Republicans Make Counteroffer on Covid Relief

By Yuval Rosenberg

Republicans Offer $618 Billion Covid Relief
Plan

A group of 10 Republican senators released a $618 billion
coronavirus relief plan Monday, making a counteroffer to President
Joe Biden’s $1.9 trillion
American Rescue Plan.

Biden met with the GOP lawmakers — Sens. Susan Collins (ME),
Lisa Murkowski (AK), Bill Cassidy (LA), Mitt Romney (UT), Rob
Portman (OH), Shelley Moore Capito (WV), Todd Young (IN), Jerry
Moran (KS), Mike Rounds (SD) and Thom Tillis (NC) — at the White
House late Monday afternoon to discuss the proposal.

Why it matters: Republicans had raised
objections to Biden’s plan, but they hadn’t previously offered a
proposal of their own in response. Ahead of the meeting, the
Republican senators framed their offer as an effort to achieve a
bipartisan agreement on the next coronavirus relief bill. "Mr.
President, we recognize your calls for unity and want to work in
good faith with your Administration to meet the health, economic,
and societal challenges of the COVID crisis," the senators said in
a joint
statement. "In the spirit of bipartisanship and
unity, we have developed a COVID-19 relief framework that builds on
prior COVID assistance laws, all of which passed with bipartisan
support."

But White House Press Secretary Jen Psaki made it clear that
while the president was happy to listen to the senators’ ideas, he
is still focused on passing his much larger proposed plan. "He’s
always open to making this package stronger," she told reporters at
a press conference, adding that Biden is more worried about
spending too little than spending too much.

Biden emphasized the point before the meeting with a tweet:
"Hardworking Americans need help and they need it now," he said.
"That’s why I’m calling on Congress to immediately pass my American
Rescue Plan that will deliver direct relief, extend unemployment
insurance, help folks put food on the table and keep a roof over
their heads, and more."

In comments after the meeting, Collins said the senators had a
cordial and productive discussion with the president, and the
parties agreed to continue to talk. She also expressed confidence
that a bipartisan Covid relief package was possible.

What’s in the GOP proposal: The Republican
plan is about a third the size of Biden’s and would include:

* Direct relief payments worth as much as
$1,000. The payments would begin tapering off at income levels of
$40,000 per year for individuals ($80,000 a year for joint filers)
and would not go to anyone earning more than $50,000 ($100,000 for
couples). Children and adult dependents get $500, and "convicted
inmates" are excluded. Total cost: $220 billion.

* $160 billion in pandemic response funding,
including $50 billion to expand testing, $35 billion for a provider
relief fund, $30 billion for a disaster relief fund and $20 billion
for vaccines.

* $300 per week in enhanced unemployment
benefits through June 30. Total cost: $132 billion.

* $50 billion for small business aid,
including $40 billion for the Paycheck Protection Program.

* $20 billion for K-12 schools.

* $20 billion for childcare.

* $12 billion for nutrition assistance,
including $3 billion to extend SNAP benefits through September
30.

What’s not in the GOP proposal:
Compared to the Biden plan, the Republican proposal offers
less generous relief checks ($1,000 compared to $1,400) that phase
out at lower income levels. Unemployment benefits are lower ($300
vs. $400) and expire sooner (June vs. September). And the GOP plan
lacks both a provision raising the minimum wage to $15 per hour
and, perhaps most importantly, any money for state and local
governments, which Biden proposed to fund with $350
billion.

Sen. Portman said Republicans, concerned about the
cost of Biden’s plan, wanted to target those most in need. "Let's
focus on those who are struggling," he
said Sunday on CNN. "We really want to help those
who need it the most. And at a time of unprecedented deficits and
debts — and a debt, as the percentage of the economy, is as high as
it's been in our nation's history since World War II — we need to
be sure this is targeted."

Cool reception from Democrats: Sen.
Ron Wyden (D-OR), incoming chairman of the Senate Finance
Committee, said the GOP proposal is a "non-starter" because of its
size. "The package outlined by 10 Senate Republicans is far too
small to provide the relief the American people need," he said in a
statement.

Senate Majority Leader Chuck Schumer
criticized the proposal for missing an essential
element: "It doesn't have any state and local money in it," he

told the New York Daily News. "Our Republican
colleagues, most of them have been very negative, either don’t want
to do anything, or want to do something minimal," Schumer said.
"President Biden believes, and I agree with him, we need a bold,
strong action. Now, we’d like to do that with the Republicans, but
if we can’t, we’ll have to go forward on our own using this
process, reconciliation."

At least one Republican was critical, as well, raising
questions about the GOP effort to reduce the cost of the package.
"What we need to understand is that trying to be per se fiscally
responsible at this point in time with what we have got going on
this country, if we actually throw away some money right now, so
what? We have really got to move and get people taken care of," Jim
Justice, Republican governor of West Virginia, said on
MSNBC.

What’s next: Democrats are still
laying the groundwork to pass Biden’s plan without GOP support if
necessary, and they continue to stress the urgency of acting
quickly. Schumer and House Speaker Nancy Pelosi (D-CA) announced
Monday that they were filing a joint budget resolution that could
serve as a legislative vehicle to pass Biden’s relief package.
"Congress must pursue a bold and robust course of action. It makes
no sense to pinch pennies," Schumer said.

Economy Will Return to Pre-Pandemic Size
by Midyear, but Job Recovery Will Take Years: CBO

As President Biden and lawmakers discuss the appropriate size of
the next coronavirus relief bill, the Congressional Budget Office
on Monday upgraded its outlook for the U.S. economy, projecting
that gross domestic product would grow faster than it had
previously forecast and that the labor market would rebound more
quickly.

In a
report on the economic outlook over the next
decade, CBO forecast that the economy will grow by 4.6% in 2021
(3.7% from fourth quarter 2020 to fourth quarter 2021), reaching
its pre-pandemic peak size by the middle of this year. CBO sees
growth averaging 1.7% a year from 2020 to 2024, up from 1.0% as of
last July.

A longer recovery for labor market: 
The nonpartisan budget scorekeeper said the job market will

take longer to fully recover. It projected that
the unemployment rate, 6.7% as of December, will fall to 5.3% by
the end of 2021, down from a projected 7.6% in its forecast from
seven months ago. At the same time, CBO said that it will take
until 2022 for the labor force to return to its pre-pandemic size —
and until 2024 for the number of people employed to again reach its
pre-pandemic level.

CBO said it upgraded its economic outlook for the next five
years "in large part because the downturn was not as severe as
expected and because the first stage of the recovery took place
sooner and was stronger than expected." The $900 billion pandemic
relief package Congress passed in December was also a factor, as
CBO said it would boost GDP by an average of 1.5% over this year
and next.

The budget scorekeeper said that the December relief package
will add $774 billion to the deficit in fiscal year 2021 and $98
billion in 2022.

But while CBO said the near-term outlook had improved, it
downgraded its longer-term forecast, projecting 1.7% annual growth
from 2025 to 2030, weaker than the 2.1% annual growth it had
projected in July.

Why it matters: The latest forecast does not
assume any additional stimulus, but it offers something for
everyone in the debate over the next package. Republicans looking
to scale back the size of the next bill can point to the rosier
economic projections and CBO’s assessment that the downturn wasn’t
as bad as feared. Democrats can point to the weaker long-term
forecast and the outlook for the labor market as evidence that the
economy still needs further support.

How Much Did the $500 Billion Paycheck
Protection Program Help?

The New York Times’s Ben Casselman and Jim Tankersley report
that — while politicians on both sides of the aisle have backed the
Paycheck Protection Program of forgivable loans to small businesses
— economists have a decidedly less rosy view of its success:

"Academic economists who have studied the program have concluded
that it has saved relatively few jobs and that, at a cost of more
than half a trillion dollars, it has been far less efficient than
other government efforts to help the economy.

"’A very large chunk of the benefit went to a very small share
of the firms, and those were probably the firms least in need,’
said David Autor, an M.I.T. economist who led one study.

The Trump Treasury Department claimed that the program supported
more than 50 million jobs and may have saved 1.86 million, but
Autor’s study found that the program saved far fewer positions,
between 1.4 million and 3.2 million. Other studies have come up
with similar numbers.

"Given the program’s cost, saving jobs on that scale doesn’t
necessarily qualify as a success," Casselman and Tankersley say.
"Unemployment benefits also provide income, at far less expense,
and programs like food assistance and aid to state and local
governments pack a larger economic punch, according to many
assessments."

Other experts say that the program should be judged not by the
number of jobs saved, but by the number of businesses it kept
alive, and that by that measure it was a success, especially with
the smallest of businesses.

"You can’t look at cost per job saved," Glenn Hubbard, who
served as chairman of the Council of Economic Advisers under
President George W. Bush, told the Times. "It wasn’t the goal. The
goal was preserving businesses."


Read the full piece at The New York Times.

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