The Era of Austerity Should Never Return

Stephen Pimpare

For years, we were given reactionary tropes about welfare queens and the need to cut the deficit. But now there’s popular recognition that state action is needed to boost the economy and help working people. We need to make sure that the age of deadly austerity never comes back.

President Biden signs the American Rescue Plan in the Oval Office on March 11, 2021. The New York Times called the legislation the “largest antipoverty effort in a generation." (Mandel Ngan/AFP via Getty Images)

Interview by
Luke Savage

Joe Biden’s $1.9 trillion COVID relief bill has prompted a spirited debate across the Left. Given its size and scope, it’s difficult to deny that key provisions will have a positive impact in many areas of concern for progressives and socialists alike. With direct cash payments and temporary expansions of tax credit programs like the child tax credit (CTC) and the earned income tax credit (EITC), the legislation has even been called the “largest antipoverty effort in a generation” by the New York Times.

To what extent are these pronouncements accurate? What does the bill herald for poverty and homelessness across the United States? And does it represent an anomaly born of out of crisis or a historic shift toward a kind of activist government not seen since before the Reagan era?

Stephen Pimpare is a director of the Public Service and Nonprofit Leadership program at the University of New Hampshire at Manchester, a historian of poverty and social policy, and the author of several books, including The New Victorians: Poverty, Politics, and Propaganda in Two Gilded Ages and A People’s History of Poverty in America. Jacobin’s Luke Savage spoke to Pimpare about the stimulus’s potential impact on poverty and why it may, in fact, signal a real shift in the long-standing bipartisan consensus around social policy.

Luke Savage

Before we get into the details of the bill — recently called the “largest antipoverty effort in a generation” by the New York Times — I think it might be worth situating it in a wider historical context of poverty relief. As a historian of poverty in America, do you think the New York Times’ framing is accurate? How does the bill compare to major anti-poverty efforts throughout American history?

Stephen Pimpare

I think, at this moment, it’s too early to make judgments about the size and scope of it in a historical context beyond what we can say about its short-term impact — which is both absolutely extraordinary and potentially anomalous, although not exactly rare of late: the CARES Act of 2020 actually has a lot in common with the American Rescue Plan Act of 2021 (ARPA). Both involved unusually large infusions of cash, some of which was distributed broadly across the population, some of which was more narrowly targeted to unemployed people and to particular categories of people. Both had a large impact on household income.

The 2021 bill, however, is different in scope. It takes the $2,000 standard child tax credit and raises it to $3,600 per child for children six and under and $3,000 for children six to seventeen, and it makes it available to the very poorest families, which it wasn’t before. There’s also another onetime cash payment of $1,400, on top of the $1,200 that went out in March 2020 and that $600 in December. It’s more progressively targeted in that the cutoff is a little bit lower and starts to phase out at $75,000 a year for individuals, and $80,000 is the sharp cutoff. But it also does a couple of other things that will have important effects. It expands access to the maternal Medicaid program, for instance — right now, when you give birth and you’re on Medicaid, you’ve got sixty days’ worth of benefits, and ARPA extends that to one year. The context for that is that we have one of the highest infant and maternal mortality rates among wealthy democracies — with black women being particularly affected.

There’s also an expansion of subsidies for the Affordable Care Act; new incentives for states that aren’t participating in expanded Medicaid to finally sign on; continued increase in eligibility and benefit levels for food stamps; a new increase in benefits for the Special Supplemental Nutrition Program for Women, Infants, and Children (that’s WIC); expansion of funding for the Section 8 housing voucher program; new protections for renters and for owners who have fallen behind on their mortgages; and so on. This is an extraordinary, though short-term, infusion of money that will absolutely have dramatic effects on poverty that we will probably start to see once the $1,400 stimulus check goes out.

And then, as those monthly child payments kick in, starting in July, most credible guesstimates we have suggest that by midsummer we will, in one fell swoop, have reduced the number of children living in poverty by half — and reduced the number of African American and Hispanic children living in poverty by 60 percent, give or take, while reducing the overall number of people in poverty by one-third or so, at least in the short term. Families with children who are in the bottom 20 percent may see their household income increase by 35 percent.

But most of these provisions expire in a year — and that’s why I am hesitant to make judgments about what this means in a larger historical context.

Luke Savage

Something I haven’t seen discussed very much is the bill’s potential impact on homelessness. I wonder if you can tell us anything about the impact it may have for homeless people?

Stephen Pimpare

The National Low Income Housing Coalition has been tracking this pretty carefully. There is, in fact, a good chunk of money, separate from the money that’s going out to states and localities, specifically allocated for providing homeless services. And some of what’s needed here is ultimately about funding, though it’s also about solving the structural problems. But things have been bad: we have never had enough shelter for all the people who are experiencing homeless in the United States to begin with. Introduce a pandemic, which instantly reduces the capacity of the limited space that you already had, and we end up exacerbating the problem. Now, there is money available in the bill to increase that capacity, and some of that, if I’m remembering correctly, may be used for longer-term emergency shelter and supportive housing projects.

Luke Savage

Given its $1.9 trillion price tag, the stimulus has been getting pretty glowing reviews — in the liberal press, especially. There may indeed be some cause for this, but we should also talk about its limitations. From an anti-poverty point of view, the biggest might be the Democrats’ refusal to include a $15 minimum wage provision. It’s a big question, obviously, but where do you think the bill falls short — both in an immediate and in a long-term sense?

Stephen Pimpare

There’s a long list of things that, if I could wave a magic wand and have them included in that bill, I would have. “Surprised” is, I think, an understatement, given that the administration laid down this marker and, with the exception of the increase in the minimum wage and a couple of other arguably smaller pieces of the bill, it remained essentially intact at a scale that I didn’t expect. So it feels somewhat politically naive and churlish to identify failures.

We should have seen a minimum wage probably higher than $15 long ago. I mean, what was proposed was a $15 minimum wage by 2025, right? Which is still far too low. Would I have liked to have seen that included? Yes, absolutely. Do I think that there were enough Democratic votes in the Senate to get it enacted? I don’t. I think that, in some respects, the administration was relieved that the Senate parliamentarian gave them an excuse to pull that out of the bill, because there was, I think, a real fear that a fight over something like the minimum wage could have unraveled the rest of the bill. So it is unclear to me, as a practical matter, what else could have been achieved and still get fifty-plus-one votes in the Senate.

Luke Savage

Fair enough. But the imminent political considerations aside, I’m curious about the magic wand thinking as well. There’s a whole separate debate to be had about the political constraints that currently exist and the extent to which they’re inevitable, how they might be overcome, why the political will doesn’t exist for things that are urgent, etcetera. Notwithstanding that . . .

Stephen Pimpare

What would my magic wand have put in the bill?

Luke Savage

Yes, exactly. What does the version with fewer political constraints, putting aside the question of what those are and why they exist, look like?

Stephen Pimpare

A lot of it is taking what’s there, expanding it, and making it permanent. One of the things that, last year and this year, the expanded federal supplemental unemployment insurance benefits revealed is what an absolute, complete mess the US system of unemployment insurance is — and how much variation there is from state to state, and how many of those systems are explicitly designed not to offer assistance to people who are unemployed but, instead, to make it as difficult as possible for them to access benefits.

So I would enact a national unemployment insurance program funded at the national level, not at the state level, with relatively generous benefits and a transparent system with easy means of access. I’d also take the child tax credit expansion and make it a family allowance rather than a tax credit, which I think has a whole host of advantages. I would want to think through what the right amount for that is, but I would definitely make it permanent and turn it into a monthly payment, and also think about whether the Social Security Administration should manage it rather than the IRS.

Absent the creation of a much more rational health care system, one of the things this bill does is it fully subsidizes COBRA expenses. Currently, if you’re laid off from your job and try to interact with COBRA, it will offer you your former employer’s health care insurance at the full cost, which is absurdly unaffordable. This bill fully subsidizes that, which strikes me as absolutely right. We should not be tying people’s access to health care to their employment, period.

If we are not yet prepared to move toward something like Medicare for All — and I don’t think that, politically, we are there yet — I think we could build on this bill by subsidizing COBRA and doing what the bill did in a more permanent way: radically expand subsidies for people who buy insurance through the ACA marketplace, expand Medicaid again, and fully federalize it so it’s no longer a shared federal state program. We’ve got enormous variation from state to state, and even within states, from county to county, when it comes to your ability to access health care. If you are low-income, that’s utterly incoherent as a policy matter, right? It makes absolutely no sense that where you live should determine your health or your children’s health or your access to benefits. So that should be nationalized and fully funded.

There’s also the question of food stamps. We could argue about whether we want to continue to keep the food stamp benefit or just turn that into an additional cash grant. But either way, the sum involved in that program has always been far too low. The bill knocks it up by 15 percent, which is still too low, and I’d raise it another 15 percent to start and, again, make it a broader benefit.

We’ve just expanded access to the Section 8 housing voucher program. But that program, as it currently stands, has a budget cap every year, which should be lifted. Even if we changed nothing else about that program, we could make access to Section 8 an entitlement to housing so that everyone who qualifies for rental assistance can get that assistance, no matter what it costs. That becomes a piece of the puzzle that reduces the number of people who wind up being homeless in the first place.

Luke Savage

There’s been a lot of debate around the stimulus and, in particular, the extent to which it heralds a significant political and ideological shift. Depending on where you come down on the question, it’s either 1) a momentary return of activist government during an historic crisis; or 2) a sign that, as James Medlock put it, “The era of ‘the era of big government is over’ is over.” What’s your view of the bill’s political dimension, especially as it applies to efforts at fighting poverty?

Stephen Pimpare

Before I went off to grad school, I was working in New York City in soup kitchens, food pantries, and emergency feeding programs in homeless shelters. And I sort of cut my teeth as an advocate and practitioner during the welfare reform debates of the 1990s, and what’s striking to me is how much of the bipartisan consensus then about the causes of poverty and about the nature of poor people themselves is fundamentally different in the discussions that have been taking place around this bill. There’s been, first of all, no talk of deficits, by and large, which is fascinating in itself; no real conversation about work requirements, at least not from Democrats; no concerns about perverse incentives — no “Oh my God, if we give people money, they won’t show up to work!” We heard a little bit of that from the Republicans, but honestly, even that was surprisingly muted.

That’s a repudiation of those ideas, which were never well substantiated in the first place and generated a horrible policy that caused enormous harm, particularly on low-income communities of color. It’s also important to keep in mind that the welfare reform bill came in a very similar political moment as the crime bill, and that Joe Biden himself was one of the proponents of both of those punitive approaches. That way of thinking about the problem did not seem evident to me in recent debates. Now, is that because we are in the midst of a global pandemic and the nature of the emergency has sort of suspended that trajectory, or are we in fact seeing a break from the post-1970s neoliberalism that has been shaping the federal government’s response to need?

In my hopeful moments, I think that, even if we don’t make all of these provisions permanent, something does feel different — and I realize that’s a ridiculous thing for a social scientist to say — but if you look at the nature of the debate now, I don’t think it comes out of nowhere. This is a product of all the people who have been doing enormously essential organizing work since the 1990s and before. It’s also a consequence of the ways in which the Black Lives Matter movement has demonstrated power in ways that have shifted debate. Bernie Sanders’s two runs for president have also helped move things, as have young, progressive women and women of color doing important work in the House and at the state level.

I think it is also because so many people have been hammered so hard for decades and decades and decades: that those always false promises of trickle-down economics, all of the rationalizations for why inequality is good, all of the defenses offered for the broadening immiseration of the population — they no longer pass the smell test for large numbers of people who are becoming increasingly insecure and afraid. You see this going back to the ’30s and in the ’60s — moments of desperation where large numbers of people finally find a means of directing their anger effectively at the political institutions that enabled their immiseration.

So, I am hopeful, on my good days, that we are sitting in one of those moments.