Is "Building Back Better" Possible?

When President Joe Biden talks about his desire to lead a recovery from the impact the Covid virus has had on the American economy, he describes his goal as “building back better.” He recognizes the pandemic has not only been a health crisis, it has also been the country’s worse economic disaster since the Great Depression. More than 22 million jobs were lost in US by April 2020 and 60 million Americans lived in households struggling to meet normal household expenses, including 29% of families in the two Carolinas. 

But if Biden is to achieve his goal, it will require a sea change in the attitude among many Americans about what constitutes value and worth in our society. 

Since taking office in January, Biden has issued several executive orders to address financial challenges resulting from the Covid pandemic, and in March he was able to persuade Congress to pass, without any Republican support, the American Rescue Plan. The nearly $2 trillion act provided immediate relief by authorizing additional $1400 stimulus checks for Americans earning less than $75,000 annually. It also provided $350 billion to state and local governments, expanded child tax credits and made them fully refundable, and included aid for both homeowners and renters to prevent a spike in homelessness. 

In addition, the act extends and supplements unemployment benefits paid by the states. The extra $300 a month federal subsidy has been of critical importance to workers in states with modest benefits. The average unemployment benefit in both Carolinas, for example, is only about $230 per week according to data from the US Department of Labor. 

Combined with the vaccine rollout that has led to nearly 40 percent of US adults being fully vaccinated, the American Rescue Plan has helped to mitigate some of the damage suffered as result of the pandemic, but “building back better” is still an elusive goal. 

In a gesture demonstrating their lack of empathy for their poorest constituents, several governors have withdrawn their state from participation in federal unemployment programs effective the end of June. Without offering any supporting databut only vague speculation, the governors claim employers are unable to find workers for available jobs because of the extended benefits and the extra $300 provided by the federal government. 

SC Governor Henry McMaster made clear his attitude when he described shutting off federal benefits as a return to “pre-pandemic, state employment operations.” No “building back better” for him. 

Less partisan observers offer several reasons for workers hesitating to leave unemployment. First is the obvious. Some jobs require particular skills. For example, many positions on the SC Works website call for a registered nurse. 

There are other understandable issues such as, lack of affordable child care and erratic work schedules, both major concerns for women. Also, there are continuing concerns for those with underlying health problems as well as the absence of “herd” immunity which requires that at least 70 percent of the adult population be vaccinated.

A cause for employee reluctance in the hospitality/leisure field is the average low wage. According to SC Works, average pay in the sector is $9.48 an hour, which is less than $400 a week and less than $20,000 a year.  Also, hospitality/leisure workers surveyed this spring by Florida Atlantic University expressed concern about last year’s abrupt layoffs. Anxious about employment security, many are looking to find jobs in other fields. 

According to Forbes in November 2020, Americans making less than $30 an hour were feeling the most economic pain as result of the quarantine imposed by the pandemic. These are the people benefiting most from the federal unemployment stipends, which have prevented wholesale eviction of families and provided income for essentials. 

In SC the extra $300 per week has added roughly $30 million dollars to state GDP each week. For NC the sum is about double. To eliminate this infusion of income ten weeks early is not a sound strategy given the overall economic environment.

But a begrudging opposition to federal unemployment benefits is not the only hurdle Biden must overcome. He also has to contend with America’s saturation of billionaires. 

While most Americans have suffered severe financial anxiety during the past 15 months, the nation’s nearly 700 billionaires have reaped a windfall. Their net worth has increased by more than $1 trillion to more than $4 trillion. 

Since 2020, nearly 100 newcomers have joined the ranks of US billionaires, including four who made their money in the health care field. But the usual suspects can be found among the biggest winners. Elon Musk of Tesla fame and Amazon founder Jeff Bezo top the list. Musk’s fortune grew by $144 billion. Bezo added only $86 billion, having shared some of his largess with his ex-wife, MacKenzie Scott. Her fortune increased a mere $25 billion. 

Perhaps it wouldn’t be so bad if billionaires were a bit more thoughtful about how they “invest” their wealth. Job creation is rarely a priority. Musk is determined to be the leader in space exploration.  Bezo has bought a 417- foot sailing yacht with sails so big he is having to buy another boat to provide a helipad for his girlfriend’s helicopter.  

And by the way, Bezo’s superyacht is not being built by American workers. It’s being built in the Netherlands, not a low-wage country, at the cost of $500 million. 

Biden has not adopted any of the audacious schemes for taxing the wealthy batted around during the 2020 Democratic presidential primary. His proposals thus far suggest only increasing modestly the marginal tax rate on income over $400,000 for individuals and doubling the capital gains tax rate, but only for those making more than $1 million a year. 

The new president wants to be tougher on corporations, raising the corporate tax rate from 21 percent to 28 percent, imposing a 15 percent minimum corporate tax, and implementing several measures to discourage corporations from moving assets and jobs abroad. 

Justification for Biden’s proposals for corporate changes is confirmed by an independent study of the 2017 Tax Cuts and Jobs Act. The Institute on Taxation and Economic Policy determined the act allowed 379 profitable corporations to pay on their 2018 income only an effective corporate tax rate of 11.3 percent, not the 21 percent statutory rate. No federal taxes at all were paid by 91 corporations, including Amazon, IBM, Duke Energy, Delta Airlines, Starbucks, Netflix and General Motors. 

The Covid pandemic has demonstrated America needs a fairer economic system that recognizes the value and worth of all citizens. Many workers essential to our well-being are being paid meager wages and lack reasonable job security, while billionaires and corporate managers milk the system for obscene riches. “Building back better” should not be partisan issue. It is in the public interest and deserves support from all economic and political factions.