$1.9 Trillion. Money in people's pocket.

This time, most of the money is going to poor and middle-income people, not banks.

People may like getting free money. This one is "family friendly."

This is the third "bailout" in 12 years.  It is a big one. In 2008 and 2009 George Bush and Barack Obama bailed out the banks.  People on both right and left protested it saved the rich perpetrators of the disaster, not to the victims of it--a fair point. In 2020, the Trump COVID bailout targeted businesses, supposedly small ones. However, the institutions most able to grab the money were the large sophisticated ones with deep relationships to banks. They got most of the money. Small businesses were unhappy--justifiably so.

This bailout targets individuals.

A $1.9 trillion dollar bailout works out to $6,500 per man, woman, and child in America. That means a family of four would get--one way or another, via direct payments, payments to their school district or state, or payments to provide health insurance--an extra $26,000 from this program alone. This is on top of the past CARES money, the extra unemployment insurance money, rent relief money, and the other special payments they may have received over the course of the past year. This is augmented by any earned income, both declared and un-declared, in a COVID economy with remote work and gig side-hustles. 

Net-net, a lot of people have come through this with money to spend, and much more to come. This inches America toward a European-style social welfare system desired as a political Promised Land by many on the left. The payment of $3,600/year for children up to age six, and $3,000 a year for children seven through 17 is a giant step toward the Universal Income Benefit considered by Richard Nixon 50 years ago and proposed by Andrew Yang in his campaign. It is not just a leftist fantasy. Mitt Romney just proposed something similar.

Mitt Romney and family

Families are expensive, so Americans are having smaller ones, or none at all, as this blog noted two weeks ago. Click: Way fewer babies  COVID caused a drop of 300,000 from the normal birthrate in America, and as a country we were already reproducing below replacement rate of 2.1 children per woman, with 1.77 children per woman. The reason isn't hard to understand. Most women have easy access to reliable contraception. Most pregnancies are a choice, not an accident of sex. The modern economy has integrated women into the workforce and most families need two incomes to achieve anywhere near a middle-class lifestyle. Housing is expensive, college is expensive.

The U.S. economy is not "family friendly," nor is the tax code, the health care system, nor the laws and customs regarding parental leave and maternity care. Big families in America--more than two--are unusual except among people in certain religious communities, some Roman Catholics, some Jewish, and many among The Church of Jesus Christ of Latter-day Saints.

Politically conservative opponents of the Biden proposal have another set of big families in mind, a socialist dystopia of dissolute Whites in meth and opioid clusters, dissolute Blacks in urban centers, and single mothers of color having children for the taxpayers to support. It is a conflicted issue for social conservatives. They want to support the stay-at-home White mother, attempting to home-school using a Christian curriculum, but don't want to support what they call out as the dysfunctional pathologies of fatherless homes. Currently, they have come down on the side of opposing the Biden COVID bill; after all, it is a Democratic proposal.

We are still in a recession, but for comfortable retired people like myself, anticipating my second COVID shot, the economy feels like coiled spring starting to break loose.  Still, right now, there is sharp unemployment and under-utilization of the potential workforce. People--mostly women--dropped out of the workforce to stay home with children who aren't in school. People doing jobs they dislike find it financially feasible to decline work. This bill will make that more common.

The official unemployment rate is 6.2%. The unemployment rate adjusted to include the people voluntarily removed from the workforce is 9.4%. 

There is political and moral justification for pouring money onto poor and middle-income families. Many are in distress because they were drafted into a war on COVID because their businesses were shut down by government order, or they are caring for children at home because their schools are closed. There will be economic consequences of giant amounts of new money poured into an economy that is already rebounding. Boom times sow the seeds of their own destruction.

Of greater long-term consequence is the effect it will have on public sentiment and values. Americans may decide they like taxing billionaires more. They may decide they like the overall effect of income support for poorer people. They may decide that stay-at-home moms are actually a pretty good way to address the "early childhood education" crisis. The $15,000 or more in direct payments plus access to affordable healthcare may pull low-wage people from the workforce. That may require the retail and service economy to pay more in wages to pull them back to work; that might address the minimum wage issue. It may cause young couples to go ahead and start a family. It may cause people to think better of income re-distribution programs. America might become a bit more like France or Germany. 

Or not. Giant changes risk a giant backlash. Biden may not be able to sell this as his effort to help good, old-fashioned big families. Republicans may decide this is socialism-friendly, not family-friendly.