SEPTEMBER 14, 2021
Meyerson on TAP
How We Avoided Great Depression 2.0 Last Year
The great American socialist Michael Harrington used to say that if you wanted to solve the problem of low incomes, you should try providing money. If anyone doubted the soundness of this recommendation, those doubts should be dispelled by a look at the Census Bureau’s data on poverty rates last year, which the bureau released earlier today.
Beginning in March of last year, the pandemic sent unemployment soaring, faster than it’s ever grown before, and to rates not seen at least since the recession of 1981. Nor did unemployment rates recede to anything like pre-pandemic levels during the course of the year, as the pandemic remained stubbornly and fatally with us.
Despite all that, the overall economy didn’t plunge to Great Depression levels in 2020, and the share of Americans living in poverty, rather amazingly, was actually lower than the share living in poverty in 2019.
And that’s entirely because the government addressed the problem of abruptly lower incomes with money.
According to an analysis of today’s data by the Economic Policy Institute, two programs enacted last year to mitigate the pandemic’s economic toll are largely responsible. The first was the expansion of unemployment insurance, adding a $600 weekly benefit to whatever the various states were paying, and also extending eligibility to independent contractors and otherwise ineligible low-income workers. These expanded UI benefits kept 5.5 million people from descending into poverty last year, which, EPI calculates, is ten times the number of Americans rescued from poverty in the year preceding. And if Congress had not curtailed the provision of those $600 UI supplements as of last July, the multiple would have been a lot higher than ten.
The other anti-poverty measure the government enacted was the provision of $1,200 stimulus checks in the spring of 2020 to adults with incomes under $75,000 and $500 to each child under the age of 17. By EPI’s calculations, this kept 11.7 million Americans out of poverty.
Since the Democrats took control of the government this January, more such programs have been created, most notably the Child Tax Credit, which lifts more than half of impoverished American children out of poverty. The CTC was authorized for only one year; its extension depends on its inclusion in the pending reconciliation bill, and its continued efficacy depends on the Democrats’ not narrowing its scope, as West Virginia Sen. Ebenezer Scrooge—excuse me, Joe Manchin—has called for.
So, yes—money is a very efficient way to solve the problem of low incomes.
~ HAROLD MEYERSON