Tom Williams/CQ Roll Call via AP Images
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A rare photograph of Democratic and Republican leaders in the same room together. This won't happen again for another week, with a crisis looming.
First Response
We are two weeks away from the expiration of enhanced unemployment payments, the critical lifeline for over 30 million Americans and counting. The spread of the virus puts most of those people in no position to find a job or return to work. The imminent and dramatic loss of income, combined with ends to eviction moratoria, sets the stage for a mass homelessness crisis when the safest place to be right now is at home.
Yet amazingly, there have been no face-to-face talks between Democrats and Republicans on what to do next. And there won’t be any for another week, since the Senate is out of session until then. That means there’s going to be just one week to stop a calamity.
All negotiations thus far have been conducted through the media. After House Democrats passed a $3 billion package called the Heroes Act, Mitch McConnell rejected it as a fantasy wish list. The White House has countered with a $1 trillion cap on the next bill, when experts have said $1 trillion is needed just for state and local governments, let alone enhanced unemployment, possible stimulus checks, school funding that provides the only path to reopening in the fall, small business support, etc.
Speaker Pelosi quickly rejected that $1 trillion cap, though she called it “an interesting starting point.” Everyone is saying there will be a bill by the end of July, but the two sides are trillions of dollars apart.
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As I have throughout, I look to the leverage. Republicans don’t have very much left that they really want, although you’d think self-preservation would be a factor as they stare down the barrel of a second depression. The major plank on the Republican side is business immunity for workers or customers contracting the virus on their premises. They will try to make that the tribute for any increase in spending off their initial offer.
I’ve heard Republicans talking about a second stimulus check means tested for those making only $40,000 or less. This would still get money to at least 80 million households. But if it was absurd to means-test stimulus payments in March when a few million had lost their jobs, it’s even more so now at 30 million. The income threshold will be based on last year’s tax return, and if you lost your job in the crisis, last year’s earnings are a fleeting memory.
I’ve also heard about dropping unemployment to $200 a week from $600. This would cut more than 30 million incomes by close to half (depending on the state share; in Florida, for example, where the maximum benefit is $275, it would be a 46 percent cut). What do you think happens to an economy if you cut incomes by half for close to 20 percent of the workforce? You get less spending and more unemployment. Even with our current supports, permanent job losses are rising. They’ll go through the roof with this kind of cut.
And as I’ve been stressing, you cannot do just unemployment enhancement without boosting state and local government grants, because it puts too much pressure on mayors and governors to re-open. (I’ll have more on this on Monday.) If you limit state and local spending, you’ll have the same spiraling effect that comes from limiting the unemployment boost. The CARES Act was inadequate because of the lack of state and local aid; son of CARES Act is poised to be inadequate because of a lack of support across the board. It would also be nice to spend some money to, you know, stop the virus, since that’s the primary hurdle to economic recovery.
We are hurtling toward disaster, and this is a moment where lawmakers need some pressure. We have engaged in a large demonstration project over the efficacy of cash payments, and whaddya know, they work. But they can’t work in isolation; forced austerity at the local level created a bad dynamic, and a lack of infrastructure for contact tracing and other methods to mitigate spread left us unprepared for the inevitable surge. This time, Congress needs to look at pandemic response as a coherent system, where actions (and lack of actions) have consequences. Otherwise we will continue our unblemished record as the worst country at handling the crisis in the developed world.
Of course, when you engage in down-to-the-wire negotiations and give yourself one week to design such a system, you shouldn’t be surprised at the insufficient outcome. The kakistocracy rolls on.
No Money in Immunity
A lot of money has been put into finding a vaccine for COVID-19. But a group of doctors and researchers think there’s already a usable bridge to that far-off day: plasma injections of blood from coronavirus survivors, rich in antibodies. So far this is more theory than practice, though the theory is plausible. Blood of survivors is being used selectively to treat sick patients; why wouldn’t it help those who haven’t gotten the virus fight it off? There have been adverse effects to using this kind of treatment with respect to other pathologies, some of them serious, and it shouldn’t be attempted without research. But even that isn’t happening; the idea has been rejected by federal officials and pharmaceutical firms. Why?
Some argue that plasma should go to treating the sick, not prevention, and we need evidence that it works in the sick first. That’s reasonable but I suspect it’s not the real issue. “Advocates for the immunity shots say businesses are reluctant to invest in a product that could soon be replaced by a vaccine,” the article notes, “so the government should offer financial incentives to offset that risk.”
There is a lot of money going to vaccine research, though not nearly enough; only about 8 percent of federal coronavirus response spending has gone to fighting the pandemic. This immunity shot wouldn’t even cost that much; you could finance it without much trouble. But the real head-shaking part of this is how the allegedly immutable laws of capitalism take precedence over the laws of saving lives. It’s just not considered cost-effective to create a possible short-term solution to the most cataclysmic public health event of our lifetime. You can’t get rich off it. So nobody does it.
Days Without a Bailout Oversight Chair
106. The Fed announced some more bond purchases, including blue-chippers Apple, Disney, and GE. Apple, at least, has definitively said it issued bonds to fund buybacks and dividends. So the Fed is using an economic rescue program to reward investor payouts. Could be a good topic for the bailout oversight chair we don’t have!
Today I Learned
- Former FDA commissioner Gottlieb estimates nearly 1 percent of the country is infected, which is a lot but also makes the “herd immunity” idea absurd. (CNBC)
- PPP just wasn’t enough: 1 in 5 small businesses plan to lay off workers after the loan runs out. (Bloomberg)
- The scramble from foreign students after the ICE ruling effectively deporting them is intense and self-destructive. (Washington Post)
- Full-up hospitals in Houston. (ProPublica)
- An outbreak in Syria sounds like an absolute tragedy. (AP)
- Another prisoner release in California to protect against more spread. Good. (Los Angeles Times)
- It’s a good thing federal policy facilitated Boeing getting a $25 billion loan, now that it can’t sell its planes anywhere. (Wall Street Journal)
