Setting the Stage: On Wednesday night the Senate unanimously approved (96-0) a much debated bailout package, sending it to the House where it will likely pass this Friday, sending cash to millions of Americans and even more to businesses small and large. All this comes in the midst of a global pandemic and the beginnings of an economic crisis the likes of which we haven’t seen since the Great Depression. Over 3.3 million Americans filed for unemployment last week, shattering the previous one week record of 695,000 claims set in 1982. This stimulus bill is meant to stop some of that devastation, but frankly if it is not met with further effort it will likely fall far short, giving too much benefit to big business and not nearly enough to average people.
Cash Payments: There has been much debate around direct cash payments, first proposed by Mitt Romney and Tom Cotton in response to the COVID-19 economic crisis. The specifics of the cash payment plan have differed by party and politician. The aforementioned Republicans came out with a proposal for $1,000 cash payments, Bernie Sanders and Rashida Talib called for $2,000 a month until the end of the crisis, and Michael Bennet, Cory Booker, and Sherrod Brown called for two cash payments of $2,000. The bill passed by House Democrats called for a $1,500 cash payment. And all of these proposals offered different levels of means testing or universality.
However, the Senate bill opted for a one time $1,200 payment to all Americans earning less than $75,000 a year. With payments phasing out for all Americans earning more than $100,000 a year. While $1,200 isn’t nothing, it’s probably not nearly enough to make up for the unemployment crisis that is coming. Over 3 million Americans filed for unemployment last week and the numbers could double this week. That’s potentially over 10 million Americans losing their job in a two week period and $1,200 isn’t enough to cover their rent, groceries, and all other bills. Some of them will have some other benefits to fall back on, but these cash payments definitely won’t save the economy.
Expanded Unemployment Insurance: One much debated proposal in the Senate relief bill was the expanded unemployment insurance provision. The expansion will grant Americans on unemployment $600 per week in addition to whatever benefits they get from state level unemployment insurance. Everyone making less than $75,000 will have their salary replaced 100 percent, for 4 months. This additional $600 was quite controversial and some Senate Republicans opposed the provision as they felt it would pay low wage workers too much and encourage them to quit their jobs and take unemployment instead. Bernie Sanders took to the Senate floor and loudly stated his opposition to those trying to rip that additional support from the bill. Ultimately it remained in and both Bernie Sanders and the Republican holdouts voted for the bill.
Help for Hospitals: The bill also sets aside $100 billion dollars to help fund hospitals struggling to fight COVID-19. Most of this money will be used to buy equipment such as ventilators and personal protective equipment like gloves, gowns, and masks. While this investment is obviously needed and necessary, it falls far short of calls for the Trump administration to utilize the Defense Production Act for emergency production of much needed medical equipment. Trump has been and remains hesitant to use these emergency powers in this way, however as the crisis gets worse and the hospitals are burdened even more that could change. As this $100 billion investment is helpful, it likely falls far short. Just as the investment in other areas of the stimulus does.
Funds for State and Local Governments: There is also a $150 billion dollar in grants for state and local governments. While that’s not nothing, many are already claiming it falls far short of what is necessary to make up for lost tax revenue in the face of the developing economic crisis.
Subsidies for Small Businesses: The bill also extends over $350 billion dollars to small businesses in the form of loans that will be forgiven if businesses maintain payroll. One problem with this provision is the definition of “small businesses” as businesses with up to 499 employees can benefit from these loans. That carve out goes further and bases that exemption on location, meaning larger corporations can take advantage of these loans to help buoy locations with less than 500 employees. There has been a lot of debate around how much help corporations need versus how much of their own money they should invest, and this provision extends a lot more relief to big businesses than some would have liked.
Trillions of Dollars for the Largest Corporations: Finally the most controversial portion of the bill is the significant carve outs for various large corporations. For example, Boeing received over $17 billion dollars, justified under calls for national defense. The bill also authorized the Federal Reserve to pump trillions more into the markets generally and specific corporations as needed. Just adding to the trillions the Federal Reserve has already pumped into the markets. These provisions led many to call on people like Bernie Sanders to oppose the bill, highlighting that time after time in these bailout situations big businesses consistently and disproportionately benefits at the expense of average people. These provisions are no different and highlight how extensive relief is for those with power versus the relief offered for the disenfranchised. Big corporations are basically offered unlimited relief on an as needed basis while the average American gets $1,200 in the face of mass layoffs.
Despite the unanimous approval of the Senate, there are a lot of problems with this bill and these problems won’t simply go away. There will likely need to be another round of bailouts, because outside the corporate welfare, this does not go far enough.