Congress is set to pass the biggest stimulus in history. It’s not completely terrible.


In the wee hours of Wednesday morning, Democrats and Republicans in the Senate, along with the White House, all struck a deal on $2 trillion in economic aid to battle the spreading coronavirus pandemic. Things are moving incredibly fast, and final language is still in flux, even if the policy parameters have been agreed to. The Senate intended to vote on it Wednesday, and it sounds like House leadership would like to pass the bill as well as quickly as possible.

I find myself caught between two warring impulses: The bill is both woefully inadequate, yet considerably more than I thought the Democrats could wrest from the GOP. So let’s go through this thing and see what’s in it.

Direct Cash Aid: Every individual making $75,000 a year or less will get $1,200, or $2,400 for every married couple making up to $150,000. The aid gradually phases out for Americans making above those thresholds, until individuals making $99,000 more more — and married households making $198,000 or more — get nothing. That said, parents will also receive $500 per child, and it doesn’t appear that part phases out.

The means-testing aspect of this is foolish and unnecessary, and the thresholds for the phase-out are much too low. That said, the original Republican proposal had the aid phasing in with income, such that the poorest Americans would get little-to-nothing. This at least gets help to people who need it most. The bigger problem is that it’s a one-time payment, and we’ll almost certainly need to do this several times over. In which case, we’re in for more Congressional fights.

Unemployment Insurance: This might be the single biggest win, from an improvement standpoint. The original Senate GOP bill had nothing for unemployment insurance at all. Now, jobless benefits will last an extra 13 weeks on top of their baseline before the coronavirus crisis commenced, and an extra $600 a week will be added to all benefit payouts for four months. In many cases, that will bring workers’ wage replacement compensation close to 100 percent. Reportedly, these increases will not count as income when qualifying for programs like Medicaid and the Children’s Health Insurance Program. That’s important, otherwise the jump in unemployment benefits could kick people off their health coverage and other benefits. Equally remarkable, these benefits will cover Americans in the gig economy and independent contractors and other workers who aren’t normally included in the unemployment insurance system.

However, it turns out that extra $600 a week will in some cases exceed the pay workers are getting now, possibly encouraging layoffs. The unemployment system is administered by the states, who each have different benefit levels, so coming up with a coordinated federal boost that would cap all benefits at people’s previous wage level would be overly complex and slow. Nonetheless, as of this writing, three Republican senators were demanding the deal be put on hold until a fix can be written. And Sen Bernie Sanders …read more

Source:: The Week – Business


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