The Washington PostDemocracy Dies in Darkness

Lawmakers, business leaders begin to raise alarms about dwindling federal aid, as omicron cases rise across U.S.

The White House is monitoring the situation, noting that existing programs in the American Rescue Plan should help the country weather any immediate economic headwinds

President Biden meets with members of the White House covid-19 response team Dec. 16 on the latest developments related to the omicron variant in the Roosevelt Room in the White House. (Evelyn Hockstein/Reuters)
Placeholder while article actions load

The swift arrival of a new coronavirus variant has rekindled economic anxieties in Washington, as congressional lawmakers, business leaders and consumer advocates begin to worry whether there is enough federal aid to shield Americans from another round of financial despair.

Over the course of the nearly two-year pandemic, Congress has committed nearly $6 trillion toward combating the contagion and bringing a battered economy back from the brink. But some of the most significant programs to keep businesses afloat and help households pay bills have expired or run out of funds, raising new risks for the future of the country’s recovery, particularly as the omicron variant wave begins to take hold.

New York coronavirus cases hit record high for second straight day

There’s no federal money left to keep restaurants open. The aid for concert halls and other customer-starved performance spaces has nearly gone dry. Federal officials ended their primary effort that pumped money into small businesses with sagging balance sheets, and they stopped paying out extra sums to workers who are out of a job.

Federal student loan protections are expiring imminently, meaning students’ bills are set to come due early next year. A stimulus initiative under President Biden that provided monthly payments to more than 35 million families with children may have issued its last round of deposits this past Wednesday. And attempts to extend those tax benefits — or address a wider array of longer-term financial issues facing parents — have stalled again on Capitol Hill.

“I’m concerned that you’re going to have many, many vulnerable Americans, Americans with young children for example, falling between the cracks,” said Sen. Ron Wyden (D-Ore.), adding: “January looks like a tough month with respect to omicron.”

When the pandemic led to a lack of child care, single mothers like Denise Tyree were left in the lurch, unable to work. (Video: Hadley Green/The Washington Post)

Public health officials and economists alike acknowledge that little is known about the changed pathogen and the effects it may ultimately have on an economy that only recently rebounded. Even as U.S. case rates climb toward potential new highs, the economy itself remains strong, avoiding the mass layoffs and other hardships seen during the darker days of the pandemic.

Hot economy collides with huge virus surge in pandemic’s latest twist

The White House, meanwhile, expressed confidence this past week that billions of dollars remain available as part of the $1.9 trillion American Rescue Plan adopted earlier this year, including funds delivered to states and schools. That could help blunt any immediate impact from the omicron variant, according to Gene Sperling, a top economic adviser to Biden.

“We feel people should be reassured by how strong the job market and the economy [are] now, and the fact there are still resources in the American Rescue Plan that can help deal with lingering challenges or the inevitable bumps in the road on economic recovery and covid recovery,” he said.

But Sperling added that the White House is keeping a close eye on the economy for signs of potential strain. “As always, we’ll follow closely whether future developments would require some targeted resources,” he said.

At the height of the pandemic, the economic toll wrought by the coronavirus at times seemed unfathomable. Roughly 40 million Americans at one point had lost their jobs. Many soon struggled to afford rents and pay bills. And students nationwide found themselves forced to learn at home, adding to the burden on their parents, who had to manage simultaneous responsibilities as workers and caregivers.

Businesses faced their own crippling economic blows, with many forced to shutter — in some cases for good — after states issued a wide array of closure orders to arrest the spread of a deadly pandemic for which there was no cure. And cities and states soon found themselves laying off workers in droves, threatening local governments and their ability to provide services to those in need.

Some school districts in California have student vaccine mandate deadlines fast approaching, raising concerns over students being removed from campus. (Video: James Cornsilk/The Washington Post, Photo: Danielle Kunitz/The Washington Post)

The United States is better equipped now than it was in March 2020 — with vaccines at the ready, new antiviral pills on the way and a wealth of scientific knowledge at doctors’ disposal. The rapid improvements are in large part the result of nine spending packages, totaling more than $5 trillion and adopted mostly on a bipartisan basis, which also helped rescue the economy from its tailspin.

Democrats alone approved the most recent aid initiative, the American Rescue Plan, securing several investments — despite overwhelming Republican objections this spring — that Biden has touted as essential to bringing unemployment down to its lowest level in decades. On average, the United States has added roughly a half-million jobs per month this year. And the Nasdaq and S&P 500 are both set to end the year up around 20 percent, reflecting new ease on Wall Street.

But that was all before the delta and omicron variants threatened anew to overwhelm the economy and public health system alike. Again, storefronts and schools are closing, restaurants are limiting their services, sports leagues are postponing their games, and travel and tourism are facing mass disruptions at the height of the busy holiday season.

Highly vaccinated countries thought they were over the worst. Denmark says the pandemic’s toughest month is just beginning.

As the country enters this new, more uncertain phase of the pandemic, a significant swath of federal aid targeting workers and businesses “already has been spent,” said Marc Goldwein, the senior vice president for the Committee for a Responsible Federal Budget, which tracks government spending. By the organization’s estimates, roughly $4.9 trillion of the estimated $5.7 trillion in emergency aid authorized by Congress since the start of the pandemic has been spent or obligated. That includes dollars set aside for a purpose, yet not actually paid out.

One of the largest swaths of aid still available is a $350 billion pot of funds set aside for cities and states to use as needed to address budgetary gaps, deliver vaccines or shore up local economies. Senior White House officials see the money as a quick, easy way for local governments to plug any immediate holes that might arise from the omicron variant or other mutations.

The government does not publish regular, timely updates on exactly how much of the money remains. But an estimate from the Center on Budget and Policy Priorities this month found that 42 states and the District of Columbia have spent $111 billion of the total $195 billion reserved for them. The remainder of the cash, which is reserved for local officials, has been much harder to track — though the Treasury Department says the money has been put to use nationwide for such purposes as mobile vaccine clinics in Buncombe County, N.C., to small business financial assistance in Pierce County, Wash.

“I would be super thankful this federal money is there given so much uncertainty in what’s going to happen,” said Ed Lazere, a senior fellow studying state fiscal issues at the CBPP. Asked whether the omicron variant might unleash further havoc, straining those dollars, he said it is “too soon” to say.

Other economic aid programs, however, have fallen into a more dormant state.

The U.S. government closed the roughly $800 billion Paycheck Protection Program in June, for example, ending an initiative that provided generous loans to more than 8.5 million small businesses and nonprofits. The Small Business Administration still has available two other programs that are set to provide loans and grants to small businesses facing “economic injury” until the end of the year. But lawmakers already withdrew more than $30 billion from those accounts to help pay for a recently adopted bipartisan infrastructure bill.

The SBA declined to say how much remains in each of its initiatives, though outside groups estimate it is in the billions of dollars. The growing fears of dwindling funds still prompted more than 60 Democrats and Republicans to band together on Friday, calling on Congress to adopt another round of aid targeting small businesses — and citing the arrival of new variants as a cause for urgent concern.

“While the U.S. economy continues to grow, the recovery has been uneven, and the negative effects of the rapid spread of new COVID-19 variants disproportionately impact businesses which rely upon in-person gathering to survive, including the restaurant, hospitality, fitness, live events, and travel industries,” wrote lawmakers including Reps. Alexandria Ocasio-Cortez (D-N.Y.), Josh Gottheimer (D-N.J.) and Brian Fitzpatrick (R-Pa.) in a letter to congressional leaders.

More targeted funds made available to restaurants this spring ran dry mere weeks after Congress authorized them as part of the American Rescue Plan. While hiring in the hospitality industry has rebounded over the year, a sign of progress in one of the hardest-hit sectors of the economy, the arrival of the omicron variant has revived old concerns — prompting lawmakers including Sen. Kyrsten Sinema (D-Ariz.) this past week to again push for her bipartisan legislation that would replenish the stimulus program.

“The omicron variant is already affecting restaurants,” she said in an interview. “Even a small decrease in business can cause independent restaurants to close their doors. We saw this starkly at the beginning of covid last spring … I think omicron certainly complicates that.”

American families, meanwhile, face their own share of potential financial burdens.

There is still federal money available for those experiencing hardship, including aid programs that help families pay for food and rent. Delays earlier in the year particularly hammered the rental relief program, and some cities and states “don’t have enough” to help those in arrears. But there still remains about $25 billion nationally in assistance, according to Diane Yentel, president of the National Low Income Housing Coalition. More is expected to be obligated or shifted to areas in need by the end of the year, she said.

But some of the most generous government initiatives — from stimulus checks to expanded unemployment payments — expired many months ago. That includes special assistance for Uber drivers or Seamless couriers, who enter a new phase of the pandemic without access to special aid targeted to those in the gig economy. Some Democrats had proposed restoring the program and boosting jobless aid for all Americans, but the idea never advanced far. Others in recent days have called for new stimulus spending to help those in greatest need.

“I’m going to push to get another package through Congress,” said Rep. Jamaal Bowman (D-N.Y.), noting the record number of cases in his state.

In recent months, Democrats have focused their attention on longer-term economic support, including efforts to lower the cost of child care and provide paid family and medical leave to millions of Americans who lack such benefits at their jobs. The proposals belong to a sprawling, roughly $2 trillion package known as the Build Back Better Act, which the president and his Democratic allies have touted as essential to helping fix gaps brought to light by the pandemic.

“I think that the big thing covid exposed is all of these gaps in our health-care system, in our child-care system, in our paid-leave system, and that’s what [Build Back Better] was about … so we don’t have these big gaps when these issues hit,” said Rep. Pramila Jayapal (D-Wash.), head of the Congressional Progressive Caucus.

But Democrats this past week faltered again in trying to advance the spending measure through the narrowly divided Senate, marking the latest in a year of political setbacks for a central element of Biden’s agenda. At the center of the stalemate was Sen. Joe Manchin III (D-W.Va.), who for weeks has raised concerns about excessive federal spending over the course of the pandemic, which he says has driven inflation and deterred people from returning to work.

Biden tried for days to engage Manchin directly in talks, hoping to finalize the package before Christmas. But negotiations faltered, all but guaranteeing the fight will slip into next year.Manchin on Sunday then revealed he opposed the approximately $2 trillion bill, saying he could not vote for the measure as written.

The failures troubled many Democrats, who said this past week that swifter action to adopt the bill might have meant the U.S. government would already be on its way to providing additional economic support to Americans now bracing for a new wave of coronavirus infections. That includes the extension of soon-to-expire child tax credit payments, which Democrats had hoped to restore in time for Americans to receive a payment come mid-January.

Sperling, the top economic adviser to Biden, pointed this past week to the resurgent pandemic as “all the more reason we’re still 100 percent committed and 100 percent focused on passing” the bill.

“We’ve seen this show,” added Wyden, the top Democrat on the tax-focused Senate Finance Committee, about the costs of inaction. “How many times do we have to go through this?”

Loading...