The coming pandemic economic crisis

Joe Biden will be sworn in as President of a nation in which millions are unable to pay their bills and most of the programs to help them will have expired.

There will be much that he can do, with or without the cooperation of the Senate.  But what he will do is another question.

Here’s the deal.  The Center on Budget and Policy Priorities reported that—

  1. Nearly 26 million American adults—12 percent of all adults—reported they sometimes or often had difficulty in putting enough food on the table during the first week in November.  That’s triple the pre-pandemic percentage.
  2. An estimated 13.5 million adult renters—about one in five renters—were behind in their rent.
  3. Nearly 81 million adults—one in three—reported it was somewhat or very difficult to pay their usual bills.
  4. In September, some 31 million Americans met the official definition of “unemployed” or were part of a household of an unemployed person.

Bankruptcy filings are mounting, and that is just the tip of the iceberg.  Many owners of failed small businesses can’t even afford to file for bankruptcy.  State and local governments, meanwhile, are running out of money.

Most of the federal emergency programs to alleviate the crisis will expire at the end of the year.  The $600-a-week supplement to state unemployment insurance expired July 31.  The rest of the unemployment insurance supplement will expire at the end of the year.  An estimated 13.5 million Americans benefit from pandemic-related unemployment relief.

The Senate and House of Representatives are deadlocked  on how to extend emergency programs.

So will the moratorium on evictions decreed by the Centers for Disease Control.  That wasn’t sustainable as a permanent policy anyway.  Property owners who make a living from rental income need that income to maintain the properties and usually to pay for utilities.

And the moratorium on student debt payments decreed by President Trump also expires at the end of the year.  About 32 million Americans had loans eligible for suspended payments. 

Both the renters nor the student debtors still owe the full amount.  They got a temporary suspension of payments, not relief.

∞∞

Joe Biden is the first President to be take office in the middle of a national crisis in which one house of Congress is controlled by the opposition political party.  This limits his freedom of action, but progressives say existing law gives him a great deal of power.

The Higher Education Act gives the Secretary of Education authority to settle all publicly-held student debt and cancel all or part of it.  David Dayan of The American Prospect says that covers 95 percent of American student debt, which is up to $1.5 trillion.  This would help stimulate the economy by making it easier to get a home mortgage or an auto loan.

Biden also would have the authority to forgive up to $50,000 of student debt by executive order.

The Affordable Care Act authorizes the Secretary of Health and Human Services to create a pilot program to cover medical expenses of anyone who suffers from an environmental health problem.   The coronavirus, Dayan said, is an environmental health problem.

The Federal Reserve Act authorizes the Federal Reserve System to make six-month loans to cities and states to cover budget shortfalls.  There’s no reason why these loans can’t be rolled over indefinitely, according to Dayan.

The federal government could decree that all federal contractors must pay workers a $15 an hour minimum wage.  About one in four American workers are employed by a company that has a federal contract on some level, Dayan said.

The federal government licenses patents to private companies for drugs developed by federally-funded research.  There is nothing to prevent the government from taking back patents from companies that charge exorbitantly-high prices for drugs.

Dylan Matthews of Vox says the Postal Service has authority to provide low-cost banking services to people who can’t afford the monthly maintenance fees, overdraft fees and other charges.  But this would have to wait until there are enough vacancies on the five-member governing board to restore a Democratic majority.

One very important power is to abandon the “too big to fail” doctrine and enforce existing anti-trust laws and laws against financial fraud.

∞∞

Will Biden actually do any of this? His record is not encouraging, and neither are the appointments he appears to have in mind.  But people sometimes change in the face of crises, and maybe he and his team will do so, too.

LINKS

The Crisis

Center on Budget and Policy Priorities.  Bookmark this for updates on new developments.

The Coming Deadly Covid Winter by Yves Smith for Naked Capitalism.

Tracking the COVID-19 Recession’s Impact on Food, Housing and Employment Hardships by the Center on Budget and Policy Priorities.

Key COVID relief programs set to expire at the end of the year without deal on new bill by Grace Segers for CBS News.

Can’t Do America: Kick-the-Can Approach to Pension Fund Crisis by Yves Smith for Naked Capitalism.

What Biden Could Do

The Day One Agenda by The American Prospect.  Bookmark this for updates on new developments.

The 277 Policies for Which Biden Need Not Ask Permission by Max Moran for The American Prospect.  [Added 12/2/2020]

What Can Biden Do Without the Senate? interviews of Robert Hockett and Demond Drummer of New Consensus and David Dayan of The American Prospect for The Intercept.

Joe Biden’s executive agenda: 10 things he can do without the Senate by Dylan Matthews for Vox.

Congress can wait: How Biden can reshape our future with executive action by Paul Rosenberg for Salon.

What a Biden Labor Board Could Do by Harold Meyerson for The American Prospect.

Biden Can Cancel Student Debt on Day One, an interview of Astra Taylor for Democracy Now!

What Biden Is Likely to Do

Cabinet Watch for The American Prospect.  Bookmark this for updates and analysis of Biden’s appointments.

And Here I Had Some Hope for Biden by Ian Welsh.

BIden, the Emcee at the Billionaires’ Ball by Glen Ford of the Black Agenda Report.

Biden Picks Budget Director Who Pushed Social Security Cuts by Walter Bragman for The Daily Poster.

Disdain and Disbelief After Biden Claims ‘Significant’ Progressive Presence in Administration by Brett Wilkins for Common Dreams.

Image via Getty Images

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