Biden’s First Mandate: A pandemic g.i. bill
Authors: Peter Marber, Julian Savulescu, February 2021.
Are there pandemic policies that can be both fair and equitable, while also jumpstarting the world economy now and in the future? We argue for a “progressive reciprocity” framework similar to America’s G.I. Bill, as both an ethical and economic recovery template. This framework would provide incentives for greater public quarantine compliance which can end the health crisis faster, thereby reducing overall societal harm. President Joe Biden might use such a plan to end the crisis, reinvigorate the economy, and restore morality to U.S. policymaking – while also repairing America’s tarnished reputation in the global community.
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History has shown that the U.S. often learns the hard way. After World War I, poor planning made re-entering civilian life a challenge for nearly 5 million Americans who served. With little financial or employment support from the government, many veterans floundered for years, which weakened the U.S. economy and most likely worsened the effects of the Great Depression in the 1930s.
Important moral and economic lessons were learned. Before World War II ended, the U.S. government passed the Servicemen’s Readjustment Act of 1944 – popularly known as the G.I. Bill. This legislation was a fair and comprehensive response to those who sacrificed for the country. Nearly nine million veterans were eligible to receive unemployment compensation, free university and trade education, along with subsidized loan and mortgage programs. The results: millions who served went to school, bought homes, and started businesses which launched a golden era of equitable socioeconomic prosperity. For the next three decades, America’s bottom 90% income group grew faster than the top 10%. (Price)
The lost jobs, bankruptcies, evictions, and deteriorating health and education from prolonged COVID-19 lockdowns have affected more people than those hurt directly by the virus. President Biden might approach this crisis similar to a postwar period and launch a “Pandemic G.I. Bill” to reintegrate millions of economic casualties and refugees who have made sacrifices for the broader good via lockdowns.
Governments have inherent abilities to enforce quarantines, but such power does not eliminate democratic protections of “reciprocity” to restore the economic value had citizens’ property and liberties not been expropriated by lockdown measures. This ethos is embedded in America’s 5th Amendment which states that private property shall not be taken for public use without “just compensation.”
Providing people with assurances about their livelihoods during quarantine is an important component of public health compliance, which should help end the crisis faster and reduce its damage (Coughlin). A 2020 study highlighted a 94 percent compliance rate when compensation was offered versus less than 57 percent without (Bodas). With effective vaccines finally approved and being distributed, compensation might also be used to accelerate its adoption – particularly in light of public skepticism.
Yet not all sacrifices are equal under lockdowns. Those in lower paying sectors such as travel, retail, hospitality, and day-labor – which total more than 25% of Americans – have either lost their jobs or have been furloughed for long periods (Dey). Essential workers, too, suffer from potentially hazardous conditions and often have to leave their children at home, unattended. Single parent households are particularly vulnerable: In the U.S. some 23% of children under the age of 18 live with one parent and no other adults (Kramer). In short, under quarantine socioeconomic disparities worsen for those already struggling.
At the same time, some winners keep winning – even during pandemics. Many higher paid knowledge and office-sector employees have worked from home with little or no interruption to their income. High-flying e-commerce companies have flourished during quarantines from increased revenue at the expense of traditional brick-and-mortar operators. Financial markets have recovered due to monetary policies such as lower interest rates and Quantitative Easing, yet who really benefits from higher equity prices? Mostly the already wealthy. Stock ownership is relatively narrow in most countries. In the U.S., for example, only 10% of Americans own more than 84% of the market – with 50% held by the top 1% (Wigglesworth). With rebounding stock prices, the world’s billionaires have seen their already-huge fortunes grow to a record high of more than $10 trillion. (Neate) The wealth of Jeff Bezos alone, the world’s richest person, rose by a startling $100 billion during the pandemic – which is more than the individual GDPs of 120 countries.
Essentially, the unintended consequences of COVID-19 quarantine policies have accelerated inequality trends that began before the pandemic: a small slice of wealthy, better educated people is quickly pulling further ahead of less-resourced, more imperiled citizens.
In light of these realities, a progressive Pandemic G.I. Bill would provide just compensation to those most harmed, with costs being borne by those who have lost little or even gained throughout the pandemic. The compensation would come in the form of job security legislation including lost wage assistance, protections against wrongful discharge, and hazard pay for at-risk workers; medical and family support for caregivers; and educational assistance including computers and WIFI for those who are required to learn from home.
To not burden future populations with such costs, an ethical solution may be to increase taxes on specific benefited populations during the pandemic. Those earning above a threshold of $250,000 (the top 5% in the U.S.), for example, could pay a higher rate on income above this level. Furthermore, large corporations that generate profit above $1 billion, perhaps, could also contribute a higher amount.
In addition, governments should temporarily raise or eliminate capital gains tax rates. In many countries, profits from investments are often taxed at less than half the rate paid on wages. This inherently favors the affluent who derive much of their income from investments versus labor. Amid a pandemic in which securities may be inflated by monetary and fiscal policies, not only do windfall gains go to relatively small populations, but they are taxed, ironically, at lower rates. This is regressive and unfair under normal circumstances, and even more so during national crises. Several studies highlight that nearly all capital gains benefits flow to the highest income brackets. In the U.S, this costs the government more than $120 billion per annum (Committee for a Responsible Federal Budget).with 75% of the benefits going to those earning over $1 million – and a remarkable 50% captured by only one in 1,000 taxpayers (Lenzer). Both suggested tax rate changes could be restored or adjusted once the economy has normalized.
COVID-19 and quarantine policies have created a few winners and many losers. In a moral society no one should benefit greatly during such crises at the expense of those harmed and weakened. Indeed, it is effective exploitation to profit from vulnerable populations. Because quarantine measures can lead to limited liberty and economic hardship for citizens, they must be accompanied by reciprocal compensation from government.
Our suggested Pandemic G.I. Bill could have a galvanizing effect in America and overseas, both economically and psychically. It can reduce and even end the effects of the pandemic faster with incentives for quarantine and vaccine compliance, thereby reducing its total cost; it would support society’s more vulnerable populations versus destabilizing them; and it should help the economy normalize and recover faster and fairer – as the G.I. Bill did after World War II. Fewer people are set-back by such an approach, with very few already-fortunate gaining less excessively. President Biden has a unique, once in a lifetime opportunity. He can tackle one of the greatest global threats in decades while, more importantly, restoring faith and confidence in democratic government – something sadly lost in recent years.
Peter Marber is a noted author on globalization and teaches at Harvard University. Julian Savulescu is a doctor, bioethicist, and Director of the Oxford Uehiro Centre for Practical Ethics at Oxford University. A version of this article was originally published here.
Bodas, Moran, and Kobi Peleg. “Self-Isolation Compliance In The COVID-19 Era Influenced By Compensation: Findings from a recent survey in Israel: public attitudes toward the COVID-19 outbreak and self-isolation: a cross sectional study of the adult population of Israel.” Health Affairs (2020): 936-941.
Committee for a Responsible Federal Budget. “www.crfb.org/blogs/tax-break-down-preferential-rates-capital-gains.” 27 August 2013. Committee for a Responsible Federal Budget. 23 February 2021. <www.crfb.org>.
Coughlin, Christine. “Public health policy: revisiting the need for a compensation system to maximize compliance.” Wake Forest Journal of Law and Policy (2017): 415.
Dey, Matthew, and Mark A. Lowenstein. “How many workers are employed in sectors directly affected by COVID-19 shutdowns, where do they work and how much do they earn?” Monthly Labor Review (2020): 1-19.
Kramer, Stephanie. “U.S. Has World’s Highest Rate of Children Living in Single-Parent Households.” 19 December 2019. Pew Research Center. 20 December 2021.
Lenzer, Robert. “The Top 0.1% Of The Nation Earn Half Of All Capital Gains.” Forbes 10 November 2011.
Neate, Rupert. “Billionaires’ wealth rises to $10.2 trillion amid Covid crisis.” The Guardian 6 October 2020.
Price, Carter C. and Kathryn A. Edwards. Trends in Income From 1975 to 2018. Working Paper. Rand Corporation. Santa Monica: Rand Corporation, 2020.Wigglesworth, Robin. “How America’s 1% came to dominate stock ownership.” Financial Times 11 February 2020.