GOP Infighting Over Coronavirus Aid Bill

Wednesday, July 22, 2020

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 million. 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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GOP Infighting Over Coronavirus Aid Bill