Mr. Biden’s economic team has said it’s open to tying benefits to conditions. The exact details are less important than the concept, but Mr. Wyden’s plan is a good starting point.
Much of Mr. Biden’s plan is aimed carefully at the pandemic and its economic effects. Getting vaccines into arms is the single most important step to revive the economy. Providing money to schools is necessary both to get kids back into classrooms and to get parents back to work.
But the Biden plan also includes a pair of big spending proposals that are not aimed specifically at those suffering economically because of the pandemic. The first, with a price tag of roughly $464 billion, would send $1,400 to most Americans, on top of the $600 federal payments approved in December. The idea is politically popular, and Democrats have tied their own hands by campaigning on the issue in the Senate runoff elections in Georgia. The broad reach of the program would help some people who do not qualify for targeted aid programs, like people who have not lost their jobs but are working fewer hours. Still, it’s not the best use of money. The economic damage caused by the pandemic is intense but quite concentrated. Most workers are still getting paid. Some of the stimulus money could be better used to increase the proposed weekly supplemental unemployment benefits in Mr. Biden’s plan from $400 a week back to $600 a week, as in the early months of the pandemic.
The second program is a one-year expansion of the child tax credit. Families could get a tax credit of up to $3,600 for children under age 6 and $3,000 for older children. Importantly, the credit would also be refundable, an odd Washington term of art that means families who don’t pay enough in taxes to get the full benefit of the credit would get it as a cash payment. Analysts estimate this could cut the number of children living in poverty roughly in half. While this, too, is not aimed precisely at those in greatest need because of the pandemic, it’s a change in policy that ought to become permanent. The persistence of child poverty in America is a national disgrace, and reworking the tax credit is an effective remedy. There’s no reason to wait for another piece of legislation to address what should have been done long ago.
Congress, in sum, can and should improve on the details of the new president’s plan. What ought not to be causing hesitation is fearmongering about federal borrowing.
The federal debt swelled under President Trump, even before the pandemic necessitated deficit spending to limit the economic damage. Those concerned about additional borrowing tend to emphasize that the debt is now about the same size as the nation’s annual economic output. Mr. Biden’s fiscal plan would further increase that measure to a level last seen in the 1940s, in the aftermath of the huge federal borrowing that funded World War II.
But the burden of the debt is best measured by the cost of the government’s annual interest payments to its lenders. The global decline in interest rates in recent decades has allowed the United States to borrow money at very low cost. Despite the increase in the size of the federal debt, the amount of the government’s annual interest payments has barely budged.