10/5 Roundtable: Government Economic Response to COVID-19 [Fact Sheet]

Compiled by: Luke Henkel, Margaret Edsey, Eri Hayakawa, TJ Rausch, and Tyler Van Patten

Liberal talking points about CARES Act/stimulus and Unemployment

• At least in this instance, government stimulus is fundamentally good because it mitigates the financial burden of those who lost their jobs due to no fault of their own
• $600/week in benefits is necessary to prevent widespread increase in poverty, evictions/foreclosures, etc.
  • Has additional benefit of encouraging people to stay home, which will help prevent the spread of the virus
  • “Lack of an incentive to work” is not necessarily problematic right now
• Public health is more important than the budget deficit
• Strong liability shields on corporations will only encourage risky business practices that could spread the virus, and companies should be responsible for ensuring the health of their employees and customers
• While the unemployment rate is decreasing, there are still almost a million Americans getting laid off each week, indicating that recovery so far has been temporary, and more stimulus is needed

Conservative talking points about CARES Act/stimulus and Unemployment

• Increased unemployment benefits disincentivizes returning to work and, therefore, hampers economic recovery
  • Many people earn more from unemployment than they would on their paychecks
• Market forces push companies to innovate around remote work, strengthening resiliency and creating better results with less government spending
• Liability shield for businesses a necessity to protect them from Covid litigation and allow them to return to operations with less fear and lower costs
• Important to focus on getting the economy running again so Americans can start earning again rather than being paid by the government to do nothing
• First rounds of spending were historically massive (trillions of dollars); might have been responsible in the height of the crisis, but irresponsible to continue given national debt
• First round of stimulus money went to many more Americans than those who actually needed it to pay the bills
• Stimulus packages have become Christmas tree bills (legislation with unrelated provisions tacked on like ornaments on a Christmas tree) with extreme price tags
• Further stimulus is likely to be used on non-essential goods, like leisure travel

Relevant facts and statistics

• Unemployment rate in January: 3.6%; April: 14.7%; June: 11.1%; July: 10.2%; August: 8.4%
• 30 Million people were receiving unemployment checks at expiration of $600

New jobless claims per week

Unemployment rate, YTD

• Fed. Reserve reported that “extraordinary governmental measures in response to the pandemic seemed to have eased families’ financial strain.” Americans’ financial well-being was higher in many ways — more adults reported being able to pay all of their bills and pay for an unexpected $400 emergency, among other aspects — in July than it was in April, before the relief efforts from the CARES Act were in place.

• The CARES Act allocated $2T: $300B for individual stimulus checks ($1200); ~$300B for extra unemployment insurance; $500B for large corporations; $377B for small businesses (PPP loans); $150B to enhance hospital capacity, expand stockpile of PPE, and support the CDC and vaccine research; and another $150 billion in direct support to state and local governments
  • Original CARES Act pandemic unemployment assistance (PUA): authorized 13 weeks of an additional $600/wk from the federal government for anyone who qualified for state unemployment benefits, as well as gig economy workers and self-employed workers who are now unemployed. State govts were still to foot the bill for regular unemployment assistance (national average of $340/wk). Expired July 31; was not renewed.
• CARES Act also mandates that all insurance plans cover Covid-19 treatments and makes coronavirus tests free
  • About 2.4% of coronavirus tests billed to insurers leave the patient responsible for some portion of payment, up to $2800. Over 77 millions tests have been performed.
• Dependents under the age of 17 gave an addition $500 to parents – but dependents over 17 gave $0 (including most college students or disabled adults)

• At least in March, there was bipartisan consensus that the CARES Act would cause the US debt to increase vastly, but would help boost the economy, reduce the severity and duration of the recession, and, even with the growing debt in mind, would create a healthier economy than would have existed without the CARES Act.

• According to Sen. John Cornyn, 80% of Texans are earning more on stimulus money than they had been in their jobs. UChicago analysts found in July that 68% of unemployed workers in the US who can receive benefits are eligible for payments that are greater than their lost earnings. They also found that halving the payment to $300 per week would still mean that 42% of unemployed workers would be getting more than their original wages

• $1.4 billion was spent in stimulus checks sent to the deceased. Also, according to the U.S. Census Bureau Survey, 15.7% of Americans spent stimulus money to pay off debt, and 14.1% planned to save it and 49% are more likely to take a vacation if they receive a second stimulus package

To date, there have been four relief packages that have actually become the law. The first two were tiny compared to the CARES Act, which was #3. The fourth, known as CARES 2.0, added $484B to the PPP and to support health care providers. Nothing has passed since April. Talks over the summer between Democratic leaders and the Trump administration started to narrow the difference, with the White House settled around $1.5 trillion and Democrats at $2.2 trillion, before the negotiations sputtered out. Here are the three most important still-standing proposals:

• In May, House Democrats passed the $3T HEROES Act
  • Details of the plan:
    • $1 trillion to state, local government, plus $100B for schools, $30B for highways and transit agency relief, and $7B for childcare
    • $100B new emergency relief for hospitals
    • $200B “Heroes’ fund” to provide hazard pay to essential workers (additional $13/hr)
    • Second round of $1,200 stimulus checks, increasing $500 bonus to $1200; would also go to anyone with TIN, not just SSN
    • $600/wk for unemployment insurance through January 31, 2021
    • $659B more for PPP; expand PPP to include nonprofits
    • 14% increase in Medicaid 
    • $25B to shore up the United States Postal Service.
  • What happened to it?
    • McConnell declared the bill Dead on Arrival, and it has not been brought to a vote in the Senate
• In July, Republicans proposed the $1T HEALS Act.
  • Details of the plan:
    • Second round of $1200 checks (only change from CARES: no age cap on dependents for $500 bonus)
    • Unemployment payment covering 70% of a worker’s previous wages, when combined with regular state benefits
    • $15B for childcare
    • Gives Liability shield to most businesses against covid-related lawsuits from customers and employees
  • What happened to it?
    • It is not actually one big omnibus bill, like HEROES or CARES; it is several different bills, none of which have yet passed the Senate
• In early September, Senate Republicans introduced a“skinny” $300B relief bill
  • Included $300/wk unemployment assistance through Dec 27, and no direct-to-citizen stimulus checks. It also included liability protections for businesses and health-care facilities, more money for health-care funding and schools and a second round of funding for PPP. 
  • Senate Democrats blocked it (needed 60 votes) a couple weeks ago.

Citations:

1.  Jobless Aid Fuels Partisan Divide Over Next Pandemic Rescue Package – Carl Hulse – New York Times
2. Here is What’s in the Senate GOP’s $1 Trillion ‘Heals Act’ Package – Jeff Stein, Laura Meckler, and Tony Romm – Washington Post
3. 3 Good Reasons You May Never See a Second Stimulus Check – Rob Berger – Forbes
4.  ‘We are stuck, with little to no options’: 6 months after the CARES Act passed, many Americans are still struggling – Alicia Adamczyk – CNBC
5.  Careful or careless? Perspectives on the CARES Act – Grace Enda, William Gale, and Claire Haldeman – Brookings Institution
6. “Why Coronavirus Tests Come With Surprise Bills” – Sarah Kliff – The New York Times
7. Careful or careless? Perspectives on the CARES Act – Grace Enda, William Gale, and Claire Haldeman – Brookings Institution
8. Many Americans Are Getting More Money From Unemployment Than They Were From Their Jobs – Amelia Thomson-DeVeaux – FiveThirtyEight
9.  About $1.4 Billion in Stimulus Checks Sent to Deceased Americans – Lorie Konish – CNBC
10.  3 Good Reasons You May Never See a Second Stimulus Check – Rob Berger – Forbes
11.  How Americans Plan to Vacation During Covid-19 – Investment Property Exchange Services
12.  The HEROES Act: Policy Overview and Political Prospects for the Latest COVID-19 Relief Bill – National Law Review