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It’s been a little more than three months since Congress passed the largest relief package in American history, the Coronavirus Aid, Relief and Economic Security (CARES) Act. But roughly $2.2 trillion later, the unemployment rate is still higher than it was at the peak of The Great Recession, and every day the coronavirus infects more Americans than it did the day before.
To make matters worse, many of the protections that the CARES Act provided are wearing off. Naturally, Congress just went on recess, but when it returns on July 20, members will face a great deal of pressure to get another relief package passed. Will they help Americans through the next phase of the outbreak, or will they leave workers in the lurch? Here’s what’s at stake.
The clock is ticking for unemployed people
When Congress passed the CARES Act, the novelty of the government’s cutting people $1,200 checks attracted a lot of attention. But more vital to keeping laid-off workers afloat has been the legislation’s provision for expanded unemployment insurance, which added $600 to every weekly unemployment check until the end of July. (As of January, the average unemployment check was $385 per week, which is not enough to keep a family above the poverty line.)
In the middle of June, some 19.5 million people collected unemployment, down from 25 million in May. Claims overwhelmed state offices from the start, and they are still struggling to get money into people’s hands.
But in other ways, the program has been more than successful: Despite the economic devastation the coronavirus has wrought, poverty has actually declined from pre-pandemic levels in the United States, according to a University of Chicago analysis. “It’s made all the difference, because basic unemployment isn’t enough,” a laid-off worker told The Times.
Initially, the program also received criticism for not following the approach of some European countries that opted to pay companies to keep employees on the payroll. But the Times columnist Paul Krugman told me in May that it wasn’t clear the United States made the wrong choice: “In Europe, health care is something you get that’s not tied to your job, and in the United States it is. And now it turns out that financial relief during the pandemic in Europe is tied to your job and in the United States it’s not.”
But many congressional Republicans initially opposed the $600 boost for being too generous and are unlikely to extend it. As Carl Hulse has reported for The Times, Democrats landed on the $600 figure as a mean of what an average worker would receive in unemployment benefits and what that person would earn on the job — a rough estimate that was needed because state unemployment systems were incapable of calculating more precise payments. (Those systems will be updated, but probably not before the end of the year.)
Republicans have argued that the payments should be phased out or lowered so that workers don’t earn more while unemployed than they were making at their jobs, which would be the case for five out of every six recipients if the benefits are extended through the end of the year.
To incentivize getting back to work, Senator Rob Portman, Republican of Ohio, has proposed offering a $450 weekly “return to work” bonus once the $600 supplement expires. But by and large, Sahil Kapur reports for NBC News, Republicans have little clarity on what ought to replace the current compensation.
In New York magazine, Eric Levitz argues that it doesn’t really matter whether enhanced unemployment benefits are discouraging some people from working. “In many sectors, we should want workers to stay at home rather than agree to staff a prematurely reopened business (thereby fueling more outbreaks and prolonged recession),” he writes. “In the present context, trying to restore prosperity by heaping pain on the unemployed is as rational as trying to end a drought by burning a sacrificial child.”
That is perhaps why congressional Democrats want to keep the higher payments, at least while the pandemic continues to hamstring the economy. Senators Charles Schumer, the minority leader, and Ron Wyden of Oregon have proposed extending the $600 supplement through March but phasing it out as jobless rates fall. Senators Michael Bennet of Colorado and Jack Reed of Rhode Island have proposed extending benefits until 30 days after the president lifts the national emergency.
Whatever Congress ends up deciding to do, the stakes are perilously high. Emily A. Benfer, a housing expert and associate professor at Columbia Law School, told The Times that without a new round of government intervention, “we will have an avalanche of evictions across the country.”
Will there be another round of stimulus checks?
As part of the last relief package, eligible adults were promised a one-time direct cash payment of up to $1,200. (As with unemployment payments, though, the rollout of these checks has not been smooth: According to the House Ways and Means Committee, some 30 million to 35 million Americans had yet to receive theirs as of June 5.)
The Washington Post reports that President Trump may support sending another round of checks in the hopes that they would jump-start the economy and help his re-election chances, although his exact position on the matter, if he has one, remains unclear. In May, the House of Representatives passed a bill providing for another round of payments of up to $6,000 per household and that would expand eligibility to immigrants with taxpayer identification numbers.
But the bill has gone nowhere in the Senate, where both Republicans and some Democrats have panned the measure as too broad. “I think many Republicans are realizing that stimulus checks are poorly targeted and not stimulative,” Adam Mitchel, a senior policy analyst at the Heritage Foundation, told CNBC, saying that such payments go to people who are still employed and don’t need the money.Given the president’s potential support, though, the matter is far from settled.
The virus is bleeding state budgets dry
States could face budget shortfalls of more than $500 billion this year, Emily Stewart reports at Vox. What does that mean? Unlike the federal government, most states can’t run deficits, so if Congress doesn’t step in, they will have to cut spending and possibly raise taxes at the same time. In May, a group of five Democratic governors said that if state and local governments didn’t receive $1 trillion in federal relief, they would be forced to decide between either funding public health care programs or keeping teachers, the police and other workers employed.
Also in Vox, Dylan Matthews notes that state-level austerity practices made the Great Recession worse and probably lengthened it. And according to the Center on Budget and Policy Priorities, the budget shortfalls in 2021 will exceed those in 2010, the worst of that recession. “This means that unless the federal government makes up for states’ lost revenue, the coronavirus recession will worsen and the recovery will weaken dramatically,” Mr. Matthews says.
It is especially vital that Congress ensure schools can reopen in the fall, argue Jennifer Nuzzo, an epidemiologist at Johns Hopkins, and Joshua M. Sharfstein, a pediatrician, in The Times. Congress has provided hundreds of billions of dollars of relief for small businesses, but leaders have paid little attention to the emergency of school closures.
The $915 billion earmarked for state and local governments in the relief package that passed the House in May would probably do the trick. But given that Senator Lindsey Graham called that bill “dead on arrival,” it’s unclear how much aid, if any, school districts will end up seeing. “Deciding whether to reopen schools is not only a question of benefits versus risks, but also a matter of priorities,” Dr. Nuzzo and Dr. Sharfstein write. “Covid-19 is harming a generation of children. Whether we can fight back effectively is up to us.”
Do you have a point of view we missed? Email us at [email protected]. Please note your name, age and location in your response, which may be included in the next newsletter.
MORE ON THE NEXT RELIEF BILL
“The Fraught Realities of Financial Relief During a Pandemic” [The New Republic]
“The most important chart in the world”? [Bloomberg]
WHAT YOU’RE SAYING
Here’s what readers had to say about the last debate: Should Schools Reopen in the Fall?
Maggie, 17, from Massachusetts: “Rising seniors like me need regular school to ensure regular results to get into the college we would normally fit into, which in many cases determines our life trajectory. My grades dropped fourth quarter; I don’t want that to happen again.”
Aditi, 13, from India: “Poor public schools will suffer the most when coming up with an effective reopening plan. Many of the students from these schools are from low-income families, which means that their education is going to be impacted adversely by their school’s lack of resources. School administrators and the government should work together to come up with measures that will help low-income schools to reach their students rather than reopen their gates. Perhaps they could give these schools some financial relief by designating funds to their teaching efforts.”
Elizabeth, 50, from Texas, where she is a high school science teacher: “I don’t see much input from teachers about schools reopening in the media. Is there bias as we are mostly women? We are the ones that pay for the Kleenex with our own money.”