By Shailly Gupta Barnes, Policy Director, Kairos Center and Policy Lead with the Poor People’s Campaign
Kairos Center monthly Policy Briefings highlight analysis informed by the 140 million people who are poor and dispossessed in this country, and their struggles against systemic racism, poverty, ecological devastation, militarism and the war economy. They will also challenge the false narratives that uphold unjust economic and political systems, including the narrative of scarcity.
“This system is not broken. It was never intended to
work for us.”
— Callie Greer
This month’s briefing focuses on the legislative response to COVID-19 and why our society prioritizes the wealthy and powerful. Despite the staggering needs of the poor, our government response continues to be driven by the belief that an economy that benefits the rich will benefit the rest of us. All around us we see the direct consequences of this failed position. As Callie Greer from the Alabama Poor People’s Campaign reminds us, “This system is not broken. It was never intended to work for us.” While lawmakers consider another relief bill, we must continue to challenge this belief in the rich and build the power of the poor.
Predictable and Possible
by Shailly Gupta Barnes
Policy Director, Kairos Center
The
COVID-19 pandemic has revealed fundamental inequalities in this country along
the lines of race, income and access to basic needs. As the U.S. has become the
global epicenter of the pandemic, it is clearer than ever that our great wealth
has not been used for the general welfare. Rather, three people own the same
amount of wealth as half the country, leaving 140 million people poor or one emergency
away from being poor in the wealthiest country in the world.
The consequences of this inequality are lethal. Before COVID-19, there were
250,000 people dying every year from poverty and inequality; those 700 deaths
per day went largely unnoticed, until this pandemic brought the reality of poverty
to bear on everyone. According to Dr. Mary Bassett, Director of the FXB Center
for Health and Human Rights at Harvard University, “The reason we were so
vulnerable to this exceptional spread had to do with the many structural
vulnerabilities that existed in the US: the high rates of poverty, the low
rates of social protection, the lack of access to health insurance. All of
these made it predictable that there would be a pandemic, because there was
already a pandemic, including the loss of workers’ rights and the failure to
ensure living wages.”
Indeed, we should not be surprised that the impacts of the pandemic have been
so drastic, especially on the poor. It is predictable that without universal
health care, millions of people will remain uninsured. It is predictable that
without stable jobs, living wages and a guaranteed income, people will not be
able to afford basic needs like housing, utilities and water. It is predictable
that a government that prioritizes the wealthy will not prioritize the poor.
We now see how women, people of color — especially Black, Latinx and Native people
— and the poor are disproportionately
bearing the brunt of this virus. This has prompted widespread
public support for bold government action to address long-standing social
problems, including support for universal health
care, keeping people in
their homes and sending more resources to state and local
governments. Low wage service workers are being recognized as
“essential” to the economy, our flawed health care system has come under public
scrutiny and some action is being taken to house the homeless,
keep water running in
our homes and secure close to $15 per
hour for the recently unemployed.
And still, legislative efforts have not met the overwhelming need to focus on
the poor and frontline workers. Instead, trillions of dollars have been
released to financial institutions, corporations and the wealthy through low-interest loans,
federal grants and tax cuts.
Even the most recent attempt to redress legislative gaps provides more
resources for lobbyists, mortgage servicers and health insurance monopolies,
setting the stage for even greater wealth
inequality, without securing health care, wages or income support
for the unemployed. This is all unfolding as we enter the worst economic
recession since World War II.
This is nothing new. As Callie Greer from the Alabama Poor People’s Campaign
has been saying: “This system is not broken — it was never intended to
work for us.”
Who Congress CARES for: A Tale of Two Responses
The
legislative response to COVID-19 only reinforces this reality. Weeks before the
CARES Act was passed, the Federal Reserve opened up $1.5 trillion in
low-interest loans to financial institutions to keep the economy from crashing.
The CARES Act then secured an additional $500 billion for corporations. Some of
those same corporations are exempt from the paid leave requirements of the bill,
so they’re keeping their “essential” workers at work even if they’re exposed to
the virus, and often without essential
protections, like masks and gloves or living wages.
[1]
The CARES Act also provides for $170 billion in tax
cuts that will mainly go to those earning more than $1 million
in 2019. This is in addition to the 2017 tax cuts, which will return $205
billion to the richest 20% this year, more than 100
times as much as will go to the poorest 20% of taxpayers. [2]
On top of this direct assistance to the wealthy, even those provisions that
were intended to help struggling households and “Main Street” have somehow been
garnished by Wall Street. The $350 billion that the CARES Act allocates to
non-profits and small businesses is being quickly depleted. Economists from MIT
and the University of Chicago found that in the early stages of these outlays, loans of more than
$1 million accounted for roughly half of the overall funds.
This means that large and wealthy companies that were seeking more money,
including hedge funds and publicly traded
companies, were favored over the small businesses for whom this
program was intended. Finally, banks and creditors have
been dipping into the $1200 stimulus checks – those with unpaid debts have had
their checks seized by creditors when they so desperately need cash to pay for
living expenses, not simply servicing their debt. The sum total of these checks
is estimated to be between $250-300 billion. This totals well over $2 trillion
that has gone to the wealthy in the past couple months.
Conversely, the CARES Act fails to meet the economic needs of the poor, even
those who are on the frontlines of this crisis. There have been nearly 40 million jobs
lost in the past two months. According to a survey by the Federal Reserve, 40% of people in
poor and low-income households who had a job in February lost that job in
March. Unemployment systems have been overwhelmed and eligible recipients have
been standing in lines for
hours, with many millions unable to file applications
to receive payments. If and when they’re processed, those unemployment payments
will count as unearned income against SNAP
allocations. This means that, although one in five children
is hungry, millions of people will be forced into a situation where
they will need to choose between unemployment payments and food
stamps; they are being told that they cannot have both. Already,
food banks are stretched beyond capacity. This is not a question of a lack of
food. Tens of millions of
pounds of food are rotting and being dumped and destroyed, but
ensuring that families have food on their tables is still not a legislative
priority.
It should not be a surprise, then, that the $1200 stimulus checks have largely been spent on
rent, food and bills. Indeed, short of monthly guaranteed payments for the
duration of this recession, even a second round of payments will fall far short
of the pressing needs of poor and low-income households on the frontlines of
this pandemic.
The legislation also fails to provide for critical public health needs. Right
now, we need access to universal health care, but the CARES Act leaves millions
of people without health coverage and does not guarantee free or affordable
treatment. It does not require Medicaid expansion in the 14 states that did not
expand coverage under the Affordable Care Act. And it does nothing to keep
hospitals open to administer testing and treatment. [3] In fact, hospitals have been
closed even during this pandemic and health care workers are
losing their jobs. Rather than expanding Medicaid, the House version of the
HEROES Act funds COBRA, subsidizing private health insurance companies, while
leaving millions still uninsured.
Nor does the legislation secure the two basic requirements to contain the
spread of this virus: housing or water. You cannot shelter in place
securely without a home, but the bill undercounts the housing insecure
population by 10 million people, doesn’t guarantee housing for all or provide
any support for people who are out of work and who will need to pay
rent and mortgages by the end of the summer. By April, there
was a 15 percent increase in
the number of renters who couldn’t pay their rent on time and homelessness is
projected to increase by 40% in
the weeks ahead. This is a crisis that cannot be fixed without rent and
mortgage cancellations and secure housing for all.
Likewise, it is impossible to wash your hands without access to water, yet
CARES does not address the long-standing crisis of water affordability or water
shut offs in the country. The House version of the HEROES Act includes a
temporary moratorium on water and utility shut offs, but it does not provide
relief for water or utility payments. This means that, once the moratorium is
lifted, millions of people will have to pay those mounting bills and their
access to water will remain insecure.
The list goes on. The CARES Act put students with disabilities at risk of
losing their financial assistance; excludes incarcerated and undocumented
people entirely; and indigenous, native and tribal communities remain woefully underserved and
neglected, without testing, treatment or even information about the
pandemic.
In short, the CARES Act provides the wealthy with a comprehensive welfare
program, while the poor and frontline workers receive piecemeal and haphazard
relief.
“We may not run this country, but we make it run.”
—Rev. Claudia de la Cruz
Faith in the Rich
This
is the logical result of the system that was in place before this pandemic.
This system treats injuries to the rich as public crises requiring massive
government action, but injuries to the rest of us as the unfortunate results of
bad luck and personal moral failures. It is able to do this — and sustain this
inequality — through the creation and reinforcement of the powerful ideological
belief that an economy that benefits the rich will benefit the rest of us. We
are seeing now how this holds true even in a crisis that affects us all. The
rich will still be prioritized over everyone else.
This belief is at the core of the curriculum of most, if not all, economics
departments in colleges, universities and graduate schools in this country, and
it shapes our fundamental understanding of what the economy is and how it
works. Notions of “job creators” or “makers and takers” or “trickle down”
illustrate the popular versions of this idea: that the wealthy are the engine
of our economy and their well-being will translate into ours.
It is easy to see how this plays out in policies that directly favor Wall
Street, corporations and the wealthy. But we see this belief even in
policies that appear to be more liberal and equitable. The CARES Act provides
free testing without treatment, unemployment insurance without living
wages and identified essential workers without securing essential
protections. The failure to fully care for workers and the poor is in part the
consequence of the fundamental faith that the rich will construct a healthy
economy out of this crisis, an economy that can and will take care of us. But
the power of this belief defies what we see every day about how the economic
interests of the rich do
not correspond with ours.
One of the economic concepts that undergirds this belief is known as pareto efficiency.
Pareto efficiency says that the resources of an economy are efficiently
distributed if an action makes someone better off, without making anyone else
worse off. This may sound fair, but it creates and defends as “efficient” an
economy where a few individuals can accumulate tremendous amounts of wealth.
By way of example, if two people are walking down the street and find $100,
they could decide to split that money in many different ways: $50 each, $25/
$75, or one of them could keep all of it. All of these are considered
efficient, because nobody is made “worse off” by any of the different
distributions. Even a situation where one person keeps the $100 and the other
gets nothing is considered efficient. This is true even if that person has many
times more wealth than the other. This concept obscures the massive inequality
that defines our society. It also guards the wealth of someone like Bill Gates
from having to “share” it with others (through taxation or other means),
because he “earned” his billions without making anyone else “worse off.”
In a different example, if one person were to ask another person for $100 out
of their wallet, and receive it, this would be considered inefficient. One
person gained $100, but the person who gave the $100 is, economically speaking,
“worse off.” Again, this is true even if the person who gave the $100 had many
times more wealth than the other person. Pareto efficiency thereby provides a
useful argument against taking wealth away from people, even if you are one of
the 3 white men who have as much wealth as half of the country.
This is because pareto efficiency does not make any moral judgments on the
distribution of resources in an economy. Prioritizing the rich is not a moral
choice, but merely an efficient way to grow the economy, regardless of how that
wealth is used or distributed. In this way, economic principles like pareto
efficiency help to justify the endless accumulation of wealth and power in the
hands of a few and defend decisions to keep that wealth intact. So long as
the pie is getting bigger, there is, theoretically, more pie for
everyone.
Politicians on both sides of the aisle are influenced by this ideology and
refuse, even in this crisis, to touch the accumulated wealth of the few. In New
York state, Democratic Governor Cuomo passed an austerity budget that will cut $300
million from their hospitals. In Philadelphia, Mayor Jim Kenney revised
the city’s five year budget to include government layoffs, salary cuts and cuts
to public services. Neither Cuomo’s nor Kenney’s budgets made the proactive
decision to tax the wealth in
their constituencies. The same is true in Washington state, where Governor Jay
Inslee has been told to exercise political courage to
pass an austerity budget. [11] This is for the same state that is home to two
of the wealthiest people in the world.
Without increased resources from the federal government — or the willingness to
tax the wealthy — state and local governments will face severe budget
crises, especially as revenues from income taxes and sales taxes
plummet. To balance their budgets, these cuts will continue and states will
take more drastic actions. We are already seeing states re-open prematurely and
can anticipate a second, more lethal
wave of the virus. More likely, many states will run the risk
of fiscal crisis,
falling into receivership and being taken over by emergency management boards
to sort out their finances. Over the last couple decades, we’ve seen this play
out in hundreds of cities, such as Flint and Detroit during
their water crises. Each time, things get worse for the poor and those who
weren’t already poor often find themselves in the same position as the poor,
without basic democratic protections, resources or support from their elected
officials.
The Power of Poor People
Of course, the rich are not the driving economic force in the country. It has
become crystal clear during this pandemic that poor people, including frontline
workers, actually fuel this economy. At the 2018 April launch of the Poor
People’s Campaign: A National Call for Moral Revival, Rev. Claudia de la Cruz
from New York reminded us that, “we may not run this country, but we make it
run.”
In the months leading up to the 1968 Poor People’s Campaign, Rev. Dr. Martin
Luther King, Jr., articulated a clear formula for how the poor can claim the
power that resides within our communities. He said: “Power for poor people will
really mean having the ability, the togetherness, the assertiveness and the
aggressiveness to make the power structure of this nation say yes when they may
be desirous to say no.” This is the kind of power that can break through the
fallacies of our current system, its unfounded faith in the rich and reveal a
new way to organize our society.
Indeed, popular movements arising out of deep economic and social discontent
have compelled our government to take concerted action in the past. The
organized outrage of the early 20th century broke out in a time when another
pandemic and roaring inequality brought this country into the Great Depression.
Facing mass unemployment, hunger and homelessness, millions of people demanded
government action to secure jobs, labor protections and the general welfare.
The unemployed councils of the 1920s and 1930s, and widespread popular
resistance, sowed the seeds for the Social Security Act, Federal Housing
Administration, Works Progress Administration and the Tennessee Valley
Authority. Some decades later, the Great Society of the 1960s reshaped the
federal budget: it reduced military spending, increased funding for social
welfare and entitlement programs, established Medicare and Medicaid, created
Head Start and passed the National Environmental Policy Act.
Each of these programs had their limitations, but they all redefined the role
of government, pushed back against the power and ideology of the rich and
channeled the wealth of this country towards the needs of the poor. This did
not happen haphazardly. It was the result of poor people taking action
together.
Today, we see the early rumblings of similar action taking shape and bringing
people together in new and powerful ways. Healthcare workers, nurses, students,
childcare givers, food service workers, big box store employees, agricultural
workers, delivery and mail carriers and others are taking action to call out
gross inequities and make known what it is that we need. Actions to cancel rent are spreading
across the country; homeless moms who have taken over empty
homes are making visible the demand to house everyone; and wildcat strikes
among low-wage workers, service workers, health workers and others are calling
for living wages, guaranteed incomes, the right to unions and universal access
to health care.
At a recent strike in Durham, North Carolina, Bertha Bradly, a 60 year-old fast
food worker said,
“I want people to know here in Durham, North Carolina, we’ve got to keep
striking. We’ve got to strike around the world. We need to strike more than
today. We need to strike every day. We need to shut it down, that’s what I want
people to know, and let them know we are not just essential workers, we are
humans. Let’s shut it down.”
This is a call for non-cooperation with a system that didn’t work for most of
us before this crisis and doesn’t work for us now. It’s a call to assert our
essential humanity and demand an economy that directs the abundance of our time
towards people, not profits. It’s a call to be free from want, debt and fear.
This is not too much to ask. It is possible right now. And it is exactly what
we need.
[1] The House version of the Health and Economic Recovery Omnibus Emergency
Solutions (HEROES) Act addresses these paid leave exemptions and extends
unemployment payments through January 31, 2021. However, these payments should
be pegged to economic indicators like unemployment and poverty rates, rather
than an arbitrary date, to make sure there is relief available until the
economy improves.
[2] Over the next ten years, the 2017 tax cuts will give $1.9 trillion to
corporations and the wealthy.
[3] Since 2010, at least 120 have been closed
and 1 in 4 rural hospitals is currently at risk of closure.
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