WASHINGTON — A quarter-century ago, a Democratic president celebrated “the end of welfare as we know it,” challenging the poor to exercise “independence” and espousing balanced budgets and smaller government.
The Democratic Party capped a march in the opposite direction this week.
Its first major legislative act under President Biden was a deficit-financed, $1.9 trillion “American Rescue Plan” filled with programs as broad as expanded aid to nearly every family with children and as targeted as payments to Black farmers. While providing an array of benefits to the middle class, it is also a poverty-fighting initiative of potentially historic proportions, delivering more immediate cash assistance to families at the bottom of the income scale than any federal legislation since at least the New Deal.
Behind that shift is a realignment of economic, political and social forces, some decades in the making and others accelerated by the pandemic, that enabled a rapid advance in progressive priorities.
Rising inequality and stagnant incomes over much of the past two decades left a growing share of Americans — of all races, in conservative states and liberal ones, in inner cities and small towns — concerned about making ends meet. New research documented the long-term damage from child poverty.
economic equity at the forefront of the new administration’s agenda.
Whether the new law is a one-off culmination of those forces, or a down payment on even more ambitious efforts to address the nation’s challenges of poverty and opportunity, will be a defining battle for Democrats in the Biden era.
broadly popular with voters, an intensified focus on worker struggles on both the left and the right, including Republicans’ increasing efforts to define themselves as a party of the working class, has scrambled the politics of economic policy across the ideological spectrum.
prominent conservatives have welcomed the antipoverty provisions, applauding them as pro-family even though they violate core tenets of the Republican Party’s decades-long position that government aid is a disincentive to work.
Many Republicans from conservative-leaning states have turned increased attention to growing social problems in their own backyards, in the middle of an opioid crisis and economic stagnation that has left rural Americans with higher poverty rates than urban Americans, particularly for children.
An emerging strain of conservatism, often supported by a new generation of economic thinkers, has embraced expanded spending for families with children, to help lower-income workers and, in some cases, to encourage families to have more children. The conservative radio host Hugh Hewitt celebrated the expanded child credit in a series of Twitter posts on Friday, urging parents to use the proceeds to send their children to parochial school, and said he would work to make them permanent.
nearly six million children out of poverty, “came to be part of the package because families that earn in the bottom third of the income distribution, or at least of the wage distribution, have been disproportionately hurt by the pandemic,” said Cecilia Rouse, the chairwoman of the White House Council of Economic Advisers.
Democrats and poverty researchers began laying the groundwork for many of those provisions years ago, amid economic changes that exposed holes in the safety net. When a 2015 book by Kathryn J. Edin and H. Luke Shaefer, “$2.00 a Day,” argued that rising numbers of families spent months with virtually no cash income, Mr. Brown arranged for all his Democratic Senate colleagues to receive a copy.
At the same time, many scholars shifted their focus from whether government benefits discouraged parents from working to whether the vagaries of a low-wage labor market left parents with adequate money to raise a child.
A growing body of academic research, which Obama administration officials began to herald shortly before leaving office, showed that a large proportion of children spent part of their childhood below the poverty line and that even short episodes of poverty left children less likely to prosper as adults. A landmark report by the National Academies of Sciences, Engineering and Medicine in 2019 found that aid programs left children better off.
“That allowed us to change the conversation,” away from the dangers of dependency “to the good these programs do,” said Hilary W. Hoynes, an economist at the University of California, Berkeley, who served on the committee that wrote the report.
cut child poverty from prepandemic levels among whites by 39 percent, Latinos by 45 percent and African-Americans by 52 percent.
“Covid exposed the fissures of systemic racism and systemic poverty that already existed,” said the Rev. William J. Barber II, who helps run the Poor People’s Campaign, an effort to get the needy more involved in electoral politics. “It forced a deeper conversation about poverty and wages in this country.”
White House officials and Democratic leaders in Congress say Mr. Biden’s rescue plan has now changed that conversation, creating momentum for permanent expansions of many of its antipoverty efforts. Multiple researchers project the bill will cut child poverty in half this year.
Democrats say they will turn that into an argument against Republicans who might oppose making the benefits permanent. “You’re voting for doubling the child poverty rate — you’re going to do that?” Mr. Brown said.
In selling the plan, Mr. Biden has blurred the lines between the poor and the middle class, treating them less as distinct groups with separate problems than as overlapping and shifting populations of people who were struggling with economic insecurity even before the pandemic. Last week, he at once talked of “millions of people out of work through no fault of their own” and cited the benefits his plan would bring to families with annual incomes of $100,000.
“This is part of why I think it is more transformational,” said Brian Deese, who heads Mr. Biden’s National Economic Council. “This is not just a targeted antipoverty program.”
In coming months, Democrats will face significant hurdles in making provisions like the child benefit permanent, including pressure from fiscal hawks to offset them by raising taxes or cutting other spending.
But the swift passage of even the temporary provisions has left many antipoverty experts delighted.
“A year ago, I would have said it was a pipe dream,” said Stacy Taylor, who tracks poverty policy for Fresh EBT by Propel, a phone application used by millions of food stamp recipients. “I can’t believe we’re going to have a guaranteed income for families with children.”
Tucked inside the $1.9 trillion stimulus bill that cleared the Senate on Saturday is an $86 billion aid package that has nothing to do with the pandemic.
Rather, the $86 billion is a taxpayer bailout for about 185 union pension plans that are so close to collapse that without the rescue, more than a million retired truck drivers, retail clerks, builders and others could be forced to forgo retirement income.
The bailout targets multiemployer pension plans, which bring groups of companies together with a union to provide guaranteed benefits. All told, about 1,400 of the plans cover about 10.7 million active and retired workers, often in fields like construction or entertainment where the workers move from job to job. As the work force ages, an alarming number of the plans are running out of money. The trend predated the pandemic and is a result of fading unions, serial bankruptcies and the misplaced hope that investment income would foot most of the bill so that employers and workers wouldn’t have to.
Both the House and Senate stimulus measures would give the weakest plans enough money to pay hundreds of thousands of retirees — a number that will grow in the future — their full pensions for the next 30 years. The provision does not require the plans to pay back the bailout, freeze accruals or to end the practices that led to their current distress, which means their troubles could recur. Nor does it explain what will happen when the taxpayer money runs out 30 years from now.
said last week.
according to the agency itself. That would leave the roughly 80,000 other union retirees whose pensions the agency now pays without their payouts.
The new legislation changes that. It calls for the Treasury to set up an $86 billion fund at the pension agency, using general revenues. The agency would be required to keep the money separate from the funds it uses for normal operations. It would use the new money to make grants to qualifying pension plans, allowing them to pay their retirees. The Congressional Budget Office estimated that 185 plans were likely to receive assistance, but as many as 336 might under certain circumstances.
pensions that were cut in a 2014 initiative that tried to revive troubled plans by trimming certain people’s pensions. The stimulus bills — there is a House version and a Senate version that have minor differences — call for the affected retirees to get whatever money was withheld over the past six years.
The legislation requires the troubled plans to keep their grant money in investment-grade bonds, and bars them from commingling it with their other resources. But beyond that, the bill would not change the funds’ investment strategies, which are widely seen as a cause of their trouble.
For decades, multiemployer pensions were said to be safe because the participating companies all backstopped each other. If one company went under, the others had to cover the orphaned retirees. Because they were considered so safe, multiemployer pensions never got much oversight.
While companies that run their pension plans solo must follow strict federal funding rules, multiemployer plans do not have to. Instead, the companies and unions hammer out their own funding rules in collective bargaining. Both sides want to keep the contributions low — the employers to reduce labor costs, and the unions to free up more money for current wages. As a result, many of the plans have gone for years promising benefits without setting aside enough money to pay for them.
In hopes of making up for the low contributions, the plans often invest unduly aggressively for their workers’ advancing age. In bear markets they lose a lot of money, and they can’t ask the employers to chip in more because the employers are often struggling themselves.
The new legislation does nothing to change that dynamic.
“These plans are uniquely unable to raise their contributions,” said Mr. Naughton, whose clients included multiemployer plans when he was a practicing actuary. “When things go well, the participants get the benefits. If things go badly, they turn to the government to make it work.”
