The Dead May Get Coronavirus Relief Payments After All

By Yuval Rosenberg

Coronavirus Talks: 'Light at the End of the
Tunnel, but How Long That Tunnel Is Remains to Be Seen'

Wednesday’s talks on a coronavirus relief package produced
progress, but no major breakthroughs.

The state of the talks: Entering Wednesday’s
negotiations, the two sides were still far apart on a host of
issues even as they had agreed to try to strike a deal by the end
of the week. Appearing on
MSNBC, Pelosi shied away from saying the parties
could finalize an agreement in that timeframe. "I am confident that
we will have an agreement, the timing of it I can't say. Because I
don’t know. It just depends."

Her tune hadn’t changed much after another afternoon negotiating
session: "I feel optimistic that there is a light at the end of the
tunnel, but how long that tunnel is remains to be seen," she

told reporters.

White House Chief of Staff Mark Meadows, negotiating his

first major deal, told Wednesday afternoon CNN
that his side was making most of the concessions. He also indicated
that there
may not be a deal if one isn’t reached in
principle by Friday, again raising the prospect of executive action
by President Trump on enhanced unemployment benefits and eviction
protections if negotiations don’t yield progress. "If Congress
can’t get it done, the president of the United States will," he
told CNN.

Some GOPers feeling the pressure: Pelosi and
Schumer said they would not walk away from the talks, even if the
Friday deadline passes. Republican senators facing difficult
reelection races may also want talks on a comprehensive deal to go
on. The Associated Press reports:

"Confronted with a poisonous political environment, vulnerable
Senate Republicans are rushing to endorse generous jobless
benefits, child care grants and more than $100 billion to help
schools reopen. Several of them are refusing to allow the Senate to
adjourn until Washington delivers a deal to their desperate
constituents."

The AP adds that the views of those senators may matter more to
Senate Majority Leader Mitch McConnell than opposition to a deal
from GOP hardliners.

As the clock ticks away, Politico
reported Wednesday morning that the parties must
still overcome large differences on a host of issues, from
unemployment insurance to an eviction moratorium to funding for the
U.S. Postal Service, elections, education, child care, food
assistance and more.

Nearing a compromise on unemployment insurance? A renewal
of some federal boost to unemployment insurance remains a key
difference now that a $600 federal supplement to weekly jobless
benefits expired at the end of July.

In Tuesday’s talks, the Trump administration offered a $400
weekly benefit to continue until December 15, according to
Politico. Democrats have been pressing for a longer extension of
the $600 payments.

McConnell, acknowledging the deep divides in his own party,

said Tuesday that he could back a renewal of the
$600 payments — if President Trump supports it. "Wherever this
thing settles between the president of the United States and his
team that has to sign it into law and the Democrat
not-insignificant minority in the Senate and majority in the House
is something I am prepared to support," McConnell told reporters,
"even if I have some problems with certain parts of it."."

The president on Wednesday indicated support for restarting
federal payments, but he again expressed concern that the benefit
might keep workers from returning to their jobs and he did not
specify the amount of the payments he would want to see.

"We want to get funds to people so they can live, but we don't
want to disincentivize people" from returning to work, Trump said
in a lengthy and wide-ranging interview with "Fox & Friends."
(Trump did, however, say again that the pandemic "will go away like
things go away." He also falsely claimed that Covid-19 is spreading
in a "relatively small portion" of the country and suggested that
children are "virtually immune" to the virus.)

A recent Yale University study
found no evidence that the $600 in enhanced unemployment
insurance discouraged people from working, and a
new analysis by Morning Consult similarly finds
little to suggest that unemployment benefits distorted workers’
incentives, even as more than 60% of those receiving unemployment
insurance in July reported that the value of their benefits was
equal to or greater than what they made at their jobs, up from 46%
in May.

"Other factors such as the demand for labor and the safety and
security of working conditions are the primary determinants of
unemployment now," Morning Consult economist John Leer writes in
his analysis.

Aid to state and local governments: "We still are a
distance apart in terms of state and local," Pelosi told MSNBC.
Democrats are reportedly seeking about $1 trillion in new aid and
Pelosi insists it’s vital. "If we don’t do that we will be
abandoning them with costs that they have incurred for fighting the
virus, and secondly they’ll be firing people and that goes into the
unemployment ranks, which doesn’t save money," she said on
MSNBC.

Republicans initially proposed to give states more flexibility
in how to spend money that was provided under the March coronavirus
relief law, and they’ve resisted coming anywhere close to Pelosi’s
numbers. The president on Wednesday again argued that Democrats
want a "bailout" for states that have long been mismanaged.

Enhanced Unemployment Benefits Get a Thumbs Up From
Economists

Some Republican lawmakers insist that the generous unemployment
benefits created by the CARES Act are contributing to the slow
economic recovery by paying workers to stay away from jobs they
would otherwise be forced to take. But a new study finds that more
generous unemployment insurance helps workers find better jobs,
which in the long run is better for employees, employers and the
economy as a whole.

The paper,
published by the National Bureau of Economic Research, finds that
workers end up with jobs they are better suited for when they have
more time to look, thanks to more unemployment generous benefits.
The effect is more pronounced for female and minority workers, the
authors said.

The study is just the latest of a series of analyses that cast
doubt on the reasoning behind Republican opposition to enhanced
unemployment payments. Earlier this week, Washington Post columnist
Catherine Rampell
reviewed five recent economic studies that found
no evidence that the $600 per week boost Congress provided for the
unemployed had depressed job growth — and if there is an effect, it
likely runs the other way.

"If anything, research to date suggests the federal benefit
supplement has boosted macroeconomic activity and, therefore,
likely supported hiring," Rampell wrote.

A new
analysis published Wednesday by Morning Consult
provides yet another piece of evidence on the issue. According to
surveys conducted in May, June and July, the enhanced benefits have
done little to distort workers’ motivations.

"Unemployed workers who received more in unemployment insurance
benefits than they did from their previous job did not return to
work at a slower rate than those who received less in UI, casting
further doubt on the distortionary effects of expanded UI benefits
on workers’ incentives."

The survey did find, though, that the expiration of the enhanced
benefits will have a powerful negative effect on the incomes and
consumption for 5.4 million Americans by the end of the month.

The Dead May Get Pandemic Relief Payments After All

It looks like being dead may not get in the way of receiving
another stimulus check, after all.

We told you in June that, according to a report by the
Government Accountability Office, the Trump administration had sent
nearly
$1.4 billion in coronavirus relief payments to
Americans who were no longer among the living. The roughly 1.1
million payments were sent despite an awareness of the problem, in
order to get the money out as quickly as possible, as required by
the CARES Act.

The IRS began to filter out payments to the deceased after some
technical and legal issues were cleared up, but according to

Politico, the relief package from Senate
Republicans includes language that would allow some taxpayers to
receive relief payments despite having shuffled off this mortal
coil.

"So long as someone died this year, they would be eligible for
the $1,200 payments included in the plan," Politico’s Brian Faler
says. "Not just that, Senate Republicans would also make them
retroactively eligible for the previous round of stimulus
checks."

A spokesperson for Senate Finance Committee chair Chuck
Grassley (R-IA) said that providing the payments would be
consistent with how the government typically treats the recently
deceased.

But some tax experts said the move would be confusing,
especially since the administration recently acted to restrict such
payments. "To have all of this within one year — it’s whiplash,"
former IRS lawyer Philip Hackney told Politico. "It makes the head
spin."

Map of the Day: Voters Choosing Medicaid Expansion

On Tuesday, voters in Missouri backed the expansion of Medicaid
in their state, which will provide health care coverage for 217,000
low-income residents. Sarah Kliff of The New York Times says
that six states — Idaho, Maine, Nebraska, Oklahoma, Utah and now
Missouri — have relied on ballot initiatives to expand Medicaid, as
allowed by the Affordable Care Act, providing coverage for about
850,000 people. The initiatives have often passed over the
objections of Republican governors and/or legislatures.

Looking at the Medicaid expansion votes this summer in
Oklahoma and Missouri, Vox’s Dylan Scott
says the pandemic may have made the difference:
"It is difficult to ignore that these ballot initiatives passed in
right-leaning states in the middle of the coronavirus pandemic,
when millions of Americans have lost their jobs and, with them,
their employer-sponsored health insurance. This is partly a
coincidence — the signatures were collected to put the Medicaid
expansion questions on the ballot long before Covid-19 ever arrived
in the US — but the relatively narrow margins made me wonder if the
pandemic and its economic and medical consequences proved
decisive."

Fiscal Policy Cushioned the Shutdown: Report

Tax and spending policies provided a huge boost to the economy
during the first few months of the coronavirus pandemic, according
to the newly updated Hutchins Center Fiscal Impact Measure (FIM)
from the Brookings Institution.

Fiscal policy increased GDP growth by 14.6% on an annualized
basis during the second quarter of 2020, Brookings’ David Wessel
said, providing a substantial cushion for an economy that
contracted at an annualized rate of 32.9%. The data illustrate "how
much worse the decline would have been if not for federal fiscal
policy," Wessel said, adding that the second quarter saw "the
highest level of the FIM since 1973, the earliest year for which we
have data."

Federal policies provided the main boost, with a decline
in state and local purchases acting as a drag, holding down GDP by
8.6%. Stimulus payments and expanded unemployment benefits played a
key role, as well as standard automatic stabilizers such as food
stamps.

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