The Dead May Get Coronavirus Relief Payments After All

The Dead May Get Coronavirus Relief Payments After All

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Plus, how fiscal policy cushioned the shutdown
Wednesday, August 5, 2020

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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