A welcome ray of hope pierced the partisan Washington fog last week when a bipartisan group of lawmakers outlined a new COVID-19 relief plan. Nine Senators - four Republicans, four Democrats, and one independent - joined the House Problem Solvers caucus as sponsors of the $908 billion proposal.
Its main features follow the path of the CARES Act, which passed with overwhelming support in March. It would provide $300 per week for 18 weeks of enhanced unemployment benefits (down from $600 per week in CARES), renew the Paycheck Protection Program, and fund a range of emergency needs for state, local, and tribal governments, vaccine distribution, transportation, schools, healthcare providers, housing, child care, and food assistance. It would also provide employers with short-term protection from COVID-19 lawsuits.
The basic intent is not to be a final or comprehensive fix to the economic damage associated with controlling the spread of the virus, but to act as a bridge through the first quarter of 2021.
As with any bipartisan compromise, neither side would get all of what it wants and both sides would have to accept some things they don’t want. But perfection, however one defines that, is not an option in a political environment so closely divided between the parties. After months of division holding up needed aid, it is encouraging to see a group of responsible lawmakers coming together for the common good.
Their efforts quickly gained traction as House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer accepted the bipartisan plan as the starting point for negotiations. So far, Republican leaders have not been as supportive, but that could change as the virus surges and signs of a slowing recovery continue to mount.
The December 4th jobs report showing a marked decline in the pace of jobs growth last month and many workers dropping out of the workforce illustrates the urgency of additional relief measures. Moreover, key remaining provisions of the CARES Act, such as extended weeks of unemployment compensation, paid sick leave, and eviction moratoriums, are scheduled to expire at the end of the month. If more support is not forthcoming soon, there is a real possibility that the slowing recovery we’re seeing now could turn into another contraction.
This is not a “normal” recession. The economic downturn and debt increase are direct and anticipated results of fighting the virus. Stay at home orders, closed businesses, cancelled events, and postponed travel are all part of an effort to restrain public health damage by limiting daily routine interactions.
No plan for jump-starting the economy, let alone putting it on a solid pro-growth path, can succeed until the pandemic is brought under control. That requires the federal government to backstop hard-hit segments of the economy and provide necessary testing, treatment, and ultimately a vaccine. Relief measures enacted so far have exceeded $2 trillion and were a major factor in stemming the economic freefall of last spring. While the deficit tripled from its already high projection (from $1 trillion to $3 trillion), the budget will not recover until the economy recovers and the economy will not recover until people are confident that the health risk of resuming daily life has been mitigated.
One argument sure to be made against the new bipartisan proposal is that it would add even more to the debt.
Concerns about the debt are legitimate but they need to be put in context. It is true that our national debt is on an unsustainable path over the long-term. But this problem predated the pandemic and will remain once the pandemic has passed. It needs to be dealt with, but all known pathways to a lower debt trajectory - lower spending and higher revenues - aren't feasible without first addressing the spread of COVID-19. We should address the needs of this crisis with policy prescriptions that are timely, targeted, and temporary. The bipartisan plan meets these criteria.
There is no question that a legitimate emergency exists. New cases of COVID-19 have recently topped 200,000 each day. More than 100,000 Americans are hospitalized with the disease and the daily death toll is nearing 3,000. All of these metrics surged in November and show no signs of abating.
While some economic indicators provide mixed signals, the health care indications are all too clear. Rising caseloads, hospitalizations, and deaths mean dampened economic activity, layoffs, foreclosures, and bankruptcies. The health care numbers are, in effect, economic indicators. Ignoring the warning signs risks deeper and longer-lasting harm to the economy. As Fed Chair Jerome Powell recently told the Senate Banking Committee, “The risk of overdoing it is less than the risk of underdoing it.”
In that regard, it is important to note that this bipartisan proposal is not an open-ended commitment to suspend deficit concerns. It would treat the problem at hand without adding permanent new costs.
Under the unique and dire circumstances we now face, it is more fiscally responsible and humane to support the economy through higher debt than it would be if we did nothing. The risks of higher debt, which can and should be remedied when the pandemic passes, will only get worse if we stand back and allow widespread business failures, long-term unemployment, and a higher death toll - the harmful effects of which would linger for many years.
The good news is that vaccines are on the horizon. As they become widely available, businesses can safely reopen and the economy should begin to revive. But a bridge is still needed for the next several months to prevent further damage to the economy.
The bottom line is this: The CARES Act did its job but the support it provided has expired or will expire soon. While concerns about the debt are important over the long-term, and should not be set aside, they should not stand in the way of a relief plan that would serve as a bridge from now until vaccines are widely available and the economy is again able to function more normally. If we truly care about the future, we should care what happens now.