Legislating Against a Viral Target

Update 429: Legislating Against a Viral Target;
Americans Watch as Congress Gropes for a Plan

The raging coronavirus, vast economic contraction, enormous open-ended stimulus spending, botched relief rollouts, system crashes, and a cacophony of partridges in the pear tree combine to confirm Americans’ impression that those in charge do not have a comprehensive economic plan.

Corona relief bills I-III have provided myriad benefits to forestall or mitigate ad hoc economic harms of all kinds to individuals and corporations insofar as they are heard by Congress. Missing thus far has been a comprehensive approach to maintaining what we can of the economic status quo ante Corona, by offering compensation continuity for workers and credit continuity for small business.

We see promise in one such proposal in the mix of ideas under discussion for the next Corona bill. Below, we summarize the state of play of a Corona IV bill expected later this month.

Good weekends all,

Dana

______________________________________

Two weeks ago, Congress passed the $2.2 trillion CARES Act to address the economic fallout from the coronavirus, the largest spending bill in history and Congress’ third Corona relief measure. The three packages have not done much to help workers and small businesses. 6.6 million more Americans filed for unemployment this week, bringing the total to nearly 17 million who’ve filed in under three weeks. 

Congressional Democrats seek a fourth relief package. Senate Majority Leader Mitch McConnell stymied their early efforts but now appears willing to negotiate. Progress has been fitful thus far; the Senate failed to pass supplemental funding for small businesses on a vote yesterday. Here, we analyze the state of play of the Corona IV negotiations and what we expect to see in the next relief package. 

Senate: Breakdown on Small Business

Thursday morning, the Senate failed to pass a $251 billion top-up to the CARES Act’s $349 billion small business loan provision, the Paycheck Protection Program (PPP). Small businesses are struggling to access the CARES Act’s funds, as the Small Business Administration (SBA) is massively overburdened. 

McConnell intended to pass the measure by unanimous consent, but Senate Democrats blocked the attempt. Maryland Democratic Sens. Van Hollen and Cardin decried McConnell’s move as a “political stunt” that was doomed to fail. 

Minority Leader Schumer and House Speaker Pelosi proposed reserving half of the small business funding for community-based financial institutions, which lend to businesses owned by women, minorities, veterans, and families. In addition to the $250 billion for small businesses, the Democrats’ bill would:

  • allocate $100 billion for healthcare providers
  • appropriate $150 billion to states, tribes, and localities
  • increase Supplemental Nutrition Assistance Program (SNAP) benefits by 15 percent 

Republicans blocked the Schumer/Pelosi plan and negotiations between Schumer and Mnuchin are ongoing. 

Although not a part of Thursday’s proposal, Schumer has demanded that hazard pay for essential workers, a “Heroes Fund,” be a part of the next coronavirus relief package. Many essential workers are currently operating without crucial workplace protections and adequate pay. Schumer’s plan would increase essential workers’ pay by up to $25,000, an extra $13 an hour, through the end of the year. The proposal would also apply retroactively. 

McConnell is eyeing narrowly-focused legislation addressing immediate coronavirus healthcare needs and technocratic fixes to the CARES Act. Senate Republicans are still upset about expansions to mandatory paid leave and unemployment insurance in earlier coronavirus bills and may be looking to reverse them.

House: More Supplemental Ad Hoc Relief?

Speaker Pelosi intends to bring a fourth coronavirus package to the House floor by the end of April, which is expected to total about $1 trillion. While the House remains in recess until April 20, members are floating ideas for Corona IV. Pelosi endorsed an infrastructure package as coronavirus-related stimulus last week but has since backed off. Pelosi supports numerous smaller plans, including a repeal on the State and Local Tax (SALT) cap. The SALT cap prevents taxpayers from deducting more than $10,000 in state taxes from their federal taxes. This provision is unlikely to pass.

Democratic Reps. Ted Lieu and Joe Neguse introduced the COVID-19 Price Gouging Prevention Act, which would prohibit companies from raising the prices of essential goods significantly above pre-pandemic levels. The bill also prevents price gouging during future national emergencies. 

House Democrats are also seeking to expand funding to support states with implementing same-day voter registration, early voting, and mail-in ballots. The CARES Act provided $400 million in state election assistance but provided no requirements on how the funds should be spent.

Other House Democratic proposals include:

  • free coronavirus treatment and additional medical equipment 
  • a second, more generous round of direct cash payments
  • supplemental assistance for low-income families via food stamps and utility bill subsidies
  • paid leave expansion to cover more affected workers and stronger workplace safety standards for health care and other frontline workers

Admin: Planning is Fine for Andrew Cuomo

Secretary Mnuchin led the administration’s failed push for the $251 billion in additional funding for the PPP. This came as the SBA has been overwhelmed with trying to process applications from businesses who are seeking relief through the initial $349 billion provided by the CARES Act. Other than this emergency funding request for the PPP, the administration has floated ideas for a Corona IV bill such as:

  • Infrastructure: Last week, Trump said that two trillion dollars in infrastructure spending could be a way to stimulate the economy in a fourth package. He tweeted that now is a good time to borrow for infrastructure spending with interest rates being at zero.
  • Direct Payments and Hazard Pay: Trump said he’s in favor of sending more direct payments to Americans after the first $1,200 payments from the CARES Act go out this week. He also voiced support for Sen. Schumer’s idea to provide hazard pay for essential workers.
  • GOP Policy Potpourri: Unsurprisingly, The Washington Post reported that the White House is again considering payroll and capital gains tax cuts. They’re also considering a callous policy of clearing businesses of liability if one of their employees contract coronavirus on the job.

With many of these policy pronouncements coming from Twitter or the briefing room podium, it’s unclear how serious the administration is in pursuing them. Mnuchin helped set the terms of debate for the Corona III negotiations, but the administration may now be taking a backseat to Congress.

A Comprehensive Continuity Policy

Relief measures are necessary but necessarily backward-looking. Putting more money into unemployment insurance cannot prevent unemployment. 

Today, Democratic Rep. Pramila Jayapal introduced the Paycheck Guarantee Plan. Her plan would keep workers on their employers’ payrolls by having the federal government subsidize workers’ wages up to $100,000 for three months. In return, businesses would be barred from firing workers. The idea of comprehensive wage replacement is gaining traction in Congress. GOP Sen. Josh Hawley proposed subsidizing workers’ wages up to 80 percent of the national median wage.

These ideas are not outlandish. Denmark and the United Kingdom are implementing similar wage subsidies. Having 17 million American workers lose their jobs was, in part, a policy decision. Corona IV needs to include a wage continuity program that ensures no additional worker has to apply for unemployment benefits during this crisis.

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