In the "good times," when it seems like economic prosperity will never end, it's common in the United States (especially among the members of the capitalist class and those in the upper-middle class) to boast about the superiority of America's market-driven economy. At the same time, the same people find it easy to ignore or ridicule those who point out how the same economic system exploits working-class and lower-middle-class people. Either the capitalists can't see that the money isn't "trickling down" to everyone, or they don't care that it isn't. In either case, the rich get richer, and the poor get poorer. It's just that wealthy people see themselves as having earned their fortunes through ingenuity and hard work, while the lot of the poor is due to their laziness and lack of drive and imagination. Anyone who thinks otherwise is a liberal, a progressive, or (perish the thought!) a socialist. However, economic expansions and bull markets don't last forever. Prosperity always ends. It stopped when the dot-com bubble burst in the early 2000s. It ended again in 2007-8 after a housing bubble fueled by subprime mortgages burst, and a banking crisis ensued, leading to a global financial crisis. And it's fading fast now, as an "everything bubble" pops under the pressure of a world economic shutdown caused by a pandemic of a novel coronavirus. America's political class has decided that progressive fiscal policy prescriptions that were criticized as wasteful, ineffective, and expensive just a short time ago (think of the economic policy ideas of Andrew Yang, Elizabeth Warren, and Bernie Sanders) are the cure for all that now ails the economy (well, except for the novel coronavirus itself). For example, the Federal government will soon be sending one-time direct payments to taxpayers. If these payments continue through the passage of future legislation, such a program would resemble a universal basic income, as popularized by Yang. Unemployment benefits have been temporarily tripled in amount (on average) and expanded to include gig-economy workers and other self-employed people. Even part-time workers are covered. Student loan payments have been suspended, moving one step closer to student debt forgiveness as proposed by Warren and Sanders. Through passing three emergency stimulus bills, Congress has obligated the Federal government to spend more than two trillion dollars on these and other programs, with more spending on the way in the form of a fourth stimulus bill. The Feds will have to raise the necessary funds through borrowing (issuing and selling new Treasury notes, bills, and bonds) since the U.S. government is already running a debt-financed, trillion-dollar deficit in the current fiscal year. Unlike the last time the Federal government ran up a hefty tab to bail out the economy, regular people (and their small businesses) are the beneficiaries of this fiscal largesse in addition to the large corporations that got most of the bailout funds in the late 2000s. So instead of just corporate socialism, now we have a measure of socialism for the people as well. After the emotional relief generated by the passage of Federal fiscal stimulus legislation fades, a question arises. Why does the United States employ such measures only in times of dire economic emergency and then only as a last resort? Wouldn't it be better to have at least some of these policies in place and operating before an economic emergency occurs? In particular, those measures that lift up the working class to include its members in the prosperity of economic good times?
Social democrats and democratic socialists would say "yes," but conservatives, many centrists and even some who call themselves liberals would say "no." The latter groups rationalize the expense of extreme fiscal measures during an economic crisis, but cannot agree to fund the same policies during periods of economic prosperity. This position is ironic for two reasons. First, the expense of such measures is much more bearable during economic expansions, when tax revenues increase due to rising corporate earnings and individual income, than during economic downturns when the opposite is the case. Second, such measures would tend to mitigate the severity of economic fluctuations over the course of the business cycle.
It's also the case that those who are right of center on the political spectrum would reject robust government-provided social benefits on ideological grounds. They would resent such measures as unwanted and unnecessary government intrusion into the private sector of the economy. They would be likely to view the increased taxes on corporations and high-income individuals necessary to fund such programs as redistribution of wealth through confiscatory means. And if taxes were not increased, fiscal hawks on the right would bemoan the resulting increase in the budget deficit and an associated rise in the national debt.
Nevertheless, necessity might prevail over ideology in the coming weeks and months. The U.S. economy will stay in hibernation mode as long as COVID-19 rages and Americans stay isolated in their homes. More than 700,000 jobs have already been lost. There are likely to be more jobs eliminated in April, potentially enough to wipe out the employment gains made since the last recession. This sudden rise in unemployment will translate into steadily decreasing demand by consumers for goods and services. Decreased corporate revenues will lead to further layoffs, furloughs, and outright firing of employees.
While e-commerce jobs likely will continue to increase, they will not make up for jobs lost in other sectors of the economy. As a result, the ranks of the jobless will swell, creating a vicious cycle of decreasing demand and increasing unemployment. Congress will have no choice but to continue the economic relief and stimulus measures already enacted, as well as to pass additional safety-net measures. Neither conservative opposition nor progressive support for such policies will matter because protecting the physical and economic well-being of all Americans will transcend partisan politics.
When all of this is finally over and a recovery is finally underway, Americans might want to think twice before undoing and discarding all of the new policies and programs created during this crisis. Some of these measures might support continued prosperity after it returns, while others might mitigate the harm caused by future economic shocks. The results of the current election cycle will have a lot to do with the long-term fate of recently enacted legislation. So voters will have the ultimate say.