June 24, 2020

Who Will Pay for the Crisis?

Francisco Pérez
Protester with a “Cancel Rent” sign in New York (photo by Shay O’Reilly)

Without massive resistance movements, people of color, white women, the disabled, and queer will pay for this crisis by losing their livelihoods, homes, education, healthcare, and for tens of thousands already, their lives. During major economic crises, governments choose who to provide with financial lifeboats and who they allow to drown. The rich and big corporations can best afford to absorb the income and wealth lost by closing entire economic sectors for months, but they are the ones most likely to benefit from government aid. These crises reveal that the largest obstacles to a decent society—to full employment and a strong safety net—are always political. The United States government has a magic money tree of sorts and could provide every resident with economic security. No one should have to worry about their next meal, being evicted, or how to pay for healthcare. The recent outburst of widespread anti-racist protests following the brutal murder of George Floyd by Minneapolis police on May 25 are a dramatic reminder of the power of collective struggle. Combined with the growing number of labor and rent strikes, this revitalization of the Black Freedom Movement is a promising sign that more radical social change in the US is possible.

On March 27, the US Congress passed the $2.2 trillion CARES Act, which like previous “stimulus” bills is unfair and inadequate. It gives away too much money the wealthy and the big corporations they own, including $46 billion for specific industries like airlines, and does not provide enough support to workers, small businesses, and state and local governments. The right-wing took advantage of the emergency to further their agenda, gifting the rich and big corporations another $174 billion in tax cuts unrelated to COVID-19. The Federal Reserve is again pumping trillions into financial markets, and the CARES Act provides $454 billion it can leverage to lend trillions more to non-financial corporations with little oversight. In contrast, workers got a one-time $1,200 check, which does not even cover rent in many cities. Bigger companies have taken advantage of the funds meant for small businesses. Black small business owners cannot raise funds from friends and family like white entrepreneurs can, so they are more dependent on bank loans, but less likely to receive them. Yet the “Paycheck Protection Program” relies on our racist banking system, that has either neglected or preyed on black and Latinx small businesses and homeowners. Finally, the money for states is insufficient, leaving them facing unprecedented budget shortfalls. Most state and local government spending is for education, so spending cuts will mean firing teachers and closing schools.

Although, the $3 trillion HEROES Act passed by House Democrats on May 15, does get many important things right, it is still does not provide enough money for families or make an open-ended promise of relief. The bill improves on the CARES Act in significant ways, providing $1 trillion to state and local governments, $200 billion in hazard pay for essential workers, $100 billion to help low-income renters avoid eviction, $75 billion for COVID-19 tracing and testing, $25 billion for the struggling postal service, as well as extending unemployment benefits, student loan forgiveness and a ban on evictions. Families would also get one more check, ranging from $1,200 to $6,000 per household. 

The Congressional Progressive Caucus should have known, however, that Republicans and conservative Democrats would block or delay further relief packages, and gotten automatic triggers based on public health and economic conditions included in the initial CARES Act legislation. In contrast, the Canadian government is sending families $1,400 a month for four months, while German government’s long time reliance on work-sharing has protected jobs during the pandemic. Already Republicans and conservative Democratic legislators—several voted against the HEROES Act—are claiming that the federal government cannot afford to do more. They want to force people back to work and are complaining that unemployment benefits are too generous and will discourage work. Cutting federal spending now would turn this crisis from a short, brutal depression into one that could drag out for years, hurting workers of color, white women, the queer and disabled the most. 

As long as this pandemic lasts, socialist activists need to apply pressure to businesses and governments to make sure that any future relief packages guarantee incomes and access to food, shelter, and healthcare, and that no one is obliged to work outside their home until it is safe. As we rebuild the economy, the need for a Green New Deal, including universal healthcare and a federal job guarantee, has never been clearer. Full employment at a fair wage has long been a demand of the Black Freedom Movement. Downplayed by those that aim to “sanitize” MLK’s legacy, the famous 1963 March on Washington demanded jobs and freedom. The fears of inflation due to runaway government spending are either overblown or insincere. The US economy is far as ever from operating at full capacity. Both inflation and the interest rates on US debt are low or even negative. There is no excuse for the federal government not to spend whatever it takes.

This profound social and economic crisis, therefore, is also an opportunity to think beyond repairing the safety net, toward building a democratic economy; one where we own and control our workplaces, housing, investments, and governments. With millions of small businesses likely to fail, this is the time to fund the creation of new worker cooperatives or convert existing businesses, giving workers the right to buy their employers. We need to make our supply chains shorter, with more locally based production of essential items like food, medicine, and energy. Worker-owners have little incentive to move their businesses overseas and could more flexibly shift production in case of emergency. My family has been able to live affordably for decades in a gentrified neighborhood because like thousands of New Yorkers I grew up in a limited-equity housing cooperative. This was the result of protracted struggle by squatters and housing activists to push the NYC government to turn foreclosed and abandoned properties over to their residents in the 1960s and 70s. As many landlords today face bankruptcy, this is the time to take housing off the market permanently and create more community land trusts. These cooperatives and land trusts could be financed by redirecting a fraction of the trillions being away to corporations to public banks and loan funds like the Seed Commons. Experiments like the Boston Ujima Project demonstrate what is possible if people of color controlled what businesses got financed in their communities and on what terms. Finally, we need to reclaim our governments by insisting that ordinary citizens be the ones that direct public money to our priorities and away from oppressive institutions like police departments.

The pandemic exposes the rot of racial capitalism. Even after the longest economic expansion in US history and record low unemployment rates, tens of millions of Americans were one or two missed paychecks from having to wait in long lines for food. Floyd, a 43-year-old father of five, was one of the millions who lost his job due to the pandemic. His alleged crime was trying to pay at a supermarket with a counterfeit $20 bill, showing that racial and economic justice are inseparable. We must continue fighting to secure a People’s Bailout and establish the foundations of a People’s Economy, one where we can all breathe. 

Francisco Pérez (@Platanomics) is a solidarity economy activist, educator and researcher currently pursuing a PhD in economics at the University of Massachusetts at Amherst. He is the Director of the Center for Popular Economics, a nonprofit collective of political economists whose workshops and publications demystify the economy and put useful economic tools in the hands of people fighting for social and economic justice.