In the midst of surging Coronavirus cases, both parties are acknowledging the need for another relief bill. As I wrote last week, the pandemic is a true national emergency and one of the few instances in which, as Barack Obama put it, shoveling money out the door is the right response, but how the money is going to be spent is also important. The two parties have starkly different visions for where the relief money should go.
Direct payments For starters, Democrats and Republicans both agree that there should be another round of payments to Americans. The relief money, which is often referred to as a stimulus but is more accurately for subsistence, paid out by the federal government in March has long been exhausted by the people who are on the financial brink. The $1,200 per person payments don’t go far when three months of rent or mortgage and car payments are considered.
Both parties favor a new $1,200 payment for individuals. Per CNN, the Republican plan would max out at $2,400 per family plus an additional $500 for each dependent while Democrats would allow a maximum of $6,000. Both bills would start to phase out benefits at an income level of $75,000 for individuals or $150,000 for married couples.
As I wrote previously, the government should be encouraging people to stay home as much as possible until the pandemic is under control in their area. A better solution than another one-time payment would be a measure that authorizes payroll subsidies when virus levels reach certain metrics that require sheltering in place.
Unemployment The current $600 per week addition to unemployment benefits is scheduled to expire at the end of July. The Democrat plan would extend the enhanced benefit through January and enable those receiving regular state benefits to continue receiving the extra money as late as March. The Republicans would decrease the benefit to a $200 per week extra payment which would expire December 31.
The $600 per week enhancement is too much. It has allowed many people to earn more on unemployment than at their jobs. This benefit should also be tied to success in the fight against the virus.
Small business loans Republicans would allow businesses to apply for a second loan through the Paycheck Protection Program provided that they have fewer than 300 employees and have lost more than 50 percent of their revenue during the first or second quarter of the year. The maximum loan amount would be reduced from $10 million to $2 million. The GOP program also creates a low-interest loan program for seasonal businesses or companies that operate in low-income communities with fewer than 500 employees and 50 percent lost revenue. Republicans would also give businesses more flexibility on how to spend the money.
The Democrat plan does not extend the PPP but does add $10 billion to the Economic Injury Disaster Loans program that ran out of money last week. The program was initially funded with $20 billion. Some Democrats have said that they would also be open to extending the PPP.
The additional loans to small businesses are much-needed. The PPP has been mostly successful so replenishing the available loan funds is a good thing, as is giving businesses more flexibility.
Education The Republican plan grants $105 billion for education which would be split with $70 billion for K-12 schools, $30 billion for colleges, and $5 billion to be allocated by governors. Two-thirds of the money would go to schools that reopen for in-person instruction. Democrats offer a total of $100 billion with $59 billion for K-12 and the remainder for higher education.
With virus levels high throughout much of the country, there should be a focus on funding more virtual classes rather than pushing schools to bring students back to in-person classes. Children are at lower risk for COVID-19 but can still spread the disease to vulnerable people in their families and community.
Liability Republicans would give liability protection to businesses, schools, health care providers, and non-profits that would prevent people from suing if they contract COVID-19 from using their facilities. Democrats oppose these liability protections and want OSHA to require employers to create plans to protect workers from COVID-19 exposure.
The focus should be on reopening safely not on escaping liability. Any liability protections should be extended only to organizations that take steps to protect their customers and employees.
State and local funding The Democrat plan includes $500 billion for states and $375 billion for local governments. The money could be used to address budget shortfalls due to lost revenue from taxes or other fees or to pay for Coronavirus-related expenses.
This is needed by many state and local governments. Tax revenues will be taking a hit due to the slowing economy and costs for measures like setting up Coronavirus screening stations and sanitizing government buildings have been high.
These bills will undoubtedly be changed as they work their way through the legislative process. Ideally, the final product would be an amalgamation of the best Republican and the best Democratic ideas. In this charged political environment, however, it would not surprise me if both of these bills stall, despite the fact that the country is very much in need of relief.
It is in the interests of both parties to work together to get the relief bill passed. As the CARES Act provisions expire, unemployment will rise and real estate prices, which have so far been solid, may collapse, further worsening the economy. Republicans won’t benefit from a collapsing economy in November, but Democrats will probably not benefit from transparently obstructing the bill. Americans want both parties to put on their big-boy pants and do the job they were sent to Washington to do.
Originally published on The Resurgent
