Congress passes $900B COVID relief package
Stimulus checks, unemployment aid halved; no relief for cities, states, restaurants
A new coronavirus relief package is working its way through Congress. (Wikimedia Commons/David Maiolo)
By Ted Cox
Congress passed a $900 billion COVID-19 relief package Monday, but in doing so ignored the advice of its own budget watchdog on aid for states and local governments.
Congressional negotiations were successful over the weekend in arriving at the $900 billion figure, resolving an issue that might have tied the hands of the Federal Reserve in providing additional aid under the Biden administration. The deal will include another round of so-called stimulus checks of $600 for those making under $75,000 and an extra $300 a week in unemployment benefits for an additional 11 weeks. But both those amounts were cut in half from the $1,200 checks and $600 a week in benefits approved early on in the pandemic in March.
The package rushed through both houses, clearing the House by a vote of 359-53 and the Senate by an overwhelming 92-6.
The deal also rejected the findings of the Congressional Budget Office in a report issued in September which projected that aid to states and local governments provided the best bang for the buck when weighed against the effect on the government budget deficit. The report projected that $150 billion sent to the states to make up for lost tax revenue in the pandemic would generate $132 billion in the Gross Domestic Product — 88 cents on the dollar.
By contrast, the Paycheck Protection Program is being replenished with part of $284 billion targeted for businesses, even though the CBO found it generated just 36 cents on the dollar in GDP. Enhanced unemployment compensation was in between, generating 67 cents on the dollar.
Republicans also included language boosting tax deductions for business meals. Former U.S. Labor Secretary Robert Reich immediately criticized that concession, tweeting: “The deal includes corporate tax cuts for three-martini power lunches but nickel-and-dimes jobless workers. GOP priorities.”
According to The New York Times, the package includes $15 billion for “performance venues, independent movie theaters, and other cultural institutions devastated by the restrictions imposed to stop the spread of the virus,” along with “$82 billion for colleges and schools, $13 billion in increased nutrition assistance, $7 billion for broadband access, and $25 billion in rental assistance,” including an extension of the eviction moratorium.
But conservative Republicans fought off aid to states and local governments, even though they’re facing an estimated $500 billion in revenue shortfalls resulting from the pandemic and mitigation efforts to contain it. Rich Miller’s Capitol Fax pointed out that “six of the seven states that are expected to suffer the biggest revenue declines over the next two years are red — states led by Republican governors and won by President Trump this year — according to a report from Moody’s Analytics.”
The Times quoted notorious anti-tax activist Grover Norquist, president of Americans for Tax Reform, as saying: “When you have less money, it makes you do reforms to reduce spending. Don’t bail them out,” he added, “or there will be no normal budget discipline.”
Moody’s Analytics has projected that the $500 billion shortfall — and the resulting cuts in public services — could reduce GDP by 2 percent. Just last Tuesday, Gov. Pritzker announced his intention to seek $700 million in Illinois budget cuts.
The CBO report counseled: “Federal assistance helps state, local, tribal, and territorial governments pay for rising expenditures related to the pandemic as their tax revenues decline. CBO expects that additional funding to increase overall demand, and thus increase output, by reducing the size of the tax increases and spending cuts that would have been required for many state and local governments to balance their budgets.”
The Times reported that the “final proposal will also include $69 billion for the distribution of a COVID-19 vaccine and more than $22 billion for states,” but as with earlier COVID relief sent to states it’s targeted for spending on the pandemic, “to conduct testing, tracing, and coronavirus mitigation programs,” not make up for lost tax revenues. The negotiated deal also failed to include the Restaurants Act after Republican budget hawks complained it singled out one industry for compensation. The Independent Restaurant Coalition welcomed the replenished PPP funding, but added in a statement that “this bill falls woefully short” of what restaurants and bars need to survive the winter in the pandemic.
Governors, mayors, restaurateurs, and others held out hope for an additional relief package once President-elect Biden is inaugurated Jan. 20.
U.S. Sen. Tammy Duckworth said she’d vote for the compromise, while holding out for more relief next year. She issued a statement saying: “For months, Mitch McConnell, Donald Trump, and congressional Republicans have blocked multiple attempts by Democrats to provide real, substantial relief to hard-working Americans who are struggling. And finally this week, we were able to come to a bipartisan compromise to provide some desperately needed relief to Americans and small businesses — while also funding the government through the end of the fiscal year. However, it is not enough. I’m deeply disappointed that we aren’t providing the large-scale relief dollars our teachers, firefighters, and health-care workers need, all because Republicans would rather fight for liability shields for corporations that would hurt workers and people with disabilities.
“We’ve lost more than 310,000 Americans to this deadly virus, and we simply can’t wait a minute longer to send urgent relief to Illinoisans and people across this country,” she added. “Although this proposal is far from perfect, when faced with the choice of accepting this deal or no relief at all I will vote for it because it extends all pandemic unemployment benefits by 11 weeks, provides funding to prevent health-care providers from closing, makes sure millions don’t go hungry during the pandemic, protects Americans from getting evicted, increases funding for our schools, sends stimulus checks to those who need help, and provides more resources for testing, contact tracing, (personal protective equipment), and vaccine distribution.”
The relief package was included in a $2.3 trillion omnibus spending bill that had to be passed Monday after Congress approved a 24-hour stopgap on Sunday. It passed even as representatives and senators complained that computer glitches and other snags delayed the actual language in the bill from being delivered to Congress.