Sorry AOC, COVID-19 is Not an Excuse for Economic Revolution
Progressives want budget-busting structural change, but the stimulus is a temporary measure to keep the economy afloat.
As a $2 trillion aid package designed offset the economic effects of the COVID-19 epidemic makes its way through Congress, Representative Alexandria Ocasio-Cortez expressed optimism about what this legislation means for her progressive platform.
“One enormous, major lesson that I hope people realize in this moment: Resistance to revolutionary policy was never really about a lack of money, or capacity, or logistics,” she wrote on Twitter. “It was always about power and a lack of political will.”
Not all of progressive Democrats’ proposals are big-spending items. But concluding that a costly emergency response to a widespread, imminent, non-permanent threat means we should create whatever permanent programs we want is illogical and narrow-sighted.
Federal spending as a percentage of total economic spending reached its three highest peaks during World War II, World War I, and the Civil War. At these times, the U.S. perceived existential threats and sought to end them as quickly as possible. As with war, the COVID-19 threat is temporal—there is a clear time frame in which the U.S. must respond to the problem, and should the issue go unresolved for too long, Americans will suffer drastic, permanent, life-altering consequences.
Based on the data we have about COVID-19 infection and mortality rates, should current trends hold, we’re looking at anywhere from 500,000 to 10 million American deaths. And that’s not even counting the deaths of those who aren’t infected but can’t receive needed treatments because hospitals are well above capacity.
Besides this obvious tragedy, there will be long-term economic consequences. Sudden dramatic reductions to the labor force and productivity will lead to shortages and inflation, increasing financial stresses on those of us left behind.
A better alternative, as has been well established, is social distancing. By severely limiting contact with each other until our testing and health care capacities can ramp up, we can be better equipped to handle the pandemic until a vaccine is available sometime next year. Employing this strategy full-force could save millions of lives.
Of course, firm social distancing will cause the economy to slow dramatically for at least a few weeks. Appropriately, many governors have ordered stay-at-home measures, which means people aren’t going to concerts, eating out, or going shopping (except for groceries).
This is going to cause severe financial stress. Many businesses can’t last without revenue for a month and won’t be able to open again once the economy starts returning to normal. That’s a recipe for a long-term employment problem. Likewise, many people can’t last a month without income, and some will fall behind in rent or utility bills. Housing problems, of course, will lead to other long-term socioeconomic strains. These consequences will bite governments, too, as revenues plummet while social expenditures skyrocket.
This is the logic behind an emergency aid package—we borrow tax revenues from our future selves, who are in healthier economic circumstance post-coronavirus to save lives and livelihoods now and facilitate a return to normalcy.
The final bill certainly has some politics in it, but its core is crucial—cash directly to people and their families, small businesses, hospitals, and hard-hit industries. Also important are incentives for employee retention and assistance to hospitals. Paired with social cooperation, this bill brightens the light at the end of the tunnel.
Such logic is remarkably different from progressives’ arguments for an economic “revolution.” Bernie Sanders wants to abolish private health insurance and replace it with by far the most generous, most expensive government health care system in the world. The Justice Democrats’ platform contains a federal jobs guarantee. AOC’s initial Green New Deal idea would have seen the government spend to the tune of three quarters of the U.S. economy, the highest in the developed world.
The details of these ideas are less important than their most essential feature—they are permanent, structural changes. They do not intend to carry people through a temporary economic slowdown. They plan to change the economy itself. While the emergency aid package internalizes the tradeoff between now and the future, progressive economic policies make no temporal distinction. Spend a lot today, they say, and spend a lot tomorrow.
While the federal government has indeed opened an enormous deficit, Americans should see it as a reflection of the seriousness of COVID-19 and not an indicator of how easy deficits are. To be sure, we will pay for these deficits down the road through interest payments and slower growth. That’s why we should be glad for the temporary cash assistance to those who need it, and why Congress should continue to avoid introducing any larger structural changes.
Revolutionary policy would permanently shift the production and distribution of American resources. While Ocasio-Cortez’s progressive platform wants a new normal, this aid seeks to help Americans’ lives get back to normal.
John Kristof is a fiscal policy analyst based in Indianapolis and a contributor with Young Voices. Follow him on Twitter @jmkristof.