Why was Washington even haggling over Covid-19 relief?

US politicians should hit the road and talk to ordinary people to understand the dire need for stimulus cheques

People try and help a homeless man in the Manhattan borough of New York City last week. Reuters

In 2015, a Seattle-based entrepreneur named Dan Price “with shoulder-length hair and Brad Pitt looks” made a dramatic decision.

As chief executive of Gravity Payments, a credit card processing company, Mr Price cut his annual salary from $1.1 million to $70,000. He also paid all of his employees the same amount. This meant that every single person in Gravity Payments, including the big boss, got equal pay.

Mr Price had been socially conscious most of his life, but he struck a nerve when he made that extraordinary move. He decided to do it after he saw a disgruntled employee on a smoke break. The employee said he was miserable working for Mr Price and felt “ripped off”.

Then Mr Price started listening to people, including friends who were burdened by student debt or were laid off or couldn’t afford $200 rent increases. He thereafter cut his salary and raised his employees’ wages.

Overnight, Mr Price morphed from another rich West Coast internet entrepreneur to a modern-day Robin Hood. But more importantly, according to INC Magazine, Mr Price “had also turbocharged a debate now raging across the American landscape, from presidential forums to bar rooms to fast-food restaurants. How much – indeed, how little – should workers be paid?”.

About 14 million people in the US have been receiving unemployment benefits through the Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programmes, which were set to expire. AFP

I mention Mr Price because, as members of the US Congress haggled over how much to pay towards the Covid-19 relief bill last week, he was tweeting about the imbalances in American society and the importance of the stimulus cheque to millions of his compatriots. At one point, he suggested that all members of Congress get paid $600 – the amount on the cheque – and be asked to live on that for one month. It could be turned into a reality TV show, he said.

Although Congress eventually passed the bill and President Donald Trump belatedly signed it, I thought Mr Price's idea was brilliant. The minimum wage in the US is currently $7.25 an hour. Many states also have minimum wage laws. In New York, for instance, it is $15, while it is $11 in New Jersey. In cases where an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages. But these amounts are still ridiculously low to live on, let alone feed and house a family.

There are currently 630 billionaires in the US whose combined wealth is $3.4 trillion. According to Forbes rankings, the 400 richest Americans have as much combined wealth as the poorest 64 per cent of American households. In other words, 400 people have more money than roughly 150 million others.

Many of them are minimum wage workers – dishwashers, baristas, waiters, cleaners – and are hurting in a pandemic year. Many have lost jobs. And we know that the disease has divided the rich and poor even further. We have seen how many more poor people have died as opposed to the rich.

So for many Americans, the 159 million stimulus payments that arrived in June, after more than $267 billion was approved by the federal government, were a means of survival - but the hope of receiving a second round of cheques had begun to fade.

This week Dr Anthony Fauci, from the National Institutes of Health, declared that the country was at a “critical point” in dealing with Covid-19. And yet Mr Trump – who still refuses to accept the November election result – was busy playing golf at his Mar-a-Lago residence and delaying the next round of stimulus cheques.

President Donald Trump held off for a few days before signing the Covid-19 relief package. AP Photo

Mr Trump was demanding larger relief sums. “I simply want to get our great people $2,000, rather than the measly $600 that is now in the bill,” he tweeted on Saturday. But he was in the process holding off on signing the end-of-year Covid-19 relief package, even though his own Republican Party was urging him to sign the legislation immediately before pressing Congress for more funds. Meanwhile, Washington was in a state of panic, as were people I know who needed that cheque to get through the post-holiday dry financial period.

Had the President remained stubborn and not signed the bill into law, people subsisting on unemployment benefits would have gone hungry by the end of the week. Many others would have been unable to find a way to pay rent or keep the electricity turned on. The federal government would have run out of money as early as this week.

I wish politicians refrained from playing with people's lives. They would all do well to go on a road trip and talk to ordinary Americans about how hard it is to live on the minimum wage, or to lose their jobs.

In 2001, the writer Barbara Ehrenreich studied the difficulties low-wage earners faced every day and the hidden costs of not having enough money to pay bills. Her book, Nickel and Dimed: On (Not) Getting By in America, remains today an urgent study of how the underclasses suffer in this land of incredible wealth. "The 'working poor' neglect their own children so that the children of others will be cared for," she wrote. "They live in substandard housing so that other homes will be shiny and perfect; they endure privation so that inflation will be low and stock prices high."

I wish Mr Trump would read it. Or other billionaires who might be inspired by Mr Price.

“Most people live pay cheque to pay cheque,” Mr Price said. “So how come I need 10 years of living expenses set aside and you don't,” he asked shortly after he dropped his “wage bomb".

Gravity Payments continued to grow after he made his decision: before being hit by the pandemic, it was making $4m a month in revenue. While this is not to say that every millionaire or entrepreneur should emulate Mr Price, it is worth pointing out what a stimulus cheque can do for those who are in desperate need for money – and for the larger good.

It was heartening to see Republicans and Democrats come together – for once – to urge Mr Trump to do the right thing. But politicians should know better than to treat millions of Americans, and their lives and livelihoods, like a political football.

Janine di Giovanni is a senior fellow at Yale’s Jackson Institute for Global Affairs