The good news is that they have bought into the idea of direct aid to millions of Americans; the bad news is that it is not remotely substantial enough. As first described during McConnell’s remarks on the Senate floor Thursday afternoon, each adult would get a $1,200 check, and $500 for each child. The Post reports:
The legislation would provide checks of $1,200 per adult for most families, as well as $500 for every child in that family. Families filing jointly would receive up to $2,400 for the adults. The size of the checks diminish for those earning more than $75,000 and phase out completely for those earning more than $99,000. The poorest families, those with no federal income tax liability, would see smaller benefits of a minimum of $600.
Despite its price tag, the proposal would leave a great many of the working poor (or the recently laid-off working poor) with relatively little, and nothing at all for a middle-class family making more than $99,000 that has a mortgage, car payments, etc.
More promising is the small business loan provision that gives employers with less than 500 employees. The Post explains: “The $300 billion for the loans would be made available through lenders certified by the Small Business Administration, such as banks and credit unions, with the maximum loan capped at $10 million. The portion of the loan used by the small businesses to cover their payrolls could be forgiven if firms retain their employees through the end of June 30, 2020.” There are also industry-specific loans totaling more than $200 billion for airlines, hospitality businesses and other unspecified “eligible businesses.”
Democrats will no doubt seek to increase the amount of the cash payments (especially to low-income individuals) and place conditions on loans to businesses (the Republican proposal says no executive for a company receiving a loan can make more than $425,000).
While there is talk of a fourth stimulus package, the lack of certainty going forward may cause people to squirrel their checks away for when things get really bad, thereby reducing the immediate impact of the stimulus.
Despite its limitations, if the bill from Senate Republicans is seen as an opening bid, there will be an opportunity to increase (or multiply) the individual payment, especially at the lower end. They could also add conditions to the business loans and include supplemental money to unemployment insurances (unemployment claims are skyrocketing). House Speaker Nancy Pelosi (D-Calif.) and Senate Minority Leader Charles E. Schumer (D-N.Y.) also called for a massive “Marshall Plan” for our health-care infrastructure.
As former auto industry czar Steve Rattner pointed out, we are in a recession (looking at a 14 percent decline in the second quarter according to one forecast), and the biggest mistake we can make is spending too little money, not too much. Rattner told me, “McConnell’s bill is far from perfect, but it’s a lot better than many of the ideas that have been floating around, particularly Trump’s proposal for a payroll tax holiday.” He added, “It would get a decent amount of money out quickly to the people who need it. (By comparison, the 2008 stimulus was $300 per person.) No one doubts that this will not be enough and there will be a phase four."
However, Rattner warns that “the amounts allocated for large and small business is too small, there should not be a special fund for airlines and there is not yet clarity around the money for airlines and other large businesses would be allocated.”
The legislation arrived at the same as a report alleging that Sen. Richard Burr (R-N.C.) was aware of the severity of the oncoming pandemic, and instead of sounding the alarm publicly, dumped a ton of stock. From ProPublica:“Soon after he offered public assurances that the government was ready to battle the coronavirus, the powerful chairman of the Senate Intelligence Committee, Richard Burr, sold off a significant percentage of his stocks, unloading between $582,029 and $1.56 million of his holdings on Feb. 13 in 29 separate transactions.”
In a statement to ProPublica, a spokesperson for Burr said he “filed a financial disclosure form for personal transactions made several weeks before the U.S. and financial markets showed signs of volatility due to the growing coronavirus outbreak.” Regardless, the matter needs to be investigated swiftly for any violations of law.
As an ethics expert told me, the point of passing the Stock Act in 2012 (which Burr voted against) was to warn Congress that non-public information members receive in the course of their jobs cannot be used for profit through trades. Of course, apart from a potential violation of law, this looks terrible and could undermine confidence in the government at a time people are panicked about their health and economic security. No one should profit off of a deadly pandemic.