ARPA: corrupting the electorate with free money

by Richard Schulman

Good parents try to raise their children from a state of dependency into independent adults. Bad governments, by contrast, seek to turn adults back into dependent children. Dependent on government, that is.

The left has a euphemism for this desired state of dependency: the universal welfare state.

Republicans are describing the recently passed $1.9 trillion American Rescue Plan Act of 2021 (ARPA) — also called the COVID-19 Stimulus Package — as a massive transfer of wealth from successful red states to failing, deficit-ridden blue states and to favored Democratic Party constituencies, such as teachers’ unions and the AFL-CIO. It certainly is that, but there’s more.

Progressive journalists are ecstatic that ARPA is a stepping stone toward the left’s holy grail, the universal welfare state. Thus, an article in The New Yorker of March 15th is headlined “Biden’s Stimulus Plan Contains an Experiment in Universal Basic Income.” A day later an article by Robert Kuttner in The American Prospect is headlined “Biden’s Child Tax Credit as Universal Basic Income” and underlines the fact that this “most transformative part of the American Rescue Plan will be very hard for Republicans to reverse.”

Free money corrupts

Kuttner explains:

For several decades, child advocates have tried to bring more public indignation to the scandal of extreme child poverty and have pushed for the expansion of the Child Tax Credit. In recent years, some progressives have called for something that seemed even more utopian, a universal basic income. Well, gentle reader, we just got both…. The new credit is for everyone, except the very richest…. There is no hassle establishing income eligibility, because eligibility is automatic…. This is free money, and word will spread.

Does anyone notice a serious political problem here? If a majority of the American public are living on transfer payments from the wealthy, what chance will the few remaining uncorrupted congressmen have to reduce taxes, deficits, and welfare spending or increase defense spending — even when this is essential to save the nation from conquest or financial ruin?

This is not the first time the issue has been raised.

Creating a dependent electorate

The Tax Foundation noted in 2012 that “Mitt Romney was pilloried for his comments on the ‘47 percent’ and the issue of dependency. It was at that time that a Congressional Budget Office report noted “that at least the bottom 60 percent of households now receive more in federal transfer income than they pay in total taxes and that it may not be long until 80 percent of Americans are net beneficiaries of transfer income.” The Tax Foundation raised what it called “an obvious and troubling question: Is it reasonable or fiscally responsible to ask the top 20 percent of households to pay for the government benefits of the other 80 percent of households?”

Nine years have passed since that observation was written, but ARPA — a partisan bill that passed without a single Republican vote — has little to do with Covid-19 and everything to do with turning an even larger portion of the US adult population into dependent children of government.

ARPA is the biggest expansion of the welfare state since LBJ’s 1965 Great Society bills. Those bills were a disaster: broken families, illegitimate children, hereditary welfare families spanning three generations. A 1996 welfare reform, pushed by Republicans and signed into law by President Bill Clinton, added a work requirement to welfare and sought to make it a temporary way station to returning to the work force. President Clinton welcomed it for “ending welfare as we’ve known it.” Despite widespread condemnation by progressives, the reform was a modest success.

Welfare as a permanent entitlement

ARPA changes the 1996 bill’s notion of welfare as temporary assistance to that of a permanent entitlement. To the extent that it proves a stepping stone to a universal welfare state, progressives will have demonstrated that they learned nothing from Senator Sanders’ famous blunder regarding Scandinavian socialism during the 2016 Democratic presidential primaries. Challenged on his career-long endorsement of socialism and asked how what he was advocating differed from the disastrous outcomes seen in Venezuela, Cuba, the USSR, and Maoist China, the presidential candidate from Vermont stated that his model for socialism was not those failed dictatorships but the democratic socialism of Sweden and the other Scandinavian countries.

He was immediately corrected by a storm of articles debunking the myth of Scandinavian socialist paradises. Sweden, for example, had a hard-working, high-growth, free market economy for a century preceding the 1960s. As a result, it and the other Scandinavian countries became quite prosperous. But beginning in the 1960s, Sweden’s Social Democrats argued that now that the country was rich, it was time to distribute the wealth among supporters. “[F]or twenty years, from 1960 to 1980, we doubled the size of the government spending as a percentage of GDP,” Swedish author and historian Johan Norberg told a Wall Street Journal interviewer. Initially, the Swedish welfare state was just conceived as a safety net for those in need. Later, however, the Social Democrats decided they’d “socialize the lives of the middle classes as well,” Norberg continues. The plan: “Increase their taxes, and their benefits, and then they will buy into this system.” But this not surprisingly “resulted in less work, people preferring to stay at home and paint the house, rather than hiring someone to do it.” There set in a “general lack of getting the kind of education that matters.” An onerous inheritance tax meanwhile drove away some of the country’s best companies and brightest minds including, at one point, Ikea.

Bringing the welfare state back to earth

In 1992, the Swedes threw out the Social Democrats and brought in as Prime Minister Carl Bildt of the Center-Right Moderate Party. He cut taxes and deregulated. Even when the Social Democrats came back, they were chastened. Sweden now has lots of deregulation, vouchers for education, and a tax burden that falls heavily on the lower and middle classes. “[T]his is the dirty little secret that no one in the American left wants to talk about,” Norberg added.

Karl Rove writes that “Democrats are betting this round of bread and circuses will win them the 2022 midterms. They think America has entered an era when voters can be bribed into supporting the party that showers them with cash—even though it’s adding to a debt their kids and grand kids must pay back with interest.”

This suggests that the youth vote the Democrats are now enjoying won’t last once the tax bills start arriving.

Covid stimulus not needed

ARPA, in the name of a Covid crisis that is receding on its own as vaccines roll out, provides helicopter money that is not needed. Hundreds of millions of dollars from previous Covid bailout bills are still unspent. More to the point, “America doesn’t need more stimulus.” Economics professor A.W. Salter writes:

Both supply and demand problems plagued the economy last spring, but only the former persist…. [H]ouseholds are awash in cash. Private savings rates are about as high as ever. The problem isn’t a lack of purchasing power, but a supply-side bottleneck… [T]he main effect of [ARPA] will be to redistribute resources from productive, market-driven activities to unproductive, politically driven ones…. Congressional Democrats are buying public support by spending money we don’t have on things we don’t need.

https://www.wsj.com/articles/america-doesnt-need-more-stimulus-11615755973

Repairing the damage they themselves caused

Much of the money being shoveled out to the unemployed and semi-employed is to repair damages that Democratic governors themselves caused by unnecessary lockdowns and school closings. Blue lockdown states like New York and California ruined small businesses to the benefit of Democrats’ mega Silicon Valley constituencies. There is little difference in infection rates between the states that locked down and those that didn’t. Florida, reviled for months by the bi-coastal progressive press, is having the last laugh.

As the Governor Newsom recall petitions suggest, even Californians have limits to being kept locked in their rooms by their elders.

Bipartisanship? When ARPA was being debated in the House, Republicans suggested numerous amendments that would have greatly improved the bill, providing money where it was needed and reducing the debt burden by only dispensing cash to those truly in need. Every one of the improvements was voted down by Democrats, just so the party could boast that the bill was entirely theirs. Polls indicate the public understands ARPA deliberately favored Dem states over Republican. But they also indicate that, at least for now, people like getting what they imagine to be free money, i.e., money paid for by someone else. This is the corrupting, infantilizing aspect of the bill.

Teachers’ unions, not money, keeping schools closed

$123 bn. is being provided to open schools, but money isn’t the problem. It’s the public school teachers’ unions that have been refusing to go back, indifferent to the harm they are causing to the children of minorities and the poor, as well as the parents, poor and middle class, who can’t work but must stay home to care for their children.

The one place where money is needed — small business – is insufficiently provided for in ARPA. “The U.S. has (or had) 30 million small businesses, employing almost half the workforce. Of the 10 million currently unemployed, maybe five million to seven million worked for small businesses. They need help,” Journal columnist Andy Kessler writes.

Protecting blue states from tax and labor competition

ARPA bars states from cutting taxes through 2024 if they take any money provided by the bill. This is to stop the hemorrhaging of citizens from high tax New York, Illinois, and other blue states to the growing number of states considering joining Florida and Texas by abandoning income taxes. The ARPA provision, added at the last moment by Senator Chuck Schumer when no one was looking, is probably unconstitutional. It seeks to overthrow the co-sovereignty of the states written into the US Constitution. In the same totalitarian spirit, House Democrats have already passed a bill, the PRO act, that will ban states from having right-to-work laws.

Democrats aren’t just out to subvert the Constitution and corrupt the electorate. They have also moved to corrupt Republican legislators by reviving earmarks. This is so they can peel off unprincipled Republican legislators to vote for Democrat bills in return for being rewarded with local-constituency pork. The abandonment of earmarks was one of the most notable Republican reforms of the post-2010 Tea Party era, but no matter: House Republicans have just agreed to resume feeding at the earmark trough, just like in the good old days.

So shameful is this Republican backsliding, that the vote to endorse it was conducted by secret vote.

Democrats, in short, have good grounds for enjoying their momentary victory parade. And yet, their hoped-for 2022 election triumph may not turn out as planned. Between now and then, the bribed children may become adults again and elect a new set of adults to represent them. These likely won’t include the earmarking House Republicans.