As I write, the Senate has passed President Biden’s $1.9 trillion covid “stimulus” plan. The Republicans all voted no, because it was devised by Democrats; if it had been Donald Trump proclaiming the people’s need of $1.9 trillion, they would have given it to him. The recent package has, of course, a Democratic flavor. The share of money going to businesses has fallen from 37% in Trump’s December 2020 package to 4% in the Biden package. The share going to state and local government has jumped from 9% in the Trump package to 27% in the Biden package. The parties have different priorities. The Republicans cry for business and the Democrats feel the aches and pains of governments.
Both enjoy shoveling out money to individuals. The Democrats, especially; it has been in their DNA since the New Deal. The world is complex and bewildering until suddenly it falls into place: need money! And if the stimulus doesn’t stimulate, it wasn’t big enough. Don’t be cheap, now! The Democrats believe deeply that history has proven them right about this.
A year ago, they and their flacks on CNN, their Ministry of Information, were saying America was in the deepest hole since the Great Depression. And they knew what to do about that. Well, the preliminary numbers are in. In the Year of Social Distancing, the unemployment rate hit the nosebleed level of 14.8% in one month, April 2020, the “lockdown” month. In the two months from February 2020 to April 2020, unemployement had shot up from 3.5% — essentially full employment — to 14.8%.
The world is complex and bewildering until suddenly it falls into place: Need money! Don’t be cheap, now!
And see what happened. By February 2021, the number of workers idle had zipped back to 6.2%. In some industries it was much higher than that, and in others lower. The soreness is uneven, but overall, a 6.2% rate is like having a fever of 99 — you don’t feel quite right, but you’re not calling for an ambulance.
A plunge in the unemployment number from 14.8 to 6.2% is a drop of 8.6 percentage points in a period of 10 months. That’s extraordinary. In a recession or depression, a snapback like that is impossible, short of a war. In the Great Recession, for example, unemployment peaked at 10% in October 2009. It first touched 3.5%, a drop of 6.5 percentage points, in September 2019 — a period of 10 years.
Ten months versus ten years. The difference is not the stimulus. Back in 2009–2010 we had the $1.8 trillion Obama stimulus. Yes, the two Trump packages were bigger, but not that much bigger. The difference is the kind of shutdown we had, and the reason for it. It wasn’t an economic shutdown, a cyclical shutdown, but an administrative shutdown, and those may be a whole lot easier to snap out of.
People who save money have put up with near-zero interest rates for more than a decade. How much longer can that go on?
My conclusion is that America does not need the Biden spending package.
According to the Washington Post, the Biden spending “injects the economy with so much money that some economists from both parties are warning that growth could overheat, leading to a bout of hard-to-contain inflation.” Free-market economists have been predicting serious inflation for a long time, and it hasn’t happened — but that doesn’t mean that it won’t. People who save money have put up with near-zero interest rates for more than a decade. How much longer can that go on? Beats me, but I’m not eager to find out.
“Meanwhile,” says the Post, “some businesses are saying that government aid has been so generous that they’re already having trouble getting unemployed workers to return to work.” Yeah, that too. Give people enough free stuff and it changes them. It makes them lazy.
I heard Biden on TV today. He was celebrating the $1.9 trillion tub of money with his name on it. The American people deserve the help, he said. People are unemployed, he said, with special emphasis, “through no fault of their own.”
Is that the operative principle now — that if your troubles are no fault of your own, you can expect the government to solve them? Do we expect a world in which we are expected to handle only those troubles that are our fault?
It would have been more convincing if Biden had said, “This government put several million persons out of work in order to protect the nation from COVID-19. Because the people as a whole benefited and the persons who lost their income paid the price, we owe those persons compensation with the people’s money.” A libertarian might argue with some of the assumptions of that statement, but at least it makes sense.
Do we expect a world in which we are expected to handle only those troubles that are our fault?
And the vaccines? Have you had yours? Mine’s coming up, and I have no reservation about taking it. It does annoy me, though, that I haven’t heard any objections to providing them all for free.
I tooled around on the internet and saw various figures for what the Pfizer, Moderna, and Johnson & Johnson vaccines actually cost — $10, $20, $35 per dose. Suppose it were offered at $50 a dose. What percent of Americans couldn’t afford that and had no insurance? 5%? We’re talking about the cost of a couple of large pizzas with beer, or a tank or two of gas. If people didn’t have the cash, they could charge it, or otherwise borrow the money. There could be free shots for the genuinely poor, maybe at the food banks.
Lots of options. What’s disturbing is not that something like this has been discussed and rejected, but that it never came up. Right off, during the presidential campaign, Joe Biden said it was going to be free to every American. It was going to be free under Bernie Sanders, and if Trump had won it would have been free under him.
It sometimes feels as if Bernie Sanders actually won.
But only to a point. At least Biden never damned the pharma companies as evil and suggested that vaccines be manufactured by the government. Sanders did — remember? You don’t hear him say that now. All he wants to talk about is the minimum wage.