The GOP’s Big Bet on a Quick Coronavirus Recovery

The GOP’s Big Bet on a Quick Coronavirus Recovery

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Tuesday, June 9, 2020
The GOP’s Big Bet on a Quick Coronavirus Recovery

The U.S. economy is officially in a pandemic-driven recession, but don’t expect another coronavirus relief bill until late next month.

The U.S. Senate is in session for the rest of the month, but several top Senate Republicans said Monday that they don’t expect to take up any “phase four” package of pandemic relief until after their two-week-long July 4th recess.

White House wants another relief bill: That July timing jibes with the timeframe laid out by White House economic adviser Larry Kudlow, who said recently that he expects formal bipartisan negotiations for the next bill to start only after the Independence Day weekend. Kevin Hassett, an economic adviser to President Trump, said Tuesday in an interview with The Wall Street Journal that he sees another round of aid before the August recess and that the White House “would definitely support” another package.

"There are a lot of things that really are necessary to make sure that once we open up that we actually lift off,” Hassett said. “The odds of a Phase Four deal is something we talked with the president about last week. We even had a small group meeting this morning to talk about it. The odds of a Phase Four deal are very, very high.”

A next round of relief in late July would also coincide with the expiration of enhanced unemployment benefits providing an additional $600 a week in assistance, which are set to expire July 31.

The GOP’s risky waiting game: As Politico’s Burgess Everett and Marianne LeVine write, the GOP’s lack of urgency on additional coronavirus legislation is essentially a big bet on a strong economic rebound — a bet that, despite last week’s surprisingly strong May jobs report, could still backfire:

“Republicans say it’s only responsible to wait and see how nearly $3 trillion in total coronavirus spending seeps into the economy. But it’s also a gamble: if the economic recovery isn’t as strong as they predict, they risk being blamed by voters in November that they and President Donald Trump didn’t do enough amid a global pandemic and historic recession.”

Senate Minority Leader Chuck Schumer (D-NY) on Monday called on Republicans to pass the next coronavirus package in the weeks ahead, before senators leave for their recess. “I fear that the recent bump in the employment number, caused in large part because of the stimulus money we pumped into the economy, will create in Republicans a sense of complacency and the economy will get even worse,” Schumer said, according to Politico.

The bottom line: The recession may already be over, and the jobs numbers announced Friday likely means that any additional coronavirus relief will be smaller than previously expected, whenever it comes. Chris Krueger of Cowen Washington Research Group on Monday lowered his expectations for the next package from $2 trillion to about $1 trillion.

Chart of the Day: A Very Deep Hole for Jobs

Last week’s jobs report certainly contained some good news, with employers hiring more than 2 million people during the month of May, much to the surprise of experts who expected millions of jobs to be lost. But as this chart from the Washington Post makes clear, it’s important to recognize just how deep a hole the job market must climb out of in the wake of the coronavirus.

"All net U.S. job gains since 2011 have been wiped out,” says the Post’s Catherine Rampell. “The unemployment rate remains higher than it was at any point during the Great Recession, and millions of people who have jobs still can’t secure enough hours. Once we adjust for such underemployment, people who want to work but have given up looking and a persistent worker misclassification issue that the Bureau of Labor Statistics has struggled to solve, it becomes clear that about a quarter of all Americans who wanted to work last month couldn’t find sufficient work.”

Health Care Providers to Receive $25 Billion

The Department of Health and Human Services said Tuesday that it will distribute $25 billion this week to health care providers who work with low-income populations, with the money coming from congressional appropriations targeting hospitals and caregivers struggling amid the coronavirus pandemic.

Providers in the Medicaid and CHIP (Children’s Health Insurance Program) systems will receive $15 billion, while safety-net hospitals, which serve all populations regardless of their ability to pay, will get $10 billion. The money is part of $175 billion in relief funds allocated by Congress for hospitals and health care providers.

The move comes after a bipartisan chorus of critics charged the Trump administration with moving too slowly to provide the money, The Hill reports. In a letter to HHS last week, a groups of lawmakers including Sen. Chuck Grassley (R-IA), Sen. Ron Wyden (D-OR), Rep. Frank Pallone, Jr. (D-NJ) and Rep. Greg Walden (R-OR) said they had “serious concerns” about delays in the distribution of the funds.

“Many of these providers are safety net providers that operate on thin profit margins, if at all,” the lawmakers wrote. “The COVID-19 pandemic has strained their already scarce resources, threatening their ability to keep their doors open in the midst of a declared public health emergency.”

The administration has distributed about $70 billion so far from the pandemic health care fund, with most of the money going to providers in the Medicare system. Health care officials say that the complicated structure of the low-income health care system has made it difficult to distribute the funds to Medicaid providers in a timely manner.

Number of the Day: $547 Billion

The cost to private insurers for treating Covid-19 could be anywhere from $30 billion to $547 billion over this year and next, according to updated estimates released Monday by consulting firm Wakely. The report was commissioned by America’s Health Insurance Plans (AHIP), the insurance industry’s lobbying arm. A previous report estimated the Covid treatment costs to be between $56 and $556 billion.

Factoring in delayed medical care resulting from the pandemic significantly alters the picture: “Incorporating deferred care with the treatment costs generally decreases the overall impact to insurers, resulting in a total impact of between -$76 and $216 billion for 2020 and 2021 combined.”

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