Cash for Everyone? Congress Eyes Coronavirus Payments

Cash for Everyone? Congress Eyes Coronavirus Payments

Printer-friendly version
Plus: Second coronavirus relief bill passes
Wednesday, March 18, 2020

Welcome to another day of our national coronavirus crisis. Some of today’s top developments:

  • The Senate passed a coronavirus relief package that includes a $105 billion provision to expand paid sick leave. The legislation also guarantees free coronavirus testing for those who need it and provides enhanced unemployment insurance and increased funding for food aid and Medicaid.
  • The White House released a proposal for a $1 trillion stimulus package, which could still grow larger (see more below).
  • The White House Office of Management and Budget on Tuesday night asked Congress for $45.8 billion in emergency funding to cover “unanticipated” coronavirus preparedness and response costs for federal agencies. Democrats panned the request, according to Roll Call, with one House aide saying that most provisions are unrelated to the virus while others are insufficient to address the pandemic.
  • Stocks continued their coronavirus selloff, with the Dow Jones Industrial Average falling 6.3%, nearly wiping out all its gains since President Trump took office.
  • The U.S. now has 7,769 confirmed cases; the number of deaths is up to 120.

Senate Passes Coronavirus Bill That Provides Limited Paid Sick Leave

The coronavirus relief bill passed by the Senate today in a 90-8 vote provides two weeks of paid sick leave for some workers and up to three months of paid family leave, with the cost of that leave covered through refundable tax credits. The paid leave provisions would cost nearly $105 billion over two years, according to the congressional Joint Committee on Taxation. President Trump is expected to sign the bill soon.

The legislation also includes provisions that:

  • Require insurers to cover the cost of diagnostic tests.
  • Expand food and nutrition services, including aid to food banks and meal-delivery programs for seniors.
  • Provide emergency state unemployment insurance grants.
  • Increase Medicaid funding at the state level.

What critics are saying: After passing the House early Saturday morning, the legislation was amended in a 90-page technical correction that watered down some its provisions, reportedly in response to pressures from business groups.

The Hill’s Niv Elis says that advocacy groups are slamming the legislation, charging that they will exclude far too many workers affected by the pandemic. Companies with over 500 employees — which account for the majority of employment in the U.S. — are excluded, though many already offer workers paid leave. Companies with fewer than 50 employees can apply for waivers. All told, only about 20% of U.S. workers will be covered by the bill, according to a critical op-ed in The New York Times — one that House Speaker Nancy Pelosi pushed back against.

Republican Senator Tom Cotton also criticized the way the paid leave rules work. “We worry that the bill setting up a new and complicated system relying on businesses giving paid sick leave and then getting a refundable tax credit won't move quickly enough and could put pressure on those businesses to lay workers off,” Cotton said.

Senate Majority Leader Mitch McConnell agreed that the bill was problematic, saying that “the House bill has real shortcomings. It does not even begin to cover all of the Americans who will need help in the days ahead.” But McConnell supported the bill nevertheless, and said he would focus on the next much larger relief bill that will provide direct cash assistance to taxpayers.

Pelosi said in a statement Tuesday that House Democrats would seek to expand the emergency leave mandate.

What’s in the Trump Administration’s $1 Trillion Stimulus Plan

Senate Republicans are racing to pull together a massive economic stimulus plan, the third phase of Congress’s coronavirus relief efforts, following an $8.3 billion emergency funding bill and the paid leave package passed Wednesday by the Senate.

Negotiations on the stimulus, including eventual talks with House Democrats, will likely extend into next week. Senate Majority Leader Mitch McConnell reportedly has given four special task forces until Thursday to come up with their pieces of the plan, covering health issues, tax policy, small businesses and major industries.

The White House, in the meantime, issued a two-page outline of its own $1 trillion proposal — larger than the stimulus plan adopted after the financial crisis — and that plan reportedly grew to $1.3 trillion as of Wednesday. “Treasury Secretary Steven Mnuchin’s goal to pump money into the economy quickly has him adding another decimal-point to his plan nearly every time he speaks,” Bloomberg’s Saleha Mohsin, Jennifer Jacobs and Josh Wingrove wrote Wednesday.

Mnuchin reportedly warned lawmakers that the unemployment rate could surge as high as 20% if Congress doesn’t enact the stimulus.

The administration plan, which could still change as negotiations continue, includes:

  • $500 billion for two rounds of direct payments to taxpayers. The first round would start April 6, while the second would start May 18. Each round would be for the same amount, with the size of the payments based on income level and family size.
  • A $300 billion loan program for small businesses — those with 500 or fewer employees. The government would guarantee 100% of six weeks of payroll, capped at $1,540 per employee per week. Employers would be required to keep paying all workers for eight weeks.
  • A roughly $50 billion airline bailout.
  • $150 billion in aid to “other severely distressed sectors of the U.S. economy.”

How Washington Jumped on the #checkscheckschecks Train

Opinions in Washington about how best to boost an economy nosediving into recession as a result of the coronavirus pandemic have quickly coalesced around the idea of sending cash directly to Americans.

Politico’s Michael Grunwald detailed how that one idea suddenly garnered bipartisan support in a town otherwise riven by partisanship:

“In just the past two days, the idea that the federal government should simply give people money to help them through the coronavirus pandemic has been endorsed across the political spectrum—by Democratic senators like Sherrod Brown and Michael Bennet, Republican senators like Mitt Romney and Tom Cotton, just about every economist who worked for President Barack Obama, and finally, this afternoon, by President Donald Trump. …
“At a time when Washington is bitterly polarized over almost everything—including other stimulus proposals that would target beleaguered industries or low-income workers—airlifting cash into American households is one of those rare concepts that almost every politician can embrace, even though it smacks of the big government liberalism that Republicans mock, even though every dollar gets added to the deficit.”

The biggest surprise may be the extent to which congressional Republicans have embraced the idea and backed the industry-specific bailouts that are also part of the Trump administration’s $1 trillion stimulus proposal.

“Such a massive rescue package would seem to mean an agonizing vote for the GOP — the last major bailout in 2008 helped launch the conservative tea party movement and many senior lawmakers still boast about their opposition to it,” Politico’s Melanie Zanona and Marianne Levine write. “But Republicans say the coronavirus is an entirely different animal: the hospitality and airline industries didn’t cause the global pandemic.”

Zanona and Levine note that some conservative groups — including those backed by billionaire Charles Koch — are urging Congress to limit the scope of any bailouts and reject any more expansive measures directing aid to specific industries. “There are still a number of fiscal hawks and conservative hard-liners who have pushed back against deficit-busting bills — and they are certain to raise concerns during the coming debate,” Politico’s team writes.

But concerns about the cost of a stimulus package and ballooning a deficit that was already expected to top $1 trillion this year have largely been limited to the far corners of the GOP, drowned out elsewhere by the need to act quickly to rescue the economy — and perhaps the November election prospects that may depend on it.

As Grunwald says:

“The one argument that isn’t being made against giving people money in the Trump era is the argument that Republicans made relentlessly against stimulus handouts in the Obama era: They will increase the budget deficit. Deficits have exploded to over $1 trillion under Trump despite a strong economy, and are now poised to soar well over $2 trillion. But the Republican Party that mocked Keynesian economics in 2009 is now eager to pour tax dollars into the faltering economy—perhaps accompanied by a Publishers Clearinghouse-style letter from Donald J. Trump—and worry about the fiscal consequences later.”

Tom Brady to Tampa Bay? Seeing him in any uniform besides New England's will be weird. But it's sure nice to have that era over. Send your feedback to Follow us on Twitter: @yuvalrosenberg, @mdrainey and @TheFiscalTimes. And please tell your friends they can sign up here for their own copy of this newsletter.


Views and Analysis