Senate Passes $2 Trillion Coronavirus Relief
Finally, we have an expansive relief package.
By Phillip | 3/25/20
The largest government relief deal ever has been passed by the Senate. The bill costs two trillion dollars and will give money to small businesses, big businesses, unemployment insurance, hospitals, and many others (Politico). The enormity of the cost should not be lost on anyone. When we say two trillion, it sounds small like “just a couple trillion.” However, $2 trillion is a sizable chunk of the $4.6 trillion the government takes in a year (USGovernmentRevenue). Two trillion is two thousand billion or two thousand thousand million. Now I don’t emphasize this to be a deficit hawk, as the deficit is very over emphasized by Republicans (when they aren’t in power). I say this, because two trillion is a lot of money to conceptualize and amazingly it might not be enough (it will likely be all used up in just a couple months).
The bill is an imperfect compromise between Democrats and Republicans (the progressive organization Indivisible sent out an email to members urging them to call representatives and convince them to make changes to the bill in the House). Over the past week, Democrats blocked the bill twice, in a fight to get more oversight on the $500 billion “slush-fund” for big businesses. As opposed to the 2009 financial crisis, this bill is not attempting to give people money that they can spend to rejuvenate the economy, but to simply offer people relief while the government asks them to stay home and miss paychecks (Vox). Back in 2009, the broad structure of the economy was still intact, but widespread fear was crippling it. Today, the economy is in shambles as workers are forced to stay home, and factories and businesses are empty.
The good news is that the government threw a huge amount of money at this problem in many different directions. A bipartisan bill (much less a huge one) seemed impossible just a couple weeks ago, when the Republicans were downplaying the threat of Coronavirus (and selling their stocks). These are the main portions of the bill according to the New York Times:
“Lawmakers agreed to provide $1,200 in direct payments to taxpayers with incomes up to $75,000 per year before starting to phase out and ending altogether for those earning more than $99,000 (NYT).” According to research, when families get UBI like payments, they spend more money on the things they were already buying (groceries, medical bills) rather than buying new stuff (Annie Lowrey). This payment will be extremely important for hourly workers and people living paycheck to paycheck, as a way to simply survive.
This caused a hang up in the Senate, with some Republican senators arguing that in some cases unemployment benefits would be larger than workers' original salary. The Republicans are right, as unemployment benefits will increase by $600 per week, which is more than doubling the current average unemployment benefit (Investopedia). According to Goldman Sachs, 2.25 million people will file for unemployment soon, which would be the largest one week increase ever (PBS). The Democrats also successfully fought for unemployment benefits for the gig economy.
Small Business Emergency Loans
The bill promises to give loans that will be forgiven if the business does not lay off its workers. However, “the $367 billion provided for small businesses is less than a third of what some experts estimate is needed to stave off a wave of layoffs and bankruptcies (NYT).”
$500 billion will be available to bailout companies (including in the airline, cruise, and hotel businesses). This is the key portion that Senate Democrats blocked twice, because they were wary of the way big companies took advantage of bailouts in the 2008 financial crisis which sparked a wave of anti-Wall Street sentiment. Senate Democrats successfully fought for strong oversight and immediate notification of the recipients. However, there are provisions that could help the Trump Organization, for-profit colleges, and give $17 billion to the incompetent airline Boeing (NYT).
$100 billion will go to hospitals along with Medicare payment increases. While this will be helpful, the government (under Obama and Trump) already screwed over hospitals by not replacing N95 masks and other essential supplies after the swine flu epidemic, which is a humiliating disaster.
The bill leaves out expanded sick leave, recurring cash-payments, expanded Medicaid funding, and support for front-line workers (Indivisible). Although sick leave should be a right and a law, at this point people aren’t coming into work whether they are healthy or sick so extended sick leave will not really matter— what is more important is cash payments and expanded unemployment benefits. The fact that there are not recurring cash-payments signals that the government is looking to take things slowly and reevaluate the situation in a couple months, which makes sense given the uncertainty surrounding everything. However, I am worried about the time that it takes to send the cash payments (if we want to do it again) and if compromise will be possible in a couple months when there is less pressure to pass a law but working class families are struggling. Finally, an epidemic is the situation that most proves the usefulness of a Medicare for All system, although I am not surprised that Republican Senators did not agree to expand Medicaid.
In addition, Democratic pundits are worried that the bill that House Democrats released on Monday, as a counter proposal to the Senate bill, is filled with too many tangential items such as tens of millions of overtime for TSA, money for biosurveillance, and the Agricultural Marketing Service (Politico). If House Democrats use their leverage in order to push non-essential items in a crisis, Republicans will hammer Democrats for their big-government spending (perhaps rightfully). The Democrats not only didn’t get paid sick leave and a national vote by mail system, but they also ignored big-ticket issues like climate and infrastructure in favor of obscure issues like National Endowment for the Arts and the Postal Service (Politico). Finally, those that hoped that a massive crisis would spur lasting changes like a Medicare expansion or recurring UBI will be disappointed. The bill, despite its huge price tag, is intended to be temporary.
Overall, I think that the bill is a first step in the right direction. The danger is not in overreacting, but in underreacting. The Senate Democrats acted as forcefully as is possible when in the minority and although another law will likely be needed again, I am hopeful that our government is up to the task of bipartisan cooperation and serving the American people.