On Thursday afternoon, Joe Biden signed the first major legislation of his presidency, the American Rescue Plan Act. The $ 1.9 trillion bill allocates a ton of money to various state-run welfare and social services programs that desperately needed a cash injection, both in the 12 months since the COVID crisis took off and in 25 years since welfare reform became a national political priority. . The size of the engagement has not been entirely inappropriate. comparisons to the initiatives of the Great Society of LBJ.
Beyond front-line cash assistance, in the form of stimulus checks and child tax credits that will go a long way in temporarily improving some of the country’s most acute child poverty, the bill also allocates a federal amount of $ 300 a week. boost unemployment insurance, extend new pandemic-era UI eligibility programs through September, reduce health insurance premiums, increase funding for Affordable Care Act Medicaid expansion, and, otherwise, it directs hundreds of billions of dollars to the states to help offset the costs of its troubled social services. programs after one year of heavy use.
Those generous and necessary financial commitments functionally end the slash-and-burn welfare reform of the Clinton years of the Democratic Party. But the Biden administration has work to do. These investments are temporary; the increase in the child tax credit ends in one year and the increase in health insurance subsidies in two. Unemployment programs will be phased out in early September. As the administration works to make some or all of these programs permanent, it should take another crucial step to improve the structure of our most important social programs by federalizing them.
Take, for example, unemployment insurance, the amount of which rose rapidly as the federal government increased it by $ 600, then zero, then $ 300, in addition to the states that were being implemented. Even in a state like California, which has far superior administrative capacity than other smaller, redder counterparts, laid off workers had serious difficulties accessing benefits. As David Dayen reported for the Perspective, “In March, 87 percent of claimants received their payment within two weeks of filing, by June that number had dropped to 52 percent.” There were numerous unnecessary delays and denials. As of August, 1 in 5 claimants (1.2 million Californians) had not received a payment.
Verification and eligibility standards remained a major challenge for outdated and overwhelmed state unemployment insurance programs throughout the year, while more sophisticated assessments of how much money beneficiaries had been making before being laid off were completely impossible to perform. , which makes the help process even more clumsy. Unemployed people experienced wildly different results depending on the state in which they lived. And that’s before we get to rampant unemployment insurance fraud, conservatively estimated at $ 36 billion, seen in California and across the country.
Of course, the federal government, which was already and continues to pay for unemployment insurance through a federal loan program that states take advantage of, would make things much easier for the unemployed simply by administering the system itself. The government could deliver almost immediate payments to a Federal Reserve bank account for every American with a social security number, and even calculate those payments based on a percentage of income, since they have that information handy. States were not funding these programs to begin with, through 50 separate, outdated, and inefficient enforcement processes. Many state systems run in COBOL, a decades-old computer programming language; there is simply no need to subject people to this. It would be better, more efficient, more impactful, and not more expensive for the federal government to enact its own system, and fewer people would be lost.
Your donation keeps this site free and open for all to read. Give what you can …
The current situation with state-run Medicaid programs is perhaps even more ridiculous. The American Rescue Plan offers a lot of money to entice states to adopt and expand Medicaid, which was expanded as part of the Affordable Care Act. But states with Republican governors have rejected Medicaid expansion or insisted on punitive work requirements for eligibility, even though it costs them next to nothing – the federal government already bears 90 percent of the cost of Medicaid expansion.
The totally ideological and non-fiscal opposition of the red states to the expansion of Medicaid has been overcome in some states by popular support for the ballot measures; elsewhere, governors have successfully thwarted expansion. That means that in places like Georgia, Republican regimes have repeatedly rejected millions of dollars in federal money.
In fact, there is a provision in the ARP that incentivizes those states that have not expanded Medicaid to the extent that it literally pays them to expand it. Of course, this will also make little difference in places like Texas, Florida and Georgia, which will not yet adopt the program or accept the free money. (The ARP now contains $ 2 billion for Georgia’s Medicaid expansion, thanks to its Democratic senators, which will likely be rejected by its Republican governor).
Which means we’ve reached a point where the federalist approach to healthcare no longer holds up. Medicaid federalization has been a hot topic in Democratic politics for the past decade, and numerous liberal think tanks have endorsed it as the logical next step since the passage of the Affordable Care Act. Medicaid expansion is extremely popular and won on the ballot in 2020 in places like Oklahoma where Democrats have no hope of competing. And, as Jon Walker has pointed out in the Perspective, Medicaid federalization can be done through reconciliation. Now is the time to act.
We have reached a point where the federalist approach to healthcare no longer holds up.
There are also opportunities to bring more provision of public education under federal control, another hugely important and costly social service that cash-strapped states have signaled they will target cuts in the coming years. The ARP has nearly $ 130 billion in block grants for education and could be expanded further.
If the year of the pandemic has shown us anything, it is that states are not up to the task of administering these benefits as quickly and efficiently as the federal government. Reallocating crucial welfare programs like unemployment and health insurance and education to the federal government would not only improve results and efficiency, but also save a ton of money in administrative costs. Since many of these states, especially those led by Republicans who have rejected Medicaid expansion, face budget and revenue deficits and unforeseen costs associated with managing the pandemic, this would also represent considerable financial relief for them.
Of course, Republicans in Congress applauded pushing these programs to the states because they knew they would be less equipped to implement them. In fact, the entire coronavirus strategy of the Trump administration was, in essence, doing nothing and letting states fend for themselves. As the Biden administration seeks to undo Trump’s legacy, undoing this clearly failed federalism is a crucial place to start. The task now for the Biden administration is to make these changes last.
Federalizing social programs would be a great step towards expanding the welfare state and ending poverty permanently. If passing new legislative packages proves even more difficult, as Republican opposition mounts and moderate Senate Democrats rush, it would be an easy step to protect the ARP’s profits and secure Biden’s presidential legacy from the start.