This is from an analysis by the Joint Committee on Taxation (pdf) of the distributional effects for 2020 of the tax changes Republicans managed to add to the CARES Act. Basically, the provision allows for a temporary suspension of the limitation on tax losses for owners of businesses known as pass-through entities. Before (from 2017 onward), owners of these entities could deduct a maximum of $250 thousand in losses from non-business income, such as stocks and bonds.
As is clear in the table above, more than 80 percent of the benefits from the tax law change will go to people making $1 million or more annually in 2020. Overall, 95 percent of individuals who benefit from the change make $200 thousand or more.
What’s the slogan of disaster capitalism? Never let a serious crisis go to waste. . .
We can’t stay this way forever—with physical distancing (now that all 50 states have finally issued some kind of Stay at Home order), schools closed (and operating with a semblance of education through online teaching), businesses shuttered (even while the stock market soars).
The question that seems to be on everyone’s lips is, when are things going to go back to normal?
But who wants to return to normalcy? The novel coronavirus pandemic has revealed, if nothing else, just how dysfunctional the situation was in the United States even before COVID-19 started to cut its deadly path across the country. Tens of millions of workers have been furloughed and laid off and there’s still relief for them in sight. Instead, they’re being forced to have the freedom to drive to food banks to obtain groceries and other household supplies. All the while, their fellow employees, who labor in activities that have been deemed essential, are told to endure dangerous commutes on public transportation and to continue to work under perilous conditions, with little regard for their personal safety. Workers didn’t have any say before in the decisions concerning their jobs, let alone in the other policies adopted by their corporate employers—and they certainly don’t now.*
The pandemic has also demonstrated just how unequal life is in the United States, both geographically and socially. New York City is a perfect example of the obscene inequalities that have characterized economic and social life throughout the country, both before and now during the current crisis. As I showed the other day, if one compares the map of where frontline workers live within New York with the map of the confirmed cases in the city, the two are virtually identical. And those areas, the poorer neighborhoods that make up the outer boroughs of the city, are heavily black, Latino, or mixed race. Before they were hit by COVID-19, they had less wealth, lower incomes, substandard healthcare, and inadequate schools—and now (as reports come in, from Chicago, Detroit, New Orleans, and elsewhere) they’re suffering disproportionately from both the dreaded disease and the uneven and unequal response to it.
I could go on. My only point is, a return to normalcy means going back to those same conditions—in which workers, blacks, Latinos, and others who make up the bottom of the economic and social pyramid are assaulted by and fundamentally excluded from the major decisions that govern their lives. Who would want that?
If voters needed any more reason to be dismayed by the choice of Joe Biden as the presumptive Democratic nominee for president, all they need to do is look at his “plan to safely reopen America.” It’s a plan to get back to normal—and only back to normal. Nothing is supposed to change.
Sure, as Biden explains, there will have to be lots of work before getting there. His plan is basically the existing common sense (at least outside the gang of hacks and grifters who currently occupy the White House): physical distancing, testing, and adequate equipment for healthcare workers and hospitals.
And after that? Biden proposes the United States “reopen more businesses and put more people back to work”—in consultation with “top experts from the private sector, industry by industry, to come up with new ideas on how to operate more safely.” And labor unions and other employee groups? Well, they’re encouraged to work with OSHA “to figure out what protections workers need on the job during this period.”
But that’s it. In Biden’s plan, they play no role in the corporations that have been bailed out thus far, and will no doubt receive more loans and grants as stimulus plans are devised further on down the line. There’s no room for workers to obtain seats on corporate boards, no stimulus for organizing more unions to represent workers in the post-pandemic economy.
As for the obscene racial inequalities that plague the U.S. economy, which preceded the pandemic and have only been magnified in recent months, all Biden promises is to “focus like a laser” on “the racial disparities in Covid-19 cases”—as if those disparities are themselves not caused by the racial disparities that are the result of the way the American economy is currently organized.
That’s as far as Biden is willing to go. He makes absolutely no attempt to begin to imagine, let alone devise a plan for, fixing the U.S. economy and the healthcare system. No new role for workers in the places where they work. No redress for the grotesque inequalities we see around us. No renewal of the local public healthcare system, let alone Medicare for All.
There’s nothing in Biden’s plan to help or inspire anyone—except the small group at the top who want to keep things as they are and just get back to normal.
*Unless, of course, they threaten to withhold their labor or go on strike, which more and more groups of American workers have begun to do.
As the Guardian explained earlier today, the coronavirus has discriminated in inflicting its terrible toll on the two very different cities that make up New York City.
Different boroughs, even different neighborhoods within each borough, are experiencing coronavirus almost as though it were two different contagions. In wealthier white areas the residential streets are empty; parking spots that are fought over in normal times now stand vacant following an exodus to out-of-town weekend homes or Airbnbs.
In places like the Bronx – which is 84% black, Latino or mixed race – the sidewalks are still bustling with people making their way into work. There is still a rush hour. “We used to call them ‘service workers’,” Williams said. “Now they are ‘essential workers’ and we have left them to fend for themselves.”
If you compare the map of where frontline workers live within New York (on the left above) with the map of the 76,876 confirmed cases in the city (on the right), the two are virtually identical.
“We put people out there and said you got to go to work, but we didn’t give them protective gear or additional testing to keep them safe. It was almost as though these groups were expendable to keep the city moving,” according to Jumaane Williams, the public advocate who acts as the official watchdog for New Yorkers.
So, in New York City and across the country, we’re really talking about two different outbreaks of coronavirus: one for so-called essential workers, who are forced to have the freedom to commute and work under extremely dangerous conditions, and another for everyone else, especially their employers.
In the United States and around the world, governments are responding to the twin pandemics—of novel coronavirus and escalating unemployment—with massive bailouts. Not unlike what happened more than a decade ago, after the global crash of 2007-08.
But there seems to be something different this time around—not only because of the speed of both the viral contamination and the economic meltdown, but also as a reaction to the terms of the bailout that was enacted in the midst of the Second Great Depression.
Here, for example, is Peter S. Goodman reflecting on the response in Britain and the European Union:
During the last crisis, the global financial catastrophe of 2008, the authorities protected corporate interests above those of ordinary people, many economists assert. Britain and the European Union bailed out financial institutions, then recovered the costs by hacking away at public services, effectively punishing laborers and taxpayers for the sins of wealthy bankers.
Just like that, with no apparent controversy, he drops in the idea that, after the last major crash, those in charge sought to safeguard corporations and neglect the interests of “ordinary people.” That was certainly the stance, in the United States, of groups like the Tea Party and Occupy Wall Street but Goodman now asserts it as a commonly held view, with a gesture to authority (“many economists assert”).
Another example is NBC News Senior Business correspondent Stephanie Ruhle, certainly no radical, who argues the last bailout “didn’t trickle down to workers,” and strings need to be attached to corporations in any new bailout.
Even Donald Trump said he would be “OK” with a conditional coronavirus bailout that bans stock buybacks for companies that receive federal relief—joining both Bernie Sanders and Elizabeth Warren.
The question is, is something going on here—in the United States, Europe, and perhaps elsewhere—that represents a shifting of the ground, a fundamental change in the common sense concerning economic issues?
Now, to be clear, I am using the term common sense not in the manner of Thomas Paine or as it is often invoked in English, but instead as it figured prominently in the writings of the Italian Marxist Antonio Gramsci, in his Prison Notebooks. As Kate Crehan explains in the preface to her insightful and prescient book, Gramsci’s Common Sense: Inequality and Its Narratives (Duke University Press),
the Italian senso comune is a far more neutral term than the English common sense. The English term, with its overwhelmingly positive connotations, puts the emphasis, so to speak, on the “sense,” senso comune on the held-in-common (comune) nature of the beliefs. In the notebooks, Gramsci reflects on the complicated roots of such collective knowledge, its shifting and often contradictory components, the ways it becomes accepted as beyond question—and by whom—and when, and how it changes. The collective here is important: “What matters is not the opinion of Tom, Dick, and Harry but the ensemble of opinions that have become collective and a powerful factor in society.”
Common sense, as I am deploying it here, is a generally accepted, collective, body of knowledge, a way of understanding or interpreting what is going on in the world that appears, at least at any moment in time, as beyond dispute. Moreover, there is nothing fixed about common sense, since it can—indeed, we should expect it to—shift and change over time.*
So, again, the question is, has the common sense about economic issues been moving in a new direction in recent weeks?
It’s pretty clear, at least to those of us on the Left, that the $2.2 trillion (or, if you count the leveraging, close to $6 trillion) CARES Act is mostly a bailout to large corporations—Boeing, the airline industry, and, with little oversight, any other corporation that manages to get its snout into the trough.
In fact, as Tim Wu and Yaryna Serkez recently explained, just before the bailout was passed and signed,
The companies that will be receiving the largest bailouts were, until recently, enjoying unprecedented levels of corporate profitability, thanks to large corporate tax cuts, industry mergers and the avoidance of significant wage increases for employees.
And, indeed, spending enormous sums on stock buybacks, which reward only shareholders and increase executive pay.
But the way the bailout has been discussed, at least outside the halls of Congress and the White House, reflects a critique of the bailout of Wall Street and the automobile industry that was orchestrated by the administrations of George W. Bush and Barack Obama after the crash of 2007-08. The ground, it seems, has shifted.
The debate about the terms of the bailout—across media platforms, from many different pundits and political perspectives—has been much more attuned to how workers and others got completely shafted in the previous “recovery” and how corporations, banks, and the rich were handed bags of money, almost none of which “trickled down” to workers, poor people, and others at the bottom of the economic pyramid. Even more, the way the bailout was structured added to the ability of those at the top to capture the lion’s share of whatever new income and wealth were generated in the aftermath. My sense is, there is a common understanding that economic inequality in the United States got a whole lot worse because of the way the bailout was first envisioned and then enacted.
Even the Wall Street Journal now admits, joining others in acknowledging the new common sense:
what many remember from a decade ago is that after the banks were bailed out, the stock market and financial industry rebounded, while ordinary workers and homeowners struggled with stagnant wages and underwater mortgages.
But, of course, this shift hasn’t occurred in a vacuum. In addition to concerns about how the United States was transformed in a much more unequal manner during the Second Great Depression, people have witnessed how inadequate the U.S. private, profit-driven, medical-industrial complex has been in either preparing for or responding to the health pandemic.** And workers—those toiling away on the front lines of overburdened and perilous public health facilities, the many who are required to abandon their families and endure unsafe conditions while laboring in “essential” industries, and the millions and millions of others who are being forced to join the reserve army of the unemployed and underemployed—are the ones who are paying the costs.
To be clear, the outcome of this changing common sense is still quite uncertain. If it has shifted, and I think it has, it has taken on dimensions that both the nationalist right and the progressive left have been able to seize on. Private markets have failed, grotesque levels of inequality are driving the divergent costs of the health and unemployment pandemics, and the previous bailout enriched a small group at the top and failed, more than a decade on, to reach the vast majority of American workers. But that common understanding of what has gone wrong in recent years opens up new possibilities for both ends of the political spectrum when it comes to economic issues.
Where this changing common sense actually ends up will depend on who is more effective in pushing and pulling that collective understanding. As I see it, the final result depends on the work of intellectuals as well as the lived experience of the “masses,” the reporting on events in the media and the positions articulated by political parties, comparisons with what is happening in other countries and what can be delivered in newly imagined ways of organizing economic and social life.
There will be many, of course, who, in the midst of the current crises, will call for the previous common sense to be restored.*** My view, for what it’s worth, is that time is past. The old common sense has been effectively discarded. We just don’t know, at this point, which one will take its place.
*The other, related term that has some play in the United States is the so-called Overton Window, which was produced within public choice economics and is central to the work of the conservative think tank the Mackinac Center for Public Policy. What I don’t particularly like about the Overton Window is that it is defined not as a body of collective knowledge, which comprises “shifting and often contradictory components,” but instead as a set of policy options, a “window,” that forms the boundaries of political debate.
**The irony, of course, is, the ideas and policies that Bernie Sanders and Elizabeth Warren articulated during the campaign for the Democratic presidential nomination, which the extreme moderates in the party did their best to stamp out, have become increasingly “mainstream,” especially in reaction to the crash that has happened and will no doubt escalate in the midst of the health and unemployment pandemics.
***The tragic irony is that Joe Biden, the presumptive Democratic nominee, is precisely the candidate who has articulated and defended the Obama administration’s bailout and thus the old common sense. How exactly he’s going to invoke the previous common sense and position himself and his party to defeat Trump in the November election is anybody’s guess.
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