GOP Infighting Over Coronavirus Aid Bill

By Yuval Rosenberg

GOP Still Infighting Over Coronavirus Aid Bill

The White House and Senate Republicans are still trying to
resolve internal differences over their opening offer on the next
coronavirus relief bill. Negotiations with Democrats, likely to be
even more difficult, are still ahead.

Here’s a quick recap of where things stand:

  • Senate Majority Leader Mitch McConnell was reportedly
    pushing to unveil the GOP blueprint as soon as Wednesday, but
    Senate Republicans and the White House are still struggling to
    reach agreement on key issues. Senate GOP staffers were reportedly
    briefed Wednesday afternoon on the proposal, which is expected to
    include a two-month extension of an as-yet-unspecified flat
    unemployment insurance payment.
  • With Republicans still internally divided, and their
    differences with Democrats even larger, passage of any coronavirus
    relief bill appears likely to slip deeper into August.
  • That timing, and the looming expiration of the $600
    federal boost to weekly unemployment benefits, has some Republicans
    exploring a short-term extension of emergency unemployment payments
    to millions of laid-off workers (see more below).
  • The payroll tax cut President Trump says he wants may not
    be included in the Republican plan. “GOP leadership has made no
    decision yet on whether their proposal will include a payroll tax
    cut,” Politico reports.
  • Democrats appear to be enjoying the GOP’s intraparty
    squabbling. “It’s in the middle of the week, and the Republican
    Party is so disorganized, chaotic and unprepared that they can
    barely cobble together a partisan bill in their own conference,”
    said Senate Minority Leader Chuck Schumer (D-NY).

GOP Considers Short-Term Extension of Unemployment Benefit at
Much Lower Level

As Senate Republicans and the White House try to reach consensus
on their proposal for the next coronavirus relief bill, they are
also discussing a possible extension of enhanced unemployment
benefits, acknowledging that a broader deal isn’t likely to be
reached before the $600-a-week payments are set to expire at the
end of July.

“I think we should do the whole thing,” Sen. Rob Portman (R-OH)

said, “but if we can't get it all done by next
week we cannot allow there to be a cliff in unemployment insurance
given that we're still at about 11% unemployment. I think we need
to do something and [in] the interim period we can have a
compromise.”

A big cut: The extension under consideration would likely
reduce the benefit dramatically from the current $600 a week.
Portman said Wednesday that GOP lawmakers were discussing a
possible two-month extension of enhanced benefits, but at a lower
level, with $200 per week being cited by some White House advisers.
CNBC
reports the extension now under consideration
would lower the supplemental payment to $100 a week and last
through the end of the year.

The $600 per week payments have played a major role in
maintaining household incomes and economic demand in the face of
the worst employment crisis in decades. A potential extension would
allow more than 20 million Americans to continue to collect extra
unemployment benefits.

A short-term extension seems unlikely for now, though, as it
would remove some deadline pressure that may be needed to get a
broader deal done. White House Chief of Staff Mark Meadows late
Wednesday told Politico’s
Jake Sherman that the White House opposes a short-term
deal.

Some top Democrats object, too: Democrats have proposed
continuing the $600 payments through January, and top Democratic
lawmakers expressed concerns about a shorter-term extension. “I
would prefer to reach agreement on a comprehensive response to the
crisis, including an extension of unemployment assistance; state,
local and tribal government assistance; and other priorities,”
House Majority Leader Steny Hoyer said Wednesday, according to

Bloomberg News. Sen. Ron Wyden of Oregon, the
ranking Democrat on the Senate Finance Committee, reportedly
accused Republicans of trying to stall.

The risk: Some economists are expressing concerns about
the shockwave that could be caused by bringing the unemployment
payments to an end. In an
analysis published by the Peterson Institute for
International Economics earlier this month, former Obama economic
adviser Jason Furman said that allowing the enhanced benefits to
come to an abrupt halt would remove some $50 billion a month from
the economy, reducing household spending, business operations and
GDP.

Eliminating the federal benefit boost permanently would
cause GDP to shrink by more than 2% in the second half of 2020,
Furman said, while reducing employment by about 2 million (see the
chart below).

Lowering the weekly payment, which seems more likely
than total elimination, also carries economic risk. Economist Ernie
Tedeschi, who worked in the Treasury Department during the Obama
administration, told The Washington Post that cutting the payment
by two-thirds would have a powerful negative economic effect. "If
they lowered it to $200 a week, 30 million workers would wake up
with a pay cut from a third to a half overnight," Tedeschi said.
"While $200 is marginally better than full expiration, the U.S.
would still take a major economic hit from this summer and this
fall as a result from it."

The timing poses challenges, too, since most states
will send out their last checks in the program at the end of this
week, creating a rapidly approaching fiscal cliff as clunky
state-level unemployment offices shut the program down, while
likely needing weeks to turn it back on again in the event of new
legislation.

Quote of the Day

“Given the sharp drop in economic activity as a direct result
of the pandemic economic shutdown and the corresponding reduction
in tax receipts, state budgets are in tatters. Governors have
already cut budgets and reduced our payrolls by 1.5 million people,
but without Senate action, we will need to make steeper cuts and
reduce payrolls even more, at precisely the time when these
services are needed most.”

– Maryland Gov. Larry Hogan and New York Gov.
Andrew Cuomo, the Republican and Democratic leaders of the National
Governors Association, in a
joint statement again calling for a $500 billion
state stabilization fund as part of the next congressional
coronavirus relief package.

US Agrees to Pay $1.95 Billion for 100 Million Doses of
Vaccine

The federal government has agreed to pay Pfizer and German
biotechnology firm BioNTech nearly $2 billion to produce 100
million doses of a Covid-19 vaccine currently under development, if
the vaccine is found to be safe and effective in humans. The
agreement also gives the U.S. the option to acquire an additional
500 million doses.

“By entering into this agreement now, a safe and effective
vaccine can be shipped quickly if FDA [Food and Drug
Administration] grants EUA [Emergency Use Authorization] or
licensure,” the Department of Health and Human Services said in a

statement Wednesday. “This approach helps meet the
U.S. government’s Operation Warp Speed goal to begin delivering 300
million of doses of safe and effective vaccine to the American
people by the end of the year.”

Paycheck Protection Program Helped Save as Many as 3.2 Million
Jobs: Study

The more than $500 billion in forgivable Paycheck Protection
Loans from the government to small businesses helped save between
1.4 million and 3.2 million jobs through the first week of June,
according to a preliminary study by
economists at the Massachusetts Institute of Technology and Federal
Reserve.

The researchers noted that assessing the impact of the loan
program was made more difficult by “the absence of granular,
high-frequency employment data that can precisely capture any
causal effect of the PPP on employment.” They used data from
payroll-processing company Automatic Data Processing to compare
employment levels at businesses that were and were not eligible for
PPP loans. They estimate that the program boosted employment at
eligible firms by 2% to 4.5%.

An earlier working
paper by researchers at Harvard and Brown Universities
using different data concluded that “the PPP had little material
impact on employment at small businesses” and that “it is clear
that the program did not restore the vast majority of jobs that
were lost following the COVID shock.”

New York Pop-Up Hospital Cost $52 Million, Treated 79 Patients:
Report

A field hospital built by New York City as the coronavirus
pandemic was peaking in April cost more than $52 billion. Located
at the U.S.T.A. Billie Jean King National Tennis Center in Queens,
the hospital had hundreds of beds and dozens of medical
professionals. But it treated just 79 patients over the month it
was open, Brian M. Rosenthal of The New York Times reports:

“Doctors at the Queens Hospital Center, a public hospital in
Jamaica, and at other medical centers wanted to transfer patients
to Billie Jean King. But they were blocked by bureaucracy, turf
battles and communication failures, according to internal documents
and interviews with workers.
“New York paid as much as $732 an hour for some doctors at
Billie Jean King, but the city made them spend hours on paperwork.
They were supposed to treat coronavirus patients, but they did not
accept people with fevers, a hallmark symptom of the virus.
Officials said the site would serve critically ill patients, but
workers said it opened with only one or two ventilators.”

City and state officials told the Times that the hospital
treated such a small number of patients because the spread of the
virus was brought under control and the city concluded that
patients were best treated at existing hospitals. Those hospitals
were expanding capacity, but they were still overcrowded and their
medical staffs were stretched thin.

“I basically got paid $2,000 a day to sit on my phone and look
at Facebook,” Katie Capano, a nurse practitioner from Baltimore who
worked at the pop-up hospital told the Times. “We all felt guilty.
I felt really ashamed, to be honest.”

An aide to New York City Mayor Bill de Blasio told the Times
that she expected the federal government to reimburse the city for
the cost of the hospital.


Read the full story at The New York Times.

Number of the Day: $12 Trillion

Offshore accounts, which are often used to evade taxes,
held at least 10 trillion euros —

roughly $12 trillion — in 2019, according to a

report from the Organization for Economic
Co-operation and Development.

The OECD analyzed data on 84 million financial accounts held
offshore by resident in nearly 100 countries — but not
including the U.S., which does not cooperate with the OECD on this
issue. James Henry of the U.K.-based Tax Justice Network
said Thursday that the OECD results are consistent
with his group’s own efforts to track offshore accounts. According
to the group, such accounts are worth upwards of $30 trillion once
the wide variety of financial assets are taken into account.

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