‘American Rescue Act’, signed by President Joe Biden, is a big rebuff to neo-liberal economic agenda

The $1.9 billion package shows what govt can really do for its own vulnerable sections if it wants to do it, and why govt intervention is most important in a crisis of such magnitude as the pandemic

US President Biden (Photo courtesy: Twitter)
US President Biden (Photo courtesy: Twitter)

Nitya Chakraborty

The historic American Rescue Act signed by President Joe Biden on Thursday marks a milestone in the struggle of the people of the United States for a better living standard defying the neo-liberal agenda of austerity and robbing the poor while making rich richer.

The $1.9 billion package goes beyond the Covid-19 related compulsions of the U.S economy and deals with the demands which the American left led by Bernie sanders has been making since the 2016 presidential election campaign.

In fact, President Biden has stunned the Sanders group, the trade unions and the U.S. Communist Party by the sweep of his package. The AFL-CIO, the largest federation of American unions, has termed the package more widespread than President Roosevelt’s ‘New Deal’ of 1930s. Biden has got the back of the U.S. working class, the leaders said.

As some of the leading experts have commented, the Biden package is a repudiation of the trickledown theory, the favourite of the neo-liberals in the last forty years.

As Dr. C J Atkins observes in US daily People’s World, after more than 40 years of dominating American economic and political life, the extreme free market capitalist ideology of neo-liberalism is starting to show some serious cracks. “Trickle down” policies that have for decades shovelled money toward the top at the expense of the bottom are breaking down and giving way to a new willingness by governments to spend money to directly benefit the broad population and the economy. For a long time—essentially since the creation of Medicare and Medicaid in the late 1960s during the “War on Poverty”—that simply didn’t happen.

Instituted in the days of Ronald Reagan and strengthened in the decades since socialism’s defeat in Eastern Europe, the neo-liberal model was capitalism on steroids. Public services and property of any kind were targeted for privatization. Welfare and social assistance were eroded, sometimes rapidly and violently. Taxes were slashed on the wealthy in order to unlock supposed investment potential. Regulations were stripped and unions weakened to liberate capital. And the power to control public finances was gradually taken away from elected democratic bodies like Congress or parliaments and handed over to unelected central bankers.

Those policies and the ideology behind them are now under pressure, and the $1.9 trillion American Rescue Act becoming law is the most recent and glaring proof of the shift. Further, the package shows what the government can really do for its own vulnerable sections, if it wants to do it and why government intervention is most important in a crisis of such magnitude.

During the 2008-09 financial crisis, the task was left to the US Federal Reserve which mostly resorted to the age old practice of quantitative easing by buying up bonds along with interest rate manipulation, leading to an unequal recovery. Inequality widened and it reached its peak in 2020 during the pandemic.

Democratic senator Bernie Sanders who started his Peoples Revolution programme after the 2016 presidential elections has been campaigning consistently since then that he will work for 99 per cent of the people and his programme contained ‘Medicare for All’ and the minimum wage of US$ 15 per hour. Biden is supposed to take up both the issues and if that happens, that will be a big victory for Sanders and the trade unions.

That is a big change in the relationship of the trade unions with the Democratic Party also, especially with the left wing groups. President Biden has supported the forming of unions at Amazon and that is a big shift. The Amazon owner is close to the Democratic Party and a big donor. Biden’s support has galvanized the trade union movement in the gig economy and demands are being raised for more facilities in the tech industry.

Many experts have taken notice of this paradigm change. Paul McCulley, a business professor at Georgetown, told the New York Times earlier this week, “Having the tools of economic stabilization work a whole lot more through the fiscal channel and a whole lot less through the monetary channel is a profound, pro-democracy policy mix.” In plainer language: It’s better to have elected representatives rather than unelected bankers making the call on how public money is spent.

This fundamental shift has just not come so easily. It is the outcome of the long struggles of the American people against the establishment since the 2008-09 economic crisis and even before. The Occupy Wall Street movement, the Black Lives Matter struggles, the unity of action of the left of the Democratic Party with the trade unions and the communists have led to a broadened unity of the American people who were in the streets protesting against the polices of the Trump regime in the last four years.

Biden, as a realist, has taken note of this shift in the mood of the American people. Sanders has popularized the words socialism and inequality to the American youth.

The victory of the American left through this rescue package is limited to domestic issues which have big importance for the American people. But in terms of foreign policy, President Biden is still following some of the old policies. The left group has to continue to put pressure on President Biden to change the external policies, especially to the Latin American regimes. That will be a big test for him but for that the left has to move cautiously. The battle for a new America has started well, but many more steps have to be taken.

(IPA Service)

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