April 19, 2021

DCTRS

Damascus Center for Theoretical and Civil Rights Studies

Hiltzik: COVID-19 relief bill is far too small

Members of Congress are out and about Monday taking a victory lap over having reached an agreement on a $908-billion COVID-19 relief package that will bring stimulus checks and enhanced unemployment benefits to millions of Americans.

Let’s hope they don’t dislocate their shoulders patting themselves on the back.

Not because they might struggle to obtain treatment at overwhelmed hospitals with infections raging out of control across the country — as denizens of Capitol Hill they undoubtedly have access to medical care many other Americans can only dream of.

But because the relief package they drafted won’t come close to addressing the economic crisis spreading coast-to-coast in the virus’ wake.

Rather than coming together to alleviate the rise in unemployment, poverty and hunger sweeping the nation, they staged a spectacle of dysfunctional governing.

Their work all but guarantees that the economic recovery will be painfully slow and leave the most vulnerable Americans even lower on the economic ladder than they were when the pandemic first appeared.

At the most basic level, the relief simply isn’t as large as it should be. It pales in comparison to what other developed countries have provided. It’s poorly targeted, offering relatively meager benefits to the working class but better breaks to big business.

Consequently, the measure leaves unfinished the effort to keep Americans in work and out of poverty. The toll of the pandemic is staring our government leaders in the face.

Nationwide, the proportion of American households living below the federal poverty line (about $12,760 for an individual and $26,200 for a household of four), rose to 11.7% in November from 9.3% in June as initial pandemic relief expired, according to researchers at the University of Chicago and Notre Dame.

The poverty rate had actually declined during the first months of the pandemic, due to the stimulus checks and unemployment benefits provided by the $2.2-trillion CARES Act in March.

New weekly unemployment filings, which declined steadily from a peak of 6.9 million in late March to 711,000 in the first week of November, have been on the rise again, reaching 885,000 in the week ended Dec. 12 — indicating that the U.S. economy isn’t anywhere near exiting the woods.

The new measure isn’t utterly devoid of help for American workers. It provides one-time checks of $600 per adult and up to two dependents, phased down for higher-income households and down to zero for individuals earning more than $99,000 and couples earning $198,000.

It also provides 11 weeks of enhanced unemployment benefits at $300 a week. Both payouts are half the size of those that were provided by the CARES Act.

But the package offers almost nothing to state and local governments, which are increasingly strapped by shrinking tax revenues and soaring public health costs, and have been laying off legions of teachers, firefighters and police officers — state and local employment has fallen by more than 1.3 million, or nearly 7%, since February. Without more relief, there will be more carnage.

Let’s not mince words: The blame here belongs almost entirely to the Republican Party. The GOP flatly refused to negotiate a new relief package after passage of the CARES Act in late March, specifically to take up the $3-trillion Heroes Act passed by the Democratic-controlled House in May, even after the House offered up a pared-down $2.2-trillion measure in October.

Republicans tied their objections to concerns about the federal deficit. That’s a spectacularly dishonest and cynical position, given that they hadn’t shown any concern about the deficit when enacting a $1.5-trillion tax cut for their well-heeled patrons in December 2017.

Now that a Democratic administration is entering the White House and the fiscal benefits would flow chiefly to the middle- and working class, the GOP claims to have rediscovered the virtues of thrift.

Once talks began, Republicans kept trying to inject injurious provisions into the negotiations. These included an effort, spearheaded by Sen. Pat Toomey (R-Pa.), aimed at hamstringing the ability of the Federal Reserve to provide new monetary stimulus in the new year (that is, once Joe Biden takes office as president).

The Republicans tied state and local aid to a provision that would absolve business owners of liability for workplace COVID infections. As I wrote in July, this vicious proposal amounted to an invitation to employers to abandon any but the most minimal safety measures for their workers.

Obviously, workplace liability has no relationship to state and local funding. The two sides weren’t negotiating over different ways to address the crisis of state and local government; this was just an attempt by the GOP to hold the localities hostage to a handout to business.

Senate Majority Leader Mitch McConnell (R-Ky.) and his GOP minions kept saying that they didn’t want to reward supposedly profligate blue states, an assertion I labeled “nakedly partisan and plain ludicrous.”

The truth is that some of the most deeply suffering states are red as can be, including Alaska, Oklahoma, Texas and Wyoming, all of which face declines of more than 15% in revenues due in part to pandemic-related price drops for oil and other natural resources.

In any event, the GOP achieved its goal of leaving state and local governments dangling. The original Heroes Act would have provided nearly $1 trillion for them. This was cut down to about $436 billion in the revised version, and effectively to nothing in the final bill.

Despite the benefits in this measure, U.S. pandemic relief remains among the most skinflint, cheeseparing packages in the developed world. It’s also among the most poorly targeted.

The latest measure is valued at about 4.25% of gross domestic product — that is, a proportion of the economy. The previous relief measures signed in March were worth a combined 14.3%, bringing the total to about 18.5%.

By contrast, according to figures from the International Monetary Fund, Germany provided fiscal relief valued at nearly 40% of GDP; Britain, nearly 26%; Japan, 35%; France, 21%. (The figures include spending, foregone revenues, loans and loan guarantees enacted through early September.)

The relief bill continues the practice of steering most employment relief through employers by reinstating the so-called paycheck protection program that rewarded business that maintained their payrolls through the crisis.

But that’s a far cry from the more direct assistance provided in other developed countries. Japan covers 100% of wages of furloughed workers; the Netherlands, 90%; France, 84% (and up to 100% for workers at the minimum wage); Britain, 80% for at least three months.

Those countries generally have more forgiving sick leave policies, which allowed infected workers or those caring for sick family members to stay home and avoid spreading the virus.

As we’ve written, America is an island unto itself in the skimpiness of its sick leave mandate. About three-quarters of all countries guarantee paid sick leave from Day One of an illness, and 76% provide for at least six weeks of coverage, according to a survey by UCLA’s World Policy Analysis Center.

Among high-income countries, about two-thirds cover self-employed workers. About half the countries in the UCLA database guaranteed workers at least 80% of their wages if they had worked for at least six months.

In the U.S., however, about a quarter of all American workers have no right to paid sick leave at all, according to the Bureau of Labor Statistics. About 91% of state and local government workers are eligible for paid sick leave, but only 73% of the privately employed.

In the private sector, moreover, paid sick leave is a privilege reserved largely for professionals, managers and the better-paid. It’s available to only about 58% of service workers — who are most likely to come in contact with the public — less than half of those in the lowest 25% of the income range, and only three in 10 of those in the lowest 10% of wage earners.

In the absence of a federal mandate for paid sick leave, states and localities have picked up the slack. Fourteen states (including California) and the District of Columbia have enacted paid sick leave laws, as have 20 cities (seven in California) and three counties.

Those laws, however, typically require employers to allow workers to accrue sick leave very slowly, based on hours worked, and allow businesses to cap sick leave at a few days per year. That’s obviously inadequate when dealing with a health emergency requiring the quarantine of exposed individuals for 10 days or more.

The new agreement offers a tax credit for employers offering paid sick leave, but that’s short of what’s needed — a federal mandate requiring paid sick leave, and paying for it if necessary.

At best, relieving Americans of the devastation of the pandemic is unfinished business. President-elect Biden has made clear that he’ll want more once he is in office, but Washington observers say that’s a forlorn hope as long as the Senate remains in Republican hands.

The Trump administration condemned the nation to a catastrophic toll in sickness and death through its incompetence and recklessness; its partners on Capitol Hill have countenanced an equivalent toll in the economy at large.

If this latest relief measure is the best our government leaders can muster in the face of the most dire national emergency since the Great Depression, shame on them.