Governing Principles

The Missus and I have been working in full-time jobs since the beginning of time it seems for about 25 years. We’re likely in the upper class. For purposes of this blog post, I’m considering the mix of income and assets any individual/household has, and dividing the classes up as such: lower/upper class = poorest/richest 25%; middle class = middle 50%. This is a rough, made-up schema, so feel free to heckle me in the comments.

Growing up, and before reaching our current point, The Missus and I were within the middle class in terms of numbers. And probably for parts of our growing-up years, the upper class. I may have been in the lower class for a few years, too. Wild times. Wild times.

I note all this to provide some context as to my first-hand experience for purposes of this blog post.

Fair to middling

In my lifetime, politicians have consistently said that their main focus is the “middle class.” The reality, I think, is more nuanced.

To paint with a (maybe overly) broad brush, Democrats have focused a lot on helping poorer people. Understandable, I think. I mean, helping poor people become more (financially) secure makes sense to me. Republicans (again, with that broad brush) have focused a lot on business (owners) and wealthy people. Makes sense. I mean, helping business owners helps them as individuals and, in many cases, as employers of others. As for helping the (very) wealthy, although I find the arguments often less compelling, if not outright debunked in some cases, I don’t think that they completely lack merit.

The broad “middle class,” plus additional “working people” have benefitted, to be sure, from many of these efforts. After all, anti-discrimination laws, minimum wage laws, and such, do/can help many workers, not just the poorest. Likewise, many efforts to help businesses benefit the business owners and their employees, many of whom are middle class. There also are a gazillion public programs and efforts big and little that benefit the middle class.

Get it?

For much of the last four to six decades conservative philosophies/fiscal conservatism have been ascendant and, in many cases, dominant in the United States (also elsewhere, but I’m just focusing on the United States in this blog post). Certainly among Republicans, and to no small extent among new-way Democrats. There have been ebbs and flows, but, generally, the social safety net has thinned over this period. Parts have disappeared. Many Americans, like me, have been conditioned to place a premium on personal responsibility and not expect (much) government assistance. Much less, government assistance that goes so far as to solve a problem, rather than ameliorate its effects a bit.

Workplace benefits—for those who even have access to them—likewise have changed over the last several decades. Pensions largely are gone. 401(k) plans (and nonprofit and public sector equivalents), and their DIY investing decision requirements now dominate in their place. And even that may be changing. Many businesses cut back on or eliminated even these plans during the ‘rona crisis.

During the last major crisis that the country faced—the Great Recession—the government largely focused on saving the financial system and too-big-to-fail companies. To me, understandable, essential, and for sure not nothing. But individuals who suffered from the crisis weren’t unjustified in resenting that approach and the lack of criminal accountability (by way of jail terms) for leaders of those companies, many of which instead merely paid (sometimes massive) fines. After all, even if individuals helped cause the crisis—and hoo, boy, did they ever—those financial institutions and businesses were at least as culpable—and hoo, boy, were they ever.

Add to this, partisan gridlock; big changes buffeting the world in recent decades—think massive and fast technological advancements; rising countries, like China, India, and others; and the growth of the information and gig economies.

The result is that the middle class, and working people more broadly, live in an increasingly changing world. But government has replied, in large respect: “Well, you’d better figure it out for yourself.”

To be sure, the benefits that come from pursuing FIRE can be game changing and address a lot of these subjects. But even we intrepid warriors in the United States sometimes have to be creative. Think health insurance after FIREing, for example.

This essentially being all I’ve ever known, I became accustomed to it and expected little more, whatever I might wish.

Naked and afraid

Thence came the ‘rona. Pretty quickly, it laid bare even to many of the theretofore naysayers the stark and vast inadequacy of America’s social safety net. A few months after the crisis arose, the federal government—led by a Republican and with a Republican-majority senate, no less—did something that left me gobsmacked at the time: in mere weeks, it passed an earth-shaking, massive stimulus bill. One that, at least temporarily, expanded the social safety net in ways theretofore unseen and previously thought unlikely. Or impossible.

Another large (even if comparatively much smaller) stimulus bill was signed into law later in 2020. State governments also took measures to address social-safety-net issues during this time.

But last week, the earth didn’t just shake, it appears to have opened wide open.

On March 12, 2021, President Joe Biden signed into law a $1.9 trillion stimulus bill (the Act). There are good debates happening as to the possible effects of the Act on the government’s finances, and on inflation, for example. Those debates and the bill’s $1,400/person payments have grabbed the most headlines. And not without reason.

But to me (and many people far smarter than I am; a low bar, I know, but indulge me, Dear Reader), the far-and-away-bigger story is that this Act bears all the markings of being paradigm-shifting. Certainly in the short-term. And likely long-term. What’s more, this paradigm-shifting bill became law relatively quickly, quietly, and easily. No Republican voted for it, but the party’s opposition was seldom more than limp, at best. Policy changes that just a year ago were believed (not without reason) to be impossible to achieve soon, or maybe ever, became law (again, temporarily at this point) with little or no pushback.

Republican protestations since the bill was signed into law have been token in nature. And the bill (and now the Act) have enjoyed wide popularity. Even including a surprisingly high 60% approval by Republicans. It stands to reason that at least some of the policy changes/changes of approach stand a good chance of becoming permanent.

Net positive

Here’s a summary of many (tho not all) of the Act’s provisions. There are plenty of short-term and one-off payments designed to directly address the ‘rona’s economic effects. $1,400/person payments, assistance for renters, state and local governments, and others, and much more. But the Act’s real significance lies elsewhere I think.

First, for example, in the greatly increased child tax credit and the expanded earned income tax credit. These measures not only are projected to reduce child poverty in the United States by roughly 40%, but, as to the child tax credit, being paid out monthly, it’ll essentially function as a guaranteed (if small) basic income for parents of kids 17-years old and younger. Just a few months ago, that would have been considered fanciful. Many—including me—think that this increased benefit and the monthly-payment-payout schedule (as opposed to an annual-lump-sum) will be hard to whittle away or eliminate entirely.

The Act also expands the Affordable Care Act in ways that will enable tens of millions of Americans to secure (better) health care coverage for less money. This measure is temporary, but like the child tax credit, I think it’ll be hard to take away in part or in whole. After all, just 10 years ago, no shortage of Americans haaaaated the Affordable Care Act Obamacare. Now a majority love Obamacare the Affordable Care Act. The Act also incentivizes states that have so far thumbed their nose at taking federal funds to expand their Medicaid programs to take the funds. I suspect that at least some states will take the feds up on the offer.

Also under the Act, independent contractors and gig workers—many of whom before stimulus bill #1 in 2020 weren’t eligible for unemployment benefits at all—will continue to be able to receive unemployment benefits. Payment amounts also have been increased by the stimulus bills. I think now that people previously ineligible for unemployment benefits not only have been eligible for them, but have been so for more than a year, a reversal will prove difficult. If not impossible.

These features of the Act for sure address issues singular to the ‘rona. But make no mistake, they are way more far reaching. And if I’m right that they’ll continue well after they’re currently scheduled to end, I think that we’ll look at this Act as the event that reversed the prevailing conservative approach to the social safety net that started in the mid- to late-1960s (most Republicans largely abandoned fiscal conservatism as a guiding light during the Trump Administration, so the unofficial ceasing could be said to already have happened).

A brave new world

Being a news and history junkie, I’ve been tracking these debates and developments for decades. Nonetheless, having been conditioned for decades to fend for myself, I find myself in a completely unfamiliar and oddly strange position: being squarely within the group on which the government has trained its formidable financial firepower and policy focus. For example, The Family and I will get $1,400 checks and also child tax credits for Thing One (The Elder) and Thing Two (The Younger). We may also take advantage of the new Obamacare policies.

On the one hand, given my current position and good fortune, I’m a bit mortified to be benefitting from the Act at all. One could argue that I don’t deserve these benefits. I’d not argue. I also count myself among those who think that a lot in the Act should have been more targeted to those in the greatest need.

On the other hand, I’m incredibly floored and grateful that this sea-change bill is directly benefitting me. And I understand the politics of the situation, the urgency to “go big,” and the fact that some of the Act’s measures are broad for a multitude of good reasons beyond those just involving dollars. I also take comfort in that people in the position I was in when I was far less stable than I am now (and those in tougher situations) will benefit even more from the Act, potentially for decades to come and in positive life-changing ways.

If the government response of 2008/2009 was acid to Americans’ faith in government and, sadly, in fellow Americans, I suspect that this legislation will prove to be a salve. I should be clear that I’ve found the fury with which many Americans have railed against the government and, in far too many cases, against their fellow Americans since 2008, unwarranted and, in no shortage of cases, repulsive. But, I also recognized the (often) justifiable grievances at the core of the frustration giving rise to the underlying frustration. I’m hopeful that the Act begins to adequately addressing that.

And in the end . . .

Dear Reader, some argue that the Act is a liberal wish list. Maybe to some extent it is, although some wish list items—such as a $15 minimum wage and higher unemployment payments than ultimately included in the bill—didn’t make it into the bill.

But even if that’s true, as I mentioned, the bill/Act has enjoyed surprisingly strong popularity, even among Republicans, at least some of whom used to profess to be fiscal and monetary hawks. And inasmuch as the Democratic Party includes the likes of legislators on the far left Bernie Sanders and Alexandria Ocasio-Cortez, it also includes legislators much further to the right, like Joe Manchin and Kyrsten Sinema. Satisfying this broad coalition surely was no small feat.

Anyway, if it truly were a liberal wish list, I think it’d look more like what Colin Jost describes here.