The responses of the Trump administration and the US Congress to meet the socio-economic challenges posed by the onslaught of the coronavirus constitute a marker in American politics — how in a deeply polarised political climate, it is still possible to evolve ‘bipartisan consensus’ between the ruling elite and the opposition when a national emergency arises and a potential catastrophe may wreck the lives and fortunes of millions of families in America.
That this is happening bang in the middle of an acrimonious election campaign which is destined to be more and more divisive in the coming months till November gives the happening an extraordinary political favour.
On Wednesday, the US Senate passed the House coronavirus relief bill (with a 90-8 voting majority) — and President Donald Trump promptly signed it into law — that amounts to what has been described as ‘one of the largest emergency spending packages in modern history.’ The legislation, passed in lighting speed, rests on a deal carefully negotiated between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin.
It provides for free coronavirus testing — even for the uninsured; two weeks of paid sick and family leave; increased federal funds for Medicaid and food security programs, like food stamps; and increased unemployment insurance benefits.
Meanwhile, negotiations over another downstream deal have been already going on. The Senate has decided to stay in session until the next deal is also worked through as legislation.
The next deal in the pipeline could be a mind-boggling proposal by the White House asking Congress for a $1 trillion coronavirus relief and economic stimulus plan that would include industry-specific bailouts and payments to individual taxpayers.
Interestingly, the White House proposal may include, according to a paper prepared by the Treasury: Payouts to individual Americans: $500 billion; Airline industry bailout: $50 billion; Other affected industries bailout: $150 billion; and, Small business interruption loans: $300 billion.
The proposal includes some striking features such as immediate payouts (totalling $500 billion) in two separate checks of equal amounts in April and May calculated on the basis of income level and family size.
Again, the small business interruption loans at concessional rates totalling $300 billion will target employers with 500 employees who will be expected to keep paying all their workers for eight weeks from the date of the loan. It means that the government would guarantee 100% of six weeks of payroll, capped at $1,540 per week per employee.
Trump has literally put to shame Barack Obama’s Troubled Asset Relief Program of $700 billion in 2008 to tackle the financial crisis where the money went entirely to bail out of big banks and auto companies. (Obama also designated another $200 billion to rescue Fannie Mae and Freddie Mac, the giant mortgage enterprises.)
It’s of course another story that Obama administration made a cool profit out of the bailout packages when the loans were paid back by Wall Street firms with interest. As of Jan. 2020, the ‘profit’ to the USG from Obama’s bailout package exceeded $120 billion!
Some big moral and ethical implications are involved here — and, inevitably, serious repercussions in US politics in the upcoming November presidential election as well.
Also, bear in mind that unlike in the 2008 financial crisis, Trump’s ‘bailout’ plans may well involve even more federal expenditures and guarantees, depending on how long the coronavirus chooses to linger on.
No matter Trump’s political motivations (which he’s entitled to have as any other politician), fundamentally, what is unfolding is a rare sight of capitalism showing human face.
In the process, social democracy of the Scandinavian variant is parachuting on American soil. The mother of all ironies is that it is happening under the watch of Trump who despises socialism or anything connected with that pernicious ideology.
Having said that, Trump’s ideological fixations have not prevented him from sensing as a shrewd politician, while closely following Bernie Sanders’ campaign with an eagle’s eye, that ‘democratic socialism’ (as Sanders prefers to call it) is indeed finding appeal and growing acceptance among the American people.
The paradox here is that while Sanders’ enduring legacy might well be that he may end his campaign having legitimised socialist thinking in the US political lexicon, in the short term an arch reactionary such as Trump is positioning himself to reap the windfall in the short term. Clearly, Joe Biden now would have no option but to turn ‘left’ under these circumstances.
Make no mistake, however, that Trump is far from overhauling the US capitalist system. Far from it. He’s unabashedly borrowing some elements of ‘democratic socialism’ for immediate political gains. Nonetheless, the profundity of what Trump is doing cannot be belittled, either.
Equally, its impact on global politics cannot be underestimated. Trump is not wasting breath on working out a G-20 global strategy, blah blah (under the leadership of the Saudi Crown Prince Mohammed bin Salman) to guide him in the fight coronavirus, but is entirely focusing on an American strategy for his country, to suit its needs and priorities. He’s emulating China’s approach.
This means that it falls on the able shoulders of other G-20 wizards such as India or Australia to create some heft for the group’s ‘virtual summit’, which Riyadh has announced on Tuesday.
Put differently, Trump’s disdain toward multilateralism hasn’t waned a bit. He still remains a unilateralist wedded to America First.
This, in turn, leaves the field wide open for China to carry the baton of leadership in the fight against corona virus.
All the same, Trump is also preparing the US business and industry for the economic boom that is certain to follow when the COVID-19 recedes and goes into hibernation. Read a riveting piece on Trump and socialism in the Atlantic magazine — There Are No Libertarians in an Epidemic, here.
Source: The Indian Punchline