n Thursday afternoon, Mitch McConnell, the Senate Majority Leader, released a two-hundred-and-forty-seven-page spending bill designed to stabilize the economy during the great covid-19 shutdown. It would provide financial assistance to individuals and businesses, including direct payments of up to twelve hundred dollars for Americans who earn less than a hundred thousand dollars a year. Although the bill didn’t come with an official price tag, analysts estimated the total cost of its proposals was roughly eight hundred billion dollars.
Despite the bill’s length, its publication is merely the opening bid in a set of negotiations that will begin on Friday. With McConnell seven short of the sixty votes necessary to pass the measure, he will have to engage in some horse-trading with Democrats. As the economic fallout from the coronavirus spreads, virtually everyone on Capitol Hill now agrees that a larger-scale fiscal package is necessary. (On Wednesday, the Senate passed an emergency spending bill worth about a hundred billion dollars.) But there is a lot less agreement on what the big package should contain. The McConnell bill is slanted toward helping small businesses and large corporations. Democrats want more money for people who are losing their jobs and for states that are fighting the virus.
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On Thursday night, I spoke with Gene Sperling, who served as the head of the National Economic Council at the White House under Bill Clinton and Barack Obama. He was closely involved in discussions about the 2009 stimulus package, the bailout of Chrysler, and the payroll-tax cut of 2010. When I reached him, he had just finished reading McConnell’s bill. “As far as I can see,” Sperling said, “it has four big holes.”
The first is that the bill fails to expand paid sick leave, which was included in legislation that the Senate passed on Wednesday. Democrats had been pushing for a twelve-week eligibility period, but Republicans insisted on limiting it to two weeks with exemptions for businesses with more than five hundred employees. “If you stay home to look after a family member and at the end of two weeks you fall sick yourself, your sick leave will have run out, so you will have an incentive to return to work and infect people there,” Sperling pointed out.
That doesn’t make any sense. Neither does the fact that, under McConnell’s proposal, low-income people and the disabled would receive smaller cash payments than everybody else—as little as six hundred dollars. Sperling rightly described this feature as inexcusable. On Thursday night, even some Republicans, including Senator Josh Hawley, of Missouri, distanced themselves from the bill.
The third hole that Sperling identified is the bill’s failure to provide sufficient financial aid to states and municipalities that are in desperate need of medical supplies, protective equipment, and additional hospital capacity. With the number of covid-19 cases rising dramatically, there is also an urgent need to bolster the federal share of Medicaid, the federal health-care program that covers seventy-five million low-income American adults and children, which the states administer and partly finance. At the end of last week, I wrote about a detailed plan from a group of public-health experts and former health officials that addresses these needs. The Senate bill barely addresses them.
Given Republican recalcitrance, it may not be easy to fill these three holes. At least in theory, though, doing so would be straightforward. But the fourth issue that Sperling identified raises fundamental questions about how to deal with what is rapidly emerging as one of the biggest problems of all: mass joblessness. In California on Tuesday, eighty thousand people applied for unemployment benefits, the Los Angeles Times reported. That’s about forty times the normal rate of applications, and it won’t be long before we see similar trends in other states.
The unemployment-insurance system, which dates back to the New Deal, is the first line of defense against mass joblessness. In its current form, however, it isn’t up to the huge task at hand. Qualified workers are entitled to receive roughly half of their previous earnings, up to a certain cap, for a period of six months. But the system doesn’t cover gig workers and other self-employed individuals. To be eligible for benefits, you need to have been categorized as a wage employee at the job you lost, and, in today’s economy, many workers aren’t categorized that way. Sperling believes unemployment insurance should cover a hundred per cent of the labor force for at least the next few months.
“I’m talking to people—Uber drivers, tutors, domestic workers, people who teach yoga—and they are telling me they are losing about ninety per cent of their business through no fault of their own,” Sperling told me. Under the Republican proposal, most of these people—as well as other types of workers—would qualify to receive a direct payment of up to twelve hundred dollars, more if they have children. But, as Sperling pointed out, such a payment “is never going to be enough” for people who are likely to be out of work for months to cover the cost of their rents or mortgage payments, food, and other expenses. Last week, I raised the idea of sending out monthly checks of a thousand dollars to all Americans, which would amount to adopting a temporary version of Andrew Yang’s universal-basic-income proposal. The Senate bill only proposes a one-time payment, which would be woefully inadequate for those being hitting hardest by the virus shutdown.
Sperling and a number of other experts believe it would be quicker and fairer to enroll self-employed people in the unemployment-insurance system, at least temporarily. Emmanuel Saez and Gabriel Zucman, two economists at the University of California, Berkeley, who worked on Elizabeth Warren’s wealth tax, have put forward a plan along these lines. Under their proposal, self-employed “individuals (such as gig workers) could report themselves as idle and be eligible for this special unemployment insurance” for a limited time period.
It’s not clear whether Chuck Schumer and other prominent Democrats will get behind this suggestion. “It is one of those proposals that was considered a far-out idea a short while ago but is quickly becoming regarded as reasonable,” Mike Konczal, the director for progressive thought at the Roosevelt Institute, who has written a useful guide to the stimulus debate, told me on Thursday evening. After a remarkable couple of weeks, that analysis applies to a lot of policy proposals. At this stage, it remains unclear which ones will make it into the final stimulus legislation, even though both sides say they want to get it passed rapidly.
One item virtually certain to be included is a loan package for large companies whose businesses the pandemic has battered, such as airlines. McConnell’s bill sets aside more than two hundred billion dollars for this purpose. Companies that receive government loans would have to limit the pay of their senior executives. But this stipulation stops far short of Democratic demands that loan recipients should be required to maintain their payrolls, refrain from stock buybacks, and pay their workers a minimum wage of fifteen dollars an hour. “Any bailout should be conditioned on a set of reforms that make workers and businesses more resilient to future external shocks, and to prevent the kind of broad-based political distrust that followed from the poorly structured bailouts during the financial crisis,” Konczal wrote in his paper.
Finally, there is the question of whether this stimulus is big enough. If the covid-19 shutdown extends beyond a few weeks, which seems highly likely, it probably isn’t. Some economists are talking about an economic-rescue package of two trillion dollars, or even three trillion dollars, being needed. In other words, whatever happens in Washington during the next few days, we will likely be back here again very soon.
Yeah, Moscow Mitch literally put forward a bill where the poorer you are, the less money you get. Fucking Hell. The good news is its so awful that even some Republicans are finding it hard to stomach.
