At least 16 million Americans have lost their jobs to the shutdown ordered to slow the spread of the novel coronavirus. That staggering number does not include those who were unable to file due to crashing state websites overwhelmed by new claims, or by freelancers whom the government doesn’t count as unemployed when they lose their gigs. This is only going to get worse. Much worse.
Only one entity has the financial and organizational resources to mitigate the damage and forestall a total societal collapse reminiscent of the Soviet Union in 1991: the federal government.
Unfortunately, few politicians of either party have indicated that they understand the existential scale of this threat, much less internalized the fact that what they do or do not do will determine whether the United States continues as such. One exception is Elizabeth Warren. “Government action is essential to save lives and to rescue our economy,” she wrote in an April 9th op-ed in the New York Times, and she’s right.
More unfortunately still, even relatively smart leaders like Warren aren’t willing to go far enough to save themselves in the system they lead. This is terrifying. If your best and your brightest aren’t good enough, you’re finished.
Warren’s recent presidential bid was known for the quip that she had a plan for everything. Her plan for the COVID-19 crisis goes further than most of her peers with the exception of Bernie Sanders but it’s hard to see how it could possibly get the job done.
Last week, when “only” 6 million new jobless claims had been filed, the unemployment rate had shot up to 13%. It’s higher now. Compare that to the Great Depression: people talk about 25%, but that was the peak in 1933. For most of the Depression, the unemployment rate averaged around 15%. We’re already there. We’re probably already higher than that. We are going higher still.
The unemployment rate is already worse than the Great Depression.
So here is what Warren, our best of the best, a progressive consumer advocate, suggests: that the government starts “suspending consumer debt collection, enacting a universal national moratorium on evictions and foreclosures, stopping water and utility shut-offs, providing as much broad student loan debt cancellation as possible and finding money to keep child care providers afloat.”
“Suspending” consumer debt collection doesn’t mean forgiving consumer debt. It means ordering debt collectors to wait until later to come after you. Later, however, you won’t be more able to pay back what you owe. You’ll be less able. You will have accumulated more debt in order to survive. Interest will have accrued; at the average rate of 15% a $1,000 credit card bill turns into $3,128 after a year. There will be late fees. Finding any job will be hard and finding a job that earns enough to pay back mountains of debt will be impossible. Any solution that doesn’t include forgiving consumer debt doesn’t stand a chance of rescuing the economy. A delay in collections adds compound interest to catastrophe.
A “national moratorium” on evictions and foreclosures is equally insane. For the time being, the sheriff doesn’t show up to throw you and your family out onto the COVID-19-infected streets. But what happens later? At some point, a moratorium expires. Lenders become impatient. Congress lifts the moratorium; then debtors come after you. Now you don’t just owe one or two months of back rent or mortgage, you owe 6 or 10 or 15. If you can’t pay one or two months, how are you going to pay ten? There will be late fees, accrued interest, and again, you’ll be making less than you did before this all happened—so you will have to pay back inflated 2020 debt with your deflated 2021 salary. Ain’t going to happen.
Kicking the can down the road with suspended debt collection and eviction moratoriums and putting off utilities shut-offs is a guaranteed ineffective, massively counterproductive wallop of magical thinking that pretends not only that everything is about to be fine, but that everyone is going to win the lottery and be able to use their newfound winnings to pay off their coronavirus debts. It’s ridiculous and stupid and unworthy of discussion by serious people.
Even Warren’s plea for “truly universal paid family and medical leave” is the wateriest of weak tea because it only applies to frontline “health care, transit, farm, grocery, domestic and delivery workers.” In a pandemic, grocery store clerks only stay healthy if their customers do.
Warren once said that she was a capitalist to her bones. Her joke of a plan for the coronavirus Great Derpression reflects her unwillingness to accept a new reality in which trillions of dollars must immediately be redistributed from the wealthy to the poor and middle class, not because it’s the right thing to do–though it is—but to avoid ruin. Landlords must go without rent, banks must forego mortgage payments, people must be able to go to the doctor without paying, heat and water must continue to flow without a bill.
There is a better way. Rather than throw tens of millions of Americans into piles of debt that they will never be able to pay, continue to pay their salaries so they can continue to pay their bills. Individuals keep their homes and their sanity; businesses remain intact.
The United Kingdom is paying citizens 80% of their paychecks to stay home from work. Germany pays two-thirds. Spain is about to institute a universal basic income at a yet-to-be-determined amount. Bernie Sanders, who just dropped out of the race for the presidency, called for every American household to receive $2000 a month until the end of the crisis.
What have we gotten instead? A one-time payment of $1200 per adult, $500 per child.
Capitalists like Warren must decide what’s more important to them: insisting on their prerogative to hoard precious resources, or survival. As for now, she doesn’t even have the start of a thought of a real plan.
And she is the best we have.
(Ted Rall (Twitter: @tedrall), the political cartoonist, columnist and graphic novelist, is the author of the biography “Bernie.” You can support Ted’s hard-hitting political cartoons and columns and see his work first by sponsoring his work on Patreon.)
10 Comments.
OMG if you saw my local Nextdoor, the landlords thought it was the end of the world when some city council members proposed a rent moratorium. the council meeting lasted longer than usual and of course this communist plot was defeated.
We need a NATION wide program to survive the virus impact
Some of howling is pure landlord greed but many landlords have loans to pay on, all landlords have bills…such as insurance, utilities for the office and grounds along with workers to pay. Reduce or freeze their payments to the banks and see then their basics are covered, then feed them the news rent is off the table for now for anyone unemployed or working for a fraction of their old wage. If landlords still resist hit them with….
If the government sits on sidelines their will be tent cities sprouting up everywhere and many landlords will go bankrupt due to low occupancy if they want the government to cover them they have to follow the rules ASAP and open their books, major landlords can that a hit that won’t sink them will have to take a little pain to get through the next year.
Of course here in silicon valley many upscale buildings would hope there are enough work at home techies and professionals they can weather the storm with only a few evictions….but a massive wave of evictions across the nation could start crashing the tech market….who needs a high tech phone and apps when you last 300 job applications only got 5 call backs the didn’t lead to single full interview. You can ditch the phone and walk to the library and log on to see if anyone emailed a reply to your latest batch of applications.
Option two: when houses and apartment building go bankrupt the government buys them and the resells then to residents when things recover.
Residents that faked a low income and skipped payment to take advantage of the situation will risk prosecution.
Final though companies rarely hire people with no addresses…this is going to be a much harder recovery than 2008 without intervention.
Another Silicon Valley resident, citizen of downtown San Jose, the less affluent area. Wow, what’s going to happen to Google’s gentrification program “Google Village” now? Sometimes I think Google will still be making huge amounts of money and the redevelopment will go ahead. So many housing developments going up now…
Ted,
In a word? “Good.”
I expect to lose my part-time job any day now. After Sanders’ loss to Biden (possibly the polls are all electronically rigged), I’m still numb, and no longer care. Biden means 12 years of centrism (he’ll turn the wheel thing of the uh thing um snackporch over to his veep, and she’ll do her best Hillary imitation for two full terms) and everything will be beyond recovery by then.
During my struggle to survive my most recent layoff (the new normal: hire someone, keep them for about three years, then lay them off and bring in new people at lower wages), I have, literally, sold off everything I owned that had any monetary value. Only the scraps are left. I estimate that with tremendous luck, I could realize maybe $800. It isn’t even worth listing things on eBay.
I look forward to all of it collapsing. I look forward to Molly and Caden, empty vape pens in their slack, idiotic mouths, trying to figure out how to survive now that mommy-and-daddy-checkbook can’t just keep sending them money to live in their $4,000 a month “authentic” Brooklyn loft.
I want to see the boomers squatting in terror in their million-dollar homes because they know — they finally know — they are so fundamentally hated that if they put foot on the streets, they’ll be beaten to death by everyone who FINALLY, thank you Jesus Aitch Christ and ALL the Saints, realizes what parasitic filth so many of the boomers are. (Not all. There are good boomers, and I hope they manage to find some safe places to hide). But I look forward to their whingeing, doofus-smugness being replaced with real fear. “Omigod. I didn’t realize. People absolutely hate us. I mean, they hate us like mothers hate pedophiles.”
I will watch it all burn — literally or figuratively — with a smile. What’s that? You had health insurance through your employer and now you realize that medicare for all is a good idea because you’re unemployed? Well drop dead. Literally and figuratively. You don’t get to suddenly come to Jesus now, because gosh jeepers it actually affects you personally.
I hope lots of people start telling me. “This. THIS is why you’re so angry all the time, isn’t it?”
Wow. The situation is so bad that in a way I am optimistic. Too many people are losing their jobs, even worse than the Great Recession, when a Rooseveltian solution would have bailed out the homeowners, not the corporations. Now is the time for change. But as Glenn says below, the problem now is that since 2008-9 the feds have bailed out the fat cats and this seems all the feds have in their portfolio. The people will demand change or else we are really screwed.
The oligarchic blood suckers will soon come to the realization that the blood they suck comes from the people these oligarchic parasites call parasites.
This is not an Ayn Rand novel where the wealth of nations comes from the few who occupy tall buildings.
Jump Mother f***ers
https://www.youtube.com/watch?v=nrm2gMvigCQ
The “elite” have always sucked from the masses, from slave drivers thousands of years ago to the globalist CEOs of today.
They know they suck…so they count on tradition, the media, churches, entertainment industry and sports to keep the masses diverted. If that fails they call on the police and army to force the masses back off the streets…but when the “elite” suck too hard things crash and break. If the police and army are too sick and worried about their families to block change, what then. I just worry we will go right, If right wing group rolls out low wage jobs, full plates, cheep roofs and bargain basement health care many people will be so relived they could easily fall in line for a wall, more oil pipelines, for more weapons…ect
The elite assholes learned from Obama that they can crash the economy any way they want and still get bailed out.
Trash for cash.
And it’s working the same with Trump.
The question is, How much electronic money can they “print” before this scam devalues the dollar in international markets?
Money and stocks only have the value that people believe they do.
What does “full faith and credit mean” when the impact of funny money eventually hits the fan?
Without the Soviet Union to hate the US has had an identity crisis that, from Bill to Hillary, they tried to reignite, even in the latter’s feeble way.
I refrained from commenting below (“Progressives Decide: … “) that Warren is NOT a progressive as you implied because I didn’t want to bother justifying it. In this column you have done that for me.
Of course, Sanders, a passable progressive, is as now as silent on matters of grave import as resulted in some serious, justified castigation/contempt for ol’ Joe “nothing fundamental will change” Biden.
Is a “progressive” who won’t speak really a “progressive.”
I’ve been notified of a new Jimmy Dore You Tube video with the cryptic title of “Biden & Bernie Working On Endorsement Deal Together.” But in true YT style, the video can’t be seen at the
moment.
Biden
re: “Only one entity has the financial and organizational resources to mitigate the damage and forestall a total societal collapse reminiscent of the Soviet Union in 1991: the federal government.”
In the Soviet Union, all housing was government owned, so nobody was evicted. The cities were planned around mass transit, which kept running, so nobody had to worry about keeping their car on the road. Cars were for rich people. Education was free, so there was no college debt. They had universal health care, which got a little ragged, but stayed functional. For those, and other reasons, there was no such thing as “consumer debt.” We are far more screwed than the Russians, already.
I would suggest that you and all your readers bone up on Dmitry Orlov’s work on “The five stages of collapse,” and his other comparisons and chronicles of collapse in the USSR and the likely course of collapse in the USA. It’s likely to be far messier here than it was there.