on the menu for our very functional government here in Aotearoa.

On Friday the US federal government took the first leap on making good on Democratic President Joe Biden’s campaign promise to “Build Back Better” from the country’s pandemic-induced recession, with Biden signing into law a $1.9 trillion stimulus bill shortly after it passed Congress. Pegged at around 9 percent of the country’s GDP, the bill aims to avoid the mistakes of Barack Obama’s first term, when conservative fears about debt and government spending shrunk the size of his post-recession stimulus, leading to a long, sluggish recovery that only took full effect once he was gone from office.

Sold as a pandemic relief bill, the legislation, in the words of the Washington Post, “showers money on Americans, sharply cutting poverty and favouring individuals over businesses,” offering a dizzying spread of programs and financial support that puts money into working people’s hands. Besides sending $1,400 directly into the bank accounts of millions of poor and middle-income Americans, it provides them with $300 extra every week of unemployment insurance on top of what they would normally get, subsidises their health insurance, gives government workers more generous paid leave, bails out broke state and city governments, and expands welfare provisions, including a broader and more generous child tax credit, among other things. The whole thing is tipped to lift the incomes of the poorest Americans by 20 percent, and put $12,460 extra in the hands of a family of four with one working parent.

That’s not even the half of it. Realising they had a limited window of opportunity to get anything remotely ambitious done, the Democrats loaded the bill up with a host of other important measures not directly related to the impact of the pandemic. It bails out 1 million workers who were set to lose their pensions, gives tens of billions of dollars of aid to Native American tribes, provides billions to disadvantaged farmers still suffering from the legacy of decades of discrimination, as well as many tens of billions more for schools, child care, health care, even public transport.

The bill is not perfect, mainly because it doesn’t go far enough. Anyone interested in the details can read this excellent run-down here.

But for all its flaws and limitations, the bill is a far more ambitious use of political power, and far more transformational, than anything our political leaders are offering here in New Zealand. While our government celebrates reductions in child poverty so small they barely register, the US stimulus bill is tipped to cut child poverty by half. While our government refuses to pay workers their full wage to isolate, the US stimulus bill gives workers affected by the pandemic more generous support than ever. Even a more questionable measure like its health care subsidies, a giveaway to health insurer donors that entrenches a dysfunctional and bewilderingly unjust system, looks pretty good when you consider Labour’s big move this year on our own urgent health care crisis: free toothbrushes and toothpaste for preschoolers.

It’s even more remarkable when you consider who’s doing it. This is a corporate-funded Democratic Party that until recently had as one of its prized goals cutting the US government’s most popular and longstanding welfare programs. The president who signed it is Joe Biden, a small-government ideologue who has spent his career almost religiously committed to slashing state spending and attacking government debt. And they did it with a parliamentary majority so slim, it barely exists.

But because of conditions on the ground and the demands of experts, Biden and the Democrats abandoned rigid ideology to act responsibly. With even business-friendly bodies like the IMF calling for big government spending to get us out of this hole, Biden listened to the economists and put debt concerns to the side, his White House warning the risk “is not going too big, it is going too small.” And they’ve done it with the understanding, in the New York Times’ words, “that the best way to stoke faster economic growth is from the bottom up.”

Compare that to our Labour government, which isn’t hampered by the legalized corporate bribery of the US system thanks to our much stricter campaign finance laws, and currently holds a historic absolute majority in parliament letting it practically do whatever it wants. Despite being led by a prime minister who claims child poverty was the reason she entered politics, her government has made little progress on the issue while obsessing over debt the same way her party once criticised National for.

And the common sense notion of helping struggling Kiwis stimulate the actual economy by spending money into it simply doesn’t exist in our political discourse. The government is instead content to let families spend most of their meagre incomes on housing costs, fuelling an unproductive and unsustainable speculative boom that the Reserve Bank is helping underwrite. In doing so, it’s resisting not just public opinion, but now the IMF, too, which recently called on our government to embark on a “vigorous fiscal and monetary stimulus” to “support demand and limit the medium-term fallout from scarring,” including “adequate unemployment benefits.”

We shouldn’t be too quick to heap praise on the Democrats. A large part of their motive here is their own political power, with memories still fresh of being harshly punished by voters in 2010, after Obama’s tepid stimulus failed to make people’s lives better in time for the next round of elections.

Yet this should be a warning for Labour, too. If they’re not going to use the unprecedented opportunity they have right now to make similarly transformational improvements to Kiwis’ lives because it’s both the right thing to do and economically smart, they should at least do what the Democrats are doing and think about their own political future.

It’s hard to know what’s sadder: That the dysfunctional and corrupt US Democratic Party has for the first time turned out more progressive and ambitious than our own Labour government; or that Labour might have to repeat their mistakes and suffer a similar defeat before they get their act together.

 

Branko Marcetic is co-host of the podcast 1 of 200 and a staff writer for Jacobin magazine

This article can be republished under a Creative Commons CC BY-ND 4.0  license. Attributions should include a link to the Democracy Project.