Diane Cross/Michigan Department of Transportation via AP
A pedestrian bridge that collapsed in Detroit last week
Part I
A fourth relief and recovery package will passed by Congress in a matter of weeks, as the costs of the economic collapse deepen. Let’s please stop calling it a “stimulus,” because it needs to be a great deal more than a macroeconomic pumping up of a deflated economy, the definition of a stimulus.
The next relief and recovery package needs to be in three parts.
First, as House Democratic leader Nancy Pelosi made clear Monday, we need to do more for our frontline medical workers and first responders—adequate equipment and supplies to help them and to help us. They are the heroes of the pandemic and they deserve better. We also need to train more health workers to anticipate what will be terrible shortages of medical staff, and to pay them adequately.
But that’s only the beginning. So many people were left out of the bill that Trump signed last week, or shortchanged. We need mandatory relief from foreclosure or eviction, and a moratorium on all mortgage payments and other debt collection. Loans or deferral of payments are not enough, since the loss of income during the collapse will be permanent, and the last thing we need is for people to be burdened with more debt when the immediate crisis passes.
In California, Gov. Gavin Newsom has negotiated a voluntary 90-day mortgage moratorium with the big banks. That’s not good enough. The Fed is throwing money at the banking system, well into the trillions. The banks need to pass the relief onto borrowers, and that should be mandatory.
The cash payments and extended unemployment compensation in the latest relief law are a start, but they are not nearly enough. Entire categories of people are excluded—for instance this spring’s crop of high school and college graduates, who were expecting to enter a job market that now hardly exists. They don’t qualify for unemployment comp, having no job history.
There also needs to be hardship pay for the millions of workers who are staying on the job, making sure we get something as basic as food. They are working under conditions that expose them to greater risk of contagion. That includes warehouse workers, delivery workers, and retail workers in stores deemed essential services—all of whom tend to be grossly underpaid. They need not only safer working conditions to keep them (and us) healthy, but they need a $20 national minimum wage.
Many of these workers also lack health insurance. Good health coverage for them should be part of the next package.
It’s gutsy that delivery workers at Amazon, Instacart, and elsewhere have been staging protest strikes against the lack of safe conditions. But government needs to help them with mandatory safety orders and supplies, as well as a mandated raise.
We need enough federal aid so that not a single public worker is laid off, and capacity is expanded.
The flipside of helping people who were left out is taking back some of the special interest windfalls that lobbyists sneaked in, often part of an industry wish-list that has nothing whatsoever to do with necessary relief during the pandemic. Our colleague David Dayen has compiled as dossier of some of the worst—see his daily post, Unsanitized. Some of the shameless corporate giveaways need to be expunged in the next bill.
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Before this virus hit, state and local governments were barely back to their capacity before the 2008 collapse. They are now called upon to provide additional services, at a time when their revenues are taking a huge hit. We need enough federal aid so that not a single public worker is laid off, and capacity is expanded.
The bill that passed last week provided a stingy $150 billion. That’s not nearly enough, since state and local governments before the collapse were spending at a rate of about $3.3 trillion. So the relief bill makes up just five percent of the total, and the revenue shortfall this year will be several times that.
States have been charging electric vehicles extra registration fees or taxes to make up for lost revenues from gasoline taxes. That’s crazy, since we need to move to EVs as fast as possible. The Federal government should make up that loss and prohibit such fees and taxes, as well as restoring the lapsed tax credit for EVs.
The next recovery package also needs to supply more money for programs that benefit poor people, where Trump’s budgets have extracted cuts, such as food stamps (SNAP), TANF, and above all Medicaid.
However, the most important part of the next relief bill can be a first step towards a World War II–scale national mobilization of spending on public infrastructure. The American Society of Civil Engineers estimates a national shortfall of $4.59 trillion by 2025.
That cannot be spent all at once, of course, but the time to start planning is right now. In our Green New Deal special issue, Professor Robert Paaswell, a distinguished professor of civil engineering at the City University of New York and former chief of the Chicago Transit Authority, explained that cities and states are caught in a chicken-and-egg trap. Federal funds for the capital improvement projects that they desperately need are never adequate, so projects get delayed, raising costs.
Exhibits A and B are the long deferred rail tunnel under the Hudson River, a notorious choke point on both commuter and intercity rail travel, and other urgently needed improvements to the Northeast rail corridor.
(New York Gov. Andrew Cuomo proved Paaswell’s point by bringing in the replacement for the Tappan Zee Bridge that spans the Hudson River from Tarrytown to Nyack under budget and ahead of schedule. Cuomo did this by locking in all the funding in advance, so that there was not the usual stop-and-start construction. He was motivated to succeed, since he named the new bridge for his late father.)
Paaswell calculates that there are something like $500 billion worth of public works that could be started up within the next year, for rail, ports, bridges, airports, and a start on high-speed rail, if that money were approved now. This in turn would allow planning time for a second phase that could invest another trillion dollars or more.
Near my home in Boston is the Longfellow Bridge, whose repairs could have taken a year and stretched over half a decade. We have a local subway and trolley system that belongs in a museum. Instead, it keeps creaking along, always short of funds for basic maintenance, let alone capital improvements.
In Boston, the MBTA subway and commuter rail system needs tens of billions in basic maintenance and modernization. Electrification of the computer rail network, for instance, is budgeted at $40 billion. But there is no money for it.
In DC, a subway system that was state of the art when it was new a half-century ago is on the verge of collapse for lack of adequate spending on maintenance and modernization.
In the Obama stimulus package, which totaled over $700 billion, sponsors made two basic mistakes. First, they thought too small. But second, they got the idea wrong. Thinking as conservative neo-Keynesian economists, they saw it in terms of short-term macroeconomic stimulus. They spent guiltily and apologetically.
Their slogan was “timely, targeted and temporary,” as if distancing themselves from the need for more adequate and permanent public outlay would somehow win over critics. They looked for projects that were “shovel-ready,” instead of recognizing that projects that would be started immediately were only the first phase of a planning-and-execution project.
Funds for basic public-works spending, as part of Recovery 4, can be a down payment on the full $4.5 trillion we need to modernize public facilities, as well as the beginning of a multi-year planning process for adequate public investment to convert to a fully green economy.
And while we are at it, we need to reclaim not just supply chains that have been moved offshore to boost corporate profits, but American manufacturing generally. If taxpayer dollars are going to support domestic public works, they should create domestic jobs. That in turn, will require drastic changes in trade policy.
How to achieve this will be the subject of Part II of this article.
