A quarter century ago, I and other members of
Bill Clinton’s cabinet urged him to reject the Republican’s proposal to
end welfare. It was too punitive, we said, subjecting poor Americans to
deep and abiding poverty. But Clinton’s political advisers warned that
unless he went along, he jeopardized his reelection.
That was the end of welfare as we knew it. As Clinton boasted in his State of the Union address to Congress that year, “the era of big government is over.”
Until last Thursday, that is, when Joe Biden signed into law the biggest expansion of government assistance since the 1960s—a guaranteed income for most families with children, raising the maximum benefit by up to 80 percent per child.
As Biden put it in his address to the nation, as if answering Clinton, “the government isn’t some foreign force in a distant capital. No, it’s us, all of us, we the people.”
As a senator, Biden had supported Clinton’s 1996 welfare restrictions as did most Americans. What happened between then and now? Three big things.
First, COVID. The pandemic has been a national wake-up call on the fragility of middle-class incomes. The deep COVID recession has revealed the harsh consequences of most Americans now living paycheck to paycheck.
For years, Republicans used welfare to drive a wedge between the white working middle class and the poor. Ronald Reagan portrayed black, inner-city mothers as freeloaders and con artists, repeatedly referring to “a woman in Chicago” as the “welfare queen.”
Whites who were putting more hours into paid work than ever – women had streamed into the workforce in the 1970s in order to prop up family incomes decimated by the decline in male factory jobs – were particularly susceptible to the message. Why should “they”get help for not working when “we” get no help, and we work?
By the time Clinton campaigned for president, “ending welfare as we knew it” had become a talisman of so-called New Democrats, even though there was little or no evidence that welfare benefits discouraged the unemployed from taking jobs. (In Britain, enlarged child benefits actually increased employment among single mothers.)
Yet when COVID hit, public assistance was no longer necessary just for “them.” It was needed by “us.”
The second big thing was Donald Trump. He exploited racism, to be sure, but replaced economic Reaganism with narcissistic grievances, claims of voter fraud, and cultural paranoia stretching from Dr. Seuss to Mr. Potato Head.
Trump obliterated concerns about government giving away money. The CARES Act, which he signed into law at the end of March, gave most Americans checks of $1,200 (to which he calculatedly attached his name). When this proved enormously popular, he demanded the next round of stimulus checks be $2,000.
Part of the GOP’s incapacity to respond to Biden’s momentous redistribution was due to the Party’s equally momentous distribution upward—its $1.9 trillion 2018 tax cut whose benefits went overwhelmingly to the top 20 percent. Despite promises of higher wages for everyone else, nothing trickled down.
Meanwhile, during the pandemic, America’s 660 billionaires—major beneficiaries of the Trump tax cut—became $1.3 trillion wealthier, enough to give every American a $3,900 check and still be as rich as they were before the pandemic.
The third big thing is the breadth of Biden’s plan. Under it, more than 93 percent of the nation’s children—69 million—receive benefits. Americans in the lowest quintile increase their incomes by 20 percent; those in the second-lowest, 9 percent; those in the middle, 6 percent.
Rather than pit the working middle class against the poor, this unites them. Over 70 percent of Americans support the bill, including 63 percent of low-income Republicans (a quarter of all Republican voters). Younger conservatives are particularly supportive, presumably because people under 50 have felt the brunt of the four-decade slowdown in real wage growth.
Given all this, it’s amazing that zero Republican members of Congress voted for it, while 278 voted for Trump’s tax cut for corporations and the rich.
The political lesson is that today’s Democrats—who enjoy popular vote majorities in presidential elections (having won seven of the past eight)—can gain political majorities by raising the wages of both middle class and poor voters, while fighting Republican efforts to suppress the votes of likely Democrats.
The economic lesson is that Reaganomics is officially dead. For years, conservative economists have argued that tax cuts for the rich create job-creating investments, while assistance to the poor creates dependency. Rubbish.
Bidenomics is exactly the reverse: Give cash to the bottom two-thirds and their purchasing power will drive growth for everyone. This is far more plausible. We’ll learn how much in coming months.