Lawmakers Float Another Round of Business Stimulus
As the omicron variant of the coronavirus drives a record surge in Covid-19 cases, some members of Congress have held early discussions about another round of economic stimulus.
The Washington Post’s Tony Romm was first to report that Sens. Ben Cardin (D-MD) and Roger Wicker (R-MS) have been leading talks about a new business-focused stimulus in recent weeks and last month outlined a roughly $68 billion proposal that could include new funding and also repurpose some previously approved spending.
“The efforts have focused primarily on authorizing billions of dollars to help an array of businesses — including restaurants, performance venues, gyms and even minor league sports teams — that face another potential blow to their already-battered balance sheets as a result of the evolving pandemic,” Romm writes.
Cardin told reporters Wednesday that the proposal is focused on restaurants, many of which did not receive aid from a $28.6 billion grant program enacted in March 2021 as part of the $1.9 trillion American Rescue Plan. He added that the proposal could still get broadened. "We started with restaurants but we're prepared to expand it if we can have the necessary support," he said. "There's other industries that have legitimate concerns."
Wicker told reporters Wednesday that half of eligible restaurants did not receive money under the previous Restaurant Revitalization Fund “because it was not adequately funded.”
Cardin and Wicker have reportedly sought to build support for the idea of a business-focused stimulus in talks with senators from both parties, including Sens. Maria Cantwell (D-WA), Mark Warner (D-VA) and Susan Collins (R-ME).
No new push from the White House: But CNN’s John Harwood and Betsy Klein report that the early talks about another aid package “were shelved before any legislation was introduced and there was no buy-in from Senate leadership.” They add that a senior Biden administration official shot down the idea of additional stimulus beyond possibly some aid for restaurants.
"No. There might be something small for restaurants. But the economy is booming, there are millions of open jobs, and we do not believe people should be sitting at home if they are vaccinated and boosted, as most adults are," the senior official told CNN. “So we are not going to write checks to incentivize people to sit at home, and we are not going to bail out businesses if the economy seems strong.”
White House Press Secretary Jen Psaki sounded a similar note Wednesday. "We did a major relief package that included helping restaurants just last year," Psaki told reporters. "We are in constant discussions with Congress and leadership about the needs of the American people, whether they are small businesses or restaurants or people sitting in their homes as we continue to fight the pandemic, but don’t have any new pending request or specific requests and wouldn’t predict that at this moment in time.”
Concerns rising among some lawmakers: Congress has thus far approved nearly $6 trillion in pandemic relief funding, and any effort to provide additional aid are likely to face pushback from some Republicans, which may make it difficult to get the 10 GOP votes needed for any new aid to clear the Senate. Bloomberg’s Erik Wasson reports that Sen. Richard Shelby (R-AL), the top Republican on the Senate Appropriations Committee, is skeptical of the proposal and wants more details on how it would be structured.
Sen. Kevin Cramer (R-ND), meanwhile, told Insider that he would be open to bipartisan discussions about an additional aid package targeted to restaurants, noting that the funding would have to be focused on “keeping people working, keeping things being produced, as opposed to just free money somewhere.”
At the same time, concern is reportedly rising among some lawmakers that additional aid will be needed beyond the restaurant industry.
Sen. Patrick Leahy (D-VT), chairman of the Senate Appropriations Committee, has started evaluating “the need for additional resources for vaccines, therapeutics, testing and other needs,” a committee aide told Romm, who adds that some House Democrats have discussed adding aid money, if needed, to a bill funding the government through September. Democrats have also been calling for a renewal of the monthly Child Tax Credit payments that expired at the end of the year (see more on this below).
The bottom line: An additional aid package for restaurants and other small businesses is at least on lawmakers’ radar now, but it’s not clear how much support it can win. But as of now, lawmakers are unlikely to provide any additional stimulus for individuals like the direct payments or enhanced unemployment benefits approved earlier in the pandemic. “With millions of job openings that are going unfilled, Congress is going to be hesitant to provide something that could be seen as being a disincentive to filling those positions,” Ed Mills, Washington policy analyst at Raymond James, told CNBC.
Democrats Look for Ways to Revive Expanded Child Tax Credit
With negotiations stalled on the Build Back Better Act, Democrats are attempting to salvage one of the bill’s key provisions, a renewal of the enhanced child tax credit that was part of the American Rescue Plan Act signed into law last March. The program provided direct payments to roughly 35 million American families with children, including households with no reported income, and was credited with sharply reducing child poverty in the U.S. over the last few months.
Senate Majority Leader Chuck Schumer (D-NY) said Tuesday that he would continue to try to pass the Build Back Better Act, which includes a one-year extension of the enhanced tax credit, at a cost of $185 billion. "I intend to hold a vote in the Senate on BBB,'' Schumer said. “And we'll keep voting until we get a bill passed." But continued opposition to the bill from Democratic Sen. Joe Manchin (WV) and virtually all Republicans has raised serious doubts about whether the legislation can advance in anything like its current form.
Manchin has criticized the refundable child tax credit on multiple grounds, including that it is too generous and lacks work requirements; he has also reportedly complained that the payments could be used by some families to buy drugs. In addition, Manchin has characterized the proposed short-term renewal of the tax credit as a “gimmick,” and called for new social programs to be funded on a long-term basis to reflect their true cost. The 10-year cost of the enhanced child tax credit is estimated to be $1.6 trillion – or nearly all of the spending Democrats are calling for in the Build Back Better plan.
One option reportedly being discussed by Democratic lawmakers is to write a stand-alone bill that extends the tax credit. However, that approach would require Republican support in the Senate, which is highly unlikely, leaving the child tax credit extension very much up in the air, along with the rest of the remaining elements of President Joe Biden’s domestic agenda.
Less popular than expected: Although social welfare experts hailed the child tax credit payments for their potential to reduce poverty, and initial results appear to be positive, there has been little pressure from voters to extend them.
“I have been kind of surprised that this has not been as popular as many of us expected that it would be,” Brad Wilcox, a conservative sociologist at the University of Virginia, told The New York Times’s Ian Prasad Philbrick Wednesday.
According to Philbrick, one possible reason for the lack of public enthusiasm for the more generous program is that the public may be losing confidence in government in general and pandemic relief efforts in particular as the Covid-19 crisis grinds on. And this lack of faith in the efficacy of government action could dovetail with a long-standing American suspicion of providing assistance to some sections of the population, including those who may be in some way “undeserving,” such as those who do not work.
The program’s focus on children could be another strike against it, Philbrick says. “While younger Americans — who are more likely to be parents receiving the credit — tend to approve of it, many older Americans do not,” he writes. A new expansion of the social safety net could be seen as a threat to existing programs, including Social Security and Medicare, leading some older voters to withhold their support.
The United States fiscal response to the Covid pandemic was second-largest among industrialized nations, representing 27% of GDP, according to an analysis by the Alex Durante of the right-leaning Tax Foundation.
“As the U.S. grapples with rising price inflation, a large and growing national debt, as well as a possible economic slowdown due to Omicron, the decision to provide additional fiscal support will prove to be a difficult one,” Durante writes. “Policymakers can debate how much stimulus is appropriate, but what is clear is that the U.S. fiscal support so far during the pandemic outranks nearly every industrialized country.”
Op-Ed of the Day: The Government Investments Needed to Fight Extremism
Ahead of tomorrow’s one-year anniversary of the January 6 attack on the Capitol, Cynthia Miller-Idriss, director of the Polarization and Extremism Research and Innovation Lab at American University, writes at The New York Times that the government needs a new approach to fighting domestic extremism:
- Fed Officials Discussed Raising Rates Sooner and Faster in 2022 – New York Times
- Federal Reserve Puts Wheels in Motion for Balance Sheet Reduction – CNBC
- Treasuries Selloff Deepens as Fed Opens Door to Faster Hikes – Bloomberg
- Lawmakers Push for Surprise Billing Changes as Law Takes Effect – Roll Call
- Customer Service at the IRS Is So Bad, Even Tax Pros Are Fed Up – Bloomberg Businessweek
- Reimbursement for Rapid At-Home Tests Will Start Next Week, a White House Official Says – New York Times
- US Hospitals Seeing Different Kind of COVID Surge This Time – Associated Press
- Drugstores Struggle to Keep Covid At-Home Tests in Stock as Omicron Rages Across U.S. – CNBC
- More and More Covid Tests: What Biden’s Team Is Doing to Expand Access – Bloomberg
- In Omicron Hot Spots, Hospitals Fill Up, but I.C.U.s May Not – New York Times
- The C.D.C. Now Recommends That People Stay ‘Up to Date’ With Covid Vaccine Boosters – New York Times
- New York’s Governor Proposes Spending $10 Billion to Hire More Health Workers – New York Times
Views and Analysis
- Should the Child Tax Credit Be Limited to Those With Lower Incomes, as Manchin Prefers? – Elaine Maag, Tax Policy Center
- Why Isn’t Biden’s Expanded Child Tax Credit More Popular? – Ian Prasad Philbrick, New York Times
- There Are Some Hints That Job Growth Is Booming and Inflation Is Moderating – Joe Weisenthal, Bloomberg
- Will We Go From Pandemic to Recession? – Bret Stephens, New York Times
- The C.D.C. Is Hoping You’ll Figure Covid Out on Your Own – Zeynep Tufekci, New York Times
- Why Quantitative Tightening Is on the Fed's Agenda Again – Chris Anstey, Bloomberg
- Bring Down the Curtain on Covid’s Morality Play – John Authers, Bloomberg
- As Omicron Overwhelms Hospitals, We Must Talk About Triage – Andreas Kluth, Bloomberg
- Excise Taxes on Guns and Ammo: Sin Taxes That Don’t Prevent the Sin – Renu Zaretsky, Tax Policy Center