To review,
Congress has enacted four substantial pieces of coronavirus relief legislation
to date. The first was a comparatively small
supplemental appropriations
bill for the federal agencies most involved in the response, such as the
Centers for Disease Control and Prevention.
The second was the
much more significant Families
First Coronavirus Relief Act. It
made COVID-19 testing, although not treatment, free. It slightly improved the unemployment insurance
system. It authorized larger allotments for
some recipients of the Supplemental Nutrition Assistance Program (SNAP, the
successor to food stamps), suspended the rule denying SNAP to unemployed
childless adults, and allowed states to distribute nutrition assistance to
replace school meals when in-person classes no longer meet. And it modestly increased the share of
Medicaid costs borne by the federal government on the condition that states not
terminate anyone’s Medicaid coverage in the midst of the pandemic.
Next came the CARES
Act, which secured much more comprehensive – but sharply time-limited – improvements
to the unemployment insurance system as well as direct aid to states, large local
governments, tribes, and institutions of higher education. It also provided for relief checks of $1,200 per
adult and $500 per child to low- and moderate-income households through the
Internal Revenue Service. To secure
these provisions, Democrats agreed to several large funds that the
Administration could distribute with minimal oversight to businesses as well as
targeted subsidies for particular industries.
The implementation
of the Families First and CARES Acts have been uninspiring, to say the least. The Administration’s interpretations of the CARES
Act’s unemployment insurance provisions denied aid to many workers in
need. The chaos and delays in implementing
the new, broader unemployment insurance system owe much to systematic under-investment
in that program over the decades, but the federal Administration has done little
to help. It also interpreted the fiscal
relief provisions to prevent states and localities from using the money to fill
the massive holes in their finances left by the economic downturn and the
postponement of tax filing. Perhaps most
spectacularly, it issued an edict purporting
to prevent universities from aiding many immigrant students.
The relief checks also
fell far short of their potential. The IRS
initially interpreted the CARES Act very conservatively to impose onerous
paperwork burdens on all those too impoverished to have filed tax returns. Under massive congressional pressure, it eventually
relented and implemented provisions of the legislation allowing return-less
checks to recipients of some federal benefit programs such as Social Security
and certain veterans’ programs. Even
there, its approach was strikingly grudging:
once it reversed itself, it gave low-income elderly and disabled recipients
of the Supplemental Security Income (SSI) benefits only a few days to go on a
brand-new web portal to register any dependents they had or forego receiving the
$500-per-child benefit.
The result was
that 12
million eligible low-income people did not receive checks. Nine million of these receive Medicaid, SNAP,
or both, but IRS made no real effort to coordinate with the state agencies
administering these programs to get the word out about how to file for
checks. It is difficult to assess how
much of this resulted from the ideological predispositions of the Trump Administration
and how much reflected a severely underfunded
IRS seeking to minimize the staff hours devoted to new responsibilities when it
was already falling short on its core activities and trying to adapt to pandemic
conditions.
As widely
predicted, the business bail-outs have operated opaquely. Those criticizing congressional Democrats for
agreeing to these provisions miss the point that they were part of a
trade: had the business relief provisions
constrained the Administration more, the President and Senator McConnell would not
have agreed to anything approaching the dramatic structural improvements for
unemployment compensation that the CARES Act provided during the pandemic.
Less commendable
was the fourth
major COVID-19 relief legislation. It poured
more money into business bailouts without any corresponding extension or
improvement to unemployment compensation, food assistance, Medicaid coverage,
or aid to hard-pressed state and local governments. As soon as it passed in late April,
Republicans began questioning the need, and particularly the urgency, of
further relief legislation. Several
opined that state and local budget crises could be positive things if they
forced cuts in public employees’ pensions and other “wasteful” spending. Many also insisted that the unemployment
compensation reforms were preventing an economic recovery by reducing workers’
incentives to return to work.
With Republican
senators and the White House largely unwilling even to talk about further
relief legislation, the House moved on its own and passed the HEROES
Act on May 15. At the time the
Congressional Budget Office predicted it would cost just
under $3.5 trillion, although the passage of time and changing conditions
surely would yield a different estimate now.
This includes $915 billion in state and local aid; economic uncertainty
makes uncertain
if this is enough to prevent cuts
in human services programs. The
legislation would spend $436 billion to extend expiring unemployment compensation
provisions into January but make no substantive reforms to help those denied benefits
under the Administration’s narrow readings of the CARES Act – and it does
nothing to tie the duration of the reforms to the unemployment rate. Another $536 billion goes to another round of
$1,200 relief payments to low- and moderate-income people. Almost $400 billion goes to hazard pay for
exposed workers, and somewhat less then $100 billion goes to means-tested
programs such as Medicaid and SNAP. Most
of the remainder is for various public health initiatives and support to assorted
industries (including higher education).
It feels odd to call a bill with that large a cost estimate modest, but
relative to the scope of the crisis it actually is.
Senator McConnell
has told his caucus that further relief legislation may be unavoidable but he
wants something dramatically smaller than the HEROES Act. He also has insisted that the price of even
opening negotiations is Democrats’ acceptance of legislation absolving employers
of liability to employees who contract COVID-19 in unsafe working conditions. In a remarkable departure
from other lawsuit-avoidance statutes, he has said nothing about alternative
arrangement for compensating disabled or dead workers nor has he explained what
alternative incentives he would give employers to maintain workplace safety.
Senator McConnell –one
of the few people in Washington who can draft complex legislation without leaks
– apparently plans to sketch out his ideas to Republican senators
on July 21. A full proposal may not
emerge until the end of the week. Many
suspect it may be less than a quarter the size of the HEROES Act. By all accounts, even staff-level technical
discussions on new legislation between the parties have not begun.
Meanwhile, the
extra $600 per week that the CARES Act added to unemployment checks will
largely disappear beginning July 26.
(Most CARES Act’s eligibility expansions last until December, but
the $600 is vital to the lowest-paid workers and to those in the “gig economy” that
have difficulty documenting what they earned before the crisis.) Most families’ economic relief checks were
spent long ago.
Senator McConnell’s
choice to wait until the very last minute – perhaps as little as two days
before enhanced unemployment compensation ends – suggests at a minimum that he wants
to play “chicken” with the Democrats.
With desperate unemployed
workers seeing precipitous drops in their incomes even as jobs disappear again after failed re-openings, Democrats will be under enormous pressure to accede
even to a very disadvantageous bill. Moreover,
this debate could be deeply divisive for Democrats. If Senator McConnell imposes a low ceiling on
the cost of any deal, Democratic priorities will be pitted against one
another. Democratic governors and state
legislators desperate to avoid savage budget cuts could be lobbying against
advocates for unemployed workers, with both squaring off against those seeking
child care subsidies, aid to schools trying to prepare for an uncertain fall, another
round of relief checks, or further business subsidies. Democrats running in marginal districts may
press their leadership to reach a deal while progressives, already prone to criticize
Speaker Pelosi, demand that the party hold out.
The likely result
is the same kind of brinksmanship we have seen repeatedly over government
shutdowns: no deal is reached, enhanced
unemployment ends, a discouraging but not devastating July unemployment report
arrives August 7, and both parties’ pollsters furiously try to determine which
party swing voters will blame.
In this battle,
Senator McConnell will benefit greatly from the innumeracy of the public and many
or most journalists. “Ten billion
dollars” for state and local fiscal relief might sound like a lot to many
people yet it is scarcely one percent of what is needed. Any sum offered for education or personal protective
equipment will sound huge even if, when spread across all the schools or health
care facilities in the country, it is purely tokenistic. And even many experts have difficulty
projecting how many people might lose out under this or that complicated change
in unemployment insurance eligibility.
The showdown might
be resolved by the pollsters. It also might come down to the relative levels of discomfort felt by
endangered Senate Republicans, on the one hand, and unemployed Democratic
constituents, on the other.
Another
possibility remains. Senator McConnell
actually may not want a deal if he can stick Democrats with much of the blame for the impasse. Any deal would surely extend the increased
unemployment compensation (although perhaps at a reduced level). Some of the President’s advisors insist
that without the loss of unemployment assistance to drive workers back to their
jobs, the economy will not rebound enough to allow his re-election. A failed negotiation would
allow Senator McConnell to avoid splitting his own party on that issue while
leaving Democrats to rancorous recriminations.
@DavidASuper1