David Dayen writes a post called Unsanitized for The American Prospect. Here is today’s report:
First Response
The HEALS Act — a $1 trillion piece of legislation so comically in hock to corporate interests that one of the initials in the acronym stands for “liability protection” — was released yesterday. This was done in a super annoying format where separate committee chairs released their own titles (Finance; Appropriations; Small Business), but you can mostly piece everything together.
Here’s what we’ve got:
Unemployment: Increased unemployment insurance immediately falls from $600 a week to $200. This extension runs until the end of the year. Combined with what the states offer, that’s on average a cut from $921 to $521 (around 43 percent), according to an analysis from the Century Foundation. Allegedly, after two months, states will figure out how to individually replace 70 percent of lost wages and offers that, with a cap of $500 from the government in that equation. The cap means that everyone will have lower support from unemployment under this plan.
I highly doubt that states will figure this out, given the technical hurdles and the underfunded systems (which do get a $2 billion boost here), and in that instance they just stick with the $200 a week addition. Also everyone gets a note saying they are required to take a suitable job if offered. Also the federal stipend counts as income for purposes of determining eligibility for other federal benefits.
This only affects those on standard unemployment, not “Pandemic Unemployment Assistance” for freelance and gig workers and independent contractors. That was already extended to the end of the year in the CARES Act. However, the HEALS Act tightens eligibility to make it as hard to stay on assistance as possible. The whole thing is appalling.
Second stimulus: This is pretty much exactly the same as the CARES Act, with $1,200 for adults and $500 for dependents (not just children, in a switch from CARES), up to $75,000 in personal income (based on last year) and then a sliding scale that phases out completely under $100,000. One cheerful note: “The rebates are protected from bank garnishment or levy by private creditors or debt collectors.” This is something near and dear to us at Unsanitized, as we broke the news that creditors, including banks, could grab stimulus checks to offset old debts. It’s gratifying that Congress is finally getting around to making sure survival money goes to survival.
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Business tax credits: The “employee retention tax credit” sounds boring but this is a pretty large bonus for businesses that could cost as much as $100 billion. It was in the CARES Act but this provision allows more companies to use it. There’s also a tax credit for hiring unemployed workers and a “safe and healthy workplace” tax credit for expenses like testing, PPE, and cleaning supplies (this is Lysol’s big moment; move over, Amazon).
Health care: There’s $118 billion in new money for hospitals, testing, contact tracing, treatment, and vaccines. The Medicare Part B premium for 2021 would be frozen. Telehealth waivers would be extended to facilitate contactless medical care. There’s a bunch of what seems like for-show assistance to nursing homes, including “strike teams” and better reporting. A good health rundown here.
Schools: As previously reported, there’s $105 billion for education, split between K-12 and higher ed with a substantial portion of it only for those schools that reopen in the fall. Amazingly that’s all the money there is for state and local government, and I’d gather all of it covers increased costs for social distancing measures. The $150 billion previously released in the CARES Act, which previously was only for increased COVID costs, can now go toward covering revenue shortfalls, with many restrictions. But that’s not new money. The House Democratic Heroes Act had nearly $1 trillion for state and local government.
Random appropriations: Includes $20 billion for farmers, $29 billion for defense (a slush fund for defense contractors and the F-35), a $1.8 billion earmark for a new FBI headquarters that just so happens to be near a Trump hotel, $10 billion for a very sketchy “airport improvement program” (I think they’re just paying off airports to stay open), and about $3 billion for tenant rental assistance, a drop in the ocean of what will be needed. There’s also $5.3 billion more to use the Defense Production Act to require certain manufacturing.
Coupons!: Expensing of restaurant business meals goes up from 50 percent to 100 percent. Because you want to be doing business in the middle of a restaurant during the pandemic.
Small business grants: There’s a “Second Draw” PPP loan enabled for smaller businesses (under 300 employees) with a 50 percent drop or more in revenue during the crisis. There are also new “Recovery Sector” 20-year loans at a 1 percent interest rate, also for hard-hit industries. Section 113 of this title makes 501(c)(6) organizations eligible for regular PPP loans; this is the K Street bailout that’s also in the House bill. The math is weird, but it looks like $157 billion in new money, on top of the remaining $120 billion-plus. (There’s already massive lobbying over these plans to pry them open for bigger businesses)
Liability protection: This has been well-documented, it’s a five-year blanket release from a “flood” of business liability lawsuits that don’t exist.
Student loans: After the deferral deadline in the CARES Act runs out on October 1, you can only defer student loan payments if you have no income. Otherwise there’s a 10 percent income-based repayment option.
The Trust Act: we reported last week that a Mitt Romney-created process to inevitably cut Social Security and Medicare would be in the bill. It is.
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Here’s what’s missing: There’s no extension of the eviction moratorium, no money for the postal service or the November elections, no hazard pay for essential workers, no OSHA standards for workplaces, no money to shore up pensions, no funds for people who lost employer-sponsored health insurance, no increase to food stamp benefits. And none of the $1 trillion in new money for state and local government.
It’s in some ways a waste to lay this out, as now we move to the negotiating stage. But all of the above being off the table frames the corners of the debate. Nearly the entire framework of the Heroes Act was thrown out. Democrats have some leverage because rank and file Republicans really don’t want to pass this bill at all. But what will they be able to claw back as a result? And doesn’t that put the CARES Act in a different context, as whatever emerges is likely to be very inadequate?
One final indignity: the Republican baseline may include (it’s completely unclear) the repeal of leverage requirements for banks put in place under the Dodd-Frank Act. This is a straight handout to Wall Street. What’s notable here is that this was the signature contribution to Dodd-Frank from endangered incumbent Susan Collins, who I’ve been told argued against this but was rebuffed. There’s no way McConnell does this if Collins had a chance of winning; you don’t strip a Senator’s biggest policy achievement of the last decade in the middle of a tight election if you think she’s going to win. The signal I get is that McConnell knows he’s beat, and the strategy for the next six months is just to steal whatever’s not bolted down on behalf of corporate America.
In a world where your bank can calculate your account, the power company can calculate your bill, and the library can calculate a fine based on some input, the argument is that the unemployment agencies in all states are so incompetent that all they can calculate is a lump sum amount based on one criteria, loss of job? I find that difficult to believe. The fact that unemployment is not based on percentage of earnings I find to be truly appalling and disturbing to all sense of fairness. I have no issue with 100% of earnings, but to throw that input aside is insane.
That’s the for-profit world you’re talking about. State govts are still using systems coded decades ago. Antique infrastructure.
The Hill:
McConnell wants FBI money out of coronavirus bill
Senate Majority Leader Mitch McConnell (R-Ky.) says he wants the $1.75 billion in funding for a new FBI headquarters in downtown Washington removed from the GOP’s coronavirus relief package.
Speaking to reporters on Tuesday, McConnell said he hopes that provision and other “non-germane” items will be removed from the legislation before it’s sent to President Trump’s desk.
“The Trust Act: we reported last week that a Mitt Romney-created process to inevitably cut Social Security and Medicare would be in the bill. It is.”
This is why no one should ever trust Mitt Romney and his very selective guilty conscience!
There was a good interview/ call-in session yesterday on CSPAN w/ Shai Akabas of the Bipartisan Policy Center about the bill as regards unemployment benefits. You can access it at c-span.org (Washington Journal 7/28].
Highlights: this organization recommends a $400/wk fed enhancement to unempl ins [1/2way between Rep & Dem proposals], & feels robust aid to state/local govts is reqd immediately.
Callers-in could have cared less about the corp liability protections, it wasn’t even raised. Calls centered around whether the $600 enhancement was fair, v-à-v those who were now working for similar [or lower] income, problems w/qualifying for unempl ins & whether or not / who had recd the $1200 stim checks. Every 5th caller or so was concerned about the future debt ramifications of the huge outlay of coronavirus assistance. Many callers suggested Reps/ Dems should simply compromise on the $/wk enhancement & get on w/it.
One interesting tidbit I learned: our states’ unemployment insurance provides on average only 30-50% income replacement… Which makes questionable the idea that “Allegedly, after two months, states will figure out how to individually replace 70% of lost wages”!
Akabas was very good at explaining in layman’s terms the economic reasons for the extra $fed/wk enhancement, & showing w/facts& figs how it’s already helped, & how this & next $stim check fit in– including why it pays to go into hock now. His org suggests a $400/wk enhancement going forward (as did many callers). He also explained well the probable economic results of not taking such measures. Good info also on why a legislated $amount enhancement, as opposed to computer algorithm [would you believe most states still run unempl ins on COBOL programs?!].
He emphasized, the Bipartisan Policy Center recommends immediate [like yesterday] big-time fed assistance to state/ local govts, which he doesn’t see in Rep proposal, painting a picture of dominoes already falling that could quickly pull economy toward a downward spiral.
Personally, I am concerned that Rep bill “tightens eligibility [for PUA], to make it as hard to stay on assistance as possible.” This is the aid to gig-workers/ ind contractors, & will make things even harder for one of my sons. Why are Reps clamping down here? This sector is very large, and low-income. Why is the gig/ ind contractor sector so large? Only and all because our govt’s anti-labor & absurdly-expensive healthcare policies make it impossible for smallbiz to operate otherwise, & instead enable these low-income workarounds… That’s bad enough! Making it harder for them during a pandemic is… unconscionable.
The German government provided income supplants and protected people and the economy. Don’t recall detail but would be helpful if someone found them.