October 01, 2021
Many of us have been giving reporters grief about the constant reference to a $3.5 trillion spending bill (pre-Manchin), without pointing out that this is over ten years and would be just over 1.2 percent of projected GDP over this period. Also, the intention is to have the bill offset by tax increases and cuts in Medicare drug spending, so the net impact on the deficit would be close to zero. (That’s not my concern, just saying.)
We also need to give them grief on the other side of the picture. I doubt anyone likes generic government spending. On the other hand, most of the specific areas where the government does spend money, like Social Security, Medicare, and education, are very popular. So, describing the bill as simply “spending” is virtually certain to reduce support for it.
In recent days, reporters have taken to calling it a “safety-net” bill. It’s not clear that is much better. Most of us probably think of safety-net programs as items like TANF or food stamps, programs designed to help people who have fallen on hard times. Most of the proposed spending in the bill really does not have this character.
Much of it is quite explicitly designed to give people more skills and improve their prospects in the workforce. That is certainly the case with making community college free, universal pre-K, and the child care provisions. We know that quality child care leads to better outcomes for the children (as does pre-K), but it also makes it easier for parents of young children to work. The same is the case for the paid family leave provisions.
The child tax credit also fits in this category. By lifting millions of children out of poverty, it will also lead to better labor market and life outcomes when these kids get older. And, at least pre-Manchin, the benefit will be received by people in the upper middle-class. That makes it no more a safety net program than the dependent deduction on personal income taxes.
There are also provisions in the bill designed to increase the availability of housing. And, very importantly, the bill includes funding for moving away from fossil fuels and reducing greenhouse gas emissions.
The bill does include funding that increases access to Medicaid, as well as funding for increased subsidies for middle-income people in the Obamacare exchanges, and improvements in Medicare. We can argue over the extent to which these are safety-net programs, but most of this money will be going to people who are middle-class.
In any case, the bulk of the bill really does not fit into the category of “safety-net” spending. The GI Bill of Rights, passed during World War II, is probably a good comparison in this respect. The bill paid for World War II veterans’ college education, it also gave them low-interest loans to buy houses (a benefit that largely excluded Black veterans because of discrimination in the lending and housing markets), and unemployment insurance.
That bill helped to give millions of veterans a path to the middle-class, in addition to including the safety-net provision of unemployment insurance. It is unlikely that many reporters at the time described the GI Bill of Rights as a “safety- net” plan. They shouldn’t describe the Democrats’ package this way either.
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