Rich interests have thrived during the pandemic. The CARES Act authorized billions in expenses to support wealthy individuals and corporations. Most of the money was used to guarantee the liquidity of banks and hedge funds, back corporate balance sheets, and buy debt to save commercial loan markets. Overall, 82% of the $ 170 billion tax provision included in the stimulus legislation benefited people who earn more than $ 1 million per year.
The results in which this expense is found. The Dow industrials DJIA,
and the S&P 500 SPX,
have been on the rise for weeks, and the Nasdaq Composite COMP,
It is at its highest point, while the aggregate net worth of billionaires has increased by 20% in the past five months.
On July 31, the $ 600 life line in additional federal unemployment benefits expires, and the $ 1,200 checks authorized by the CARES Act will be gone. And despite receiving direct aid, most states and cities will face a cash crisis, which could lead to mass layoffs and cuts to critical social services. If these problems weren’t enough, President Donald Trump demands that school districts bring students back, without the billions of resources necessary to do so safely.
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The federal government’s job is to spend to stimulate the economy during a crisis, and we know that this strategy works. Now Congress must do the same for workers and communities across the country.
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Without dramatic action from Congress in the coming days, the US economy is poised to jump off a cliff.
Fortunately, members of Congress are negotiating another stimulus package. But the next must fix the defects of the first. This time, the stimulus package should prioritize recurring aid and structural reforms for workers and local governments.
So-called federal accounts, created at no charge to all Americans by the Federal Reserve, would provide an alternative to financial services that take advantage of unbanked and subbank populations, which generally charge far higher market rates.
fake pictures
The next stimulus package must extend the unemployment benefit and provide a guaranteed recurring income of $ 2,000 per month, create free Federal Reserve bank accounts – “Fed Accounts” – for every American, and provide state and local governments with payments continuous cash and ensure that future economic crises trigger automatic payments.
The federal government’s job is to spend to stimulate the economy during a crisis, and we know that this strategy works. Now Congress must do the same for workers and communities across the country.
Before the pandemic, many Americans barely made ends meet. Only four in 10 Americans had $ 400 in the bank to weather an emergency, millions of households lived on checks, and many spent more than a third of their income on housing. This was an economy with historically low unemployment and rising stock markets. The coronavirus forced its fragile belly to the surface.
By providing each American with a guaranteed monthly income of $ 2,000, the United States will be a more resilient nation. Monthly cash payments will ensure people can pay rent and buy groceries, provide the peace of mind necessary to distance themselves socially today, and better prepare everyone for the next disaster.
According to data from the Federal Reserve, 22% of Americans do not have banking or banking services. About 40% of the unbanked used some type of predatory service, such as a check cashing service, pawn shops, an auto title loan, payday or advance payment, or a tax refund product. In perspective, currency exchanges generally charge 3% to cash a government check (one that has zero chance of bouncing), 1% of a utility bill to pay that bill, and up to 400% on a loan from payday.
Put another way, billions of dollars of income and future wealth are drawn from communities because we don’t treat access to banking as a public service like water or electricity.
When the time came to disburse the CARES Act checks, millions of people had no way of receiving aid. Many waited weeks. Some are still waiting. The creation of free federal accounts will ensure that everyone has a public option for a free bank account and receive their guaranteed income at no cost through the government keystroke.
Finally, Congress should pass a structural reform in which states and cities receive recurring countercyclical aid when there is an economic crisis. State and local governments have seen revenues fall due to the coronavirus, and there are additional risks on the horizon. With continued unemployment and a possible wave of defaults on residential and commercial rentals and mortgages, income from property and income taxes are under threat. States and cities must pass balanced budgets by law, even if it means harming the people they serve. Historically, they have had to do all three, and in doing so, they hurt long-term recovery efforts. By supporting local governments with recurring aid, the federal government will drive the national economic recovery.
These are reasonable demands. It is not reasonable to think that individuals and communities can weather the pandemic without additional help. Yes, these items will cost money, but inaction will cause more deaths and permanent damage to the economy.
The clock is ticking.
Ameya Pawar is a former Chicago alderman and a member of the Open Society Foundations and the Economic Security Project. Her next book “Organize Capital: The Case for Public Banks” will be published by the UChicago Press in 2021..
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