‘Still hurting.’ Congress scrambling to save economy if $2 trillion in aid falls short
Americans have yet to receive their checks from the largest federal stimulus in history. But as unemployment continues to spike each week, lawmakers of both parties have already concluded the first $2 trillion won’t be enough to get the country through the COVID-19 pandemic.
Some GOP leaders want to see the that bill passed last month fully take effect before approving another massive stimulus measure. Several Kansas City area lawmakers, however, say Congress should follow up quickly as the virus continues to cripple the economy.
Sen Josh Hawley, the freshman Missouri Republican with potential White House aspirations, rolled out an ambitious proposal last week for the federal government to cover 80 percent of each worker’s payroll costs up to the median wage for all businesses regardless of size in an effort to prevent additional layoffs during the crisis.
Firms that hire back laid off workers would also be eligible to receive the benefit. The U.S. Bureau of Labor Statistics calculates the national median wage at roughly $39,000 a year.
“The goal is to protect the job of every worker. The proposal does not call for size thresholds,” Hawley’s spokeswoman Kelli Ford said in an email to The Star, referring to financial assistance in the last bill that is only for companies with under 500 employees.
“This is because a worker who is laid off from a mid-size firm of say 501 employees needs just as much help as a worker laid off by a small business. It’s also important to avoid complicated eligibility criteria that requires businesses to consult with lawyers and bankers to find out if they qualify,” Ford said, noting the rocky rollout of the paycheck protection program, which effectively left banks to decide whether to accept a business’ application.
Ford said Hawley has pitched the idea to lawmakers of both parties and the White House. He’s also promoted it on Fox News, a favorite channel of President Donald Trump, and in a guest column for The Washington Post.
Hawley’s office didn’t provide an estimate for the cost of his payroll plan — a sum certain to be in the trillions— but Ford argued that it would save taxpayer money by reducing the need for spending on unemployment benefits and industry bailouts.
“Regarding cost, this program would stem layoffs and prevent workers from going on unemployment benefits in the first place. With more workers on payroll and more firms staying in businesses, this also means the taxpayer does not need to spend money on future bailouts,” Ford said.
“All of these factors will help to offset the program’s cost. Instead of a patchwork-style process, this is a smarter use of resources—and better for workers and their families.”
Wait a month or act now?
Hawley’s approach contrasts sharply with the caution displayed by Missouri’s other Republican senator, Roy Blunt.
Blunt, a member of Senate GOP leadership, said he’s read about Hawley’s proposal, but has not spoken to him about it in depth.
He said Congress’ first priority should be making sure the recently approved bill is implemented effectively.
It established programs to aid small businesses, direct payments to individuals and families and a relief fund for state and local government among other measures.
Congress is preparing to pass by unanimous consent— a process that doesn’t require most lawmakers to travel to Washington—additional funding to shore up the paycheck protection program.
Other fixes to the previous bill will also be needed and Blunt said he doesn’t want to see them bogged down by negotiations over another large package.
“What you don’t want to do is get those kinds of universally agreed to corrections tied up with a bill that takes a while to construct,” he said.
Blunt said Congress will know better “a month from today than today” which programs in the previous bill need to be extended.
He acknowledged that it’s likely Congress will have to provide an additional direct payment to people on top of the $1,200 coming to all tax filers who make under $75,000 under the recent legislation. He also said that it’s likely the next bill will delve more deeply into agriculture and food assistance.
Rep. Emanuel Cleaver, D-Missouri, said Congress doesn’t have time to wait before beginning to craft a new bill. He said even if the direct payments go out this month as planned, many people will already have suffered weeks of lost wages, putting them behind on mortgages and other debt.
A one-time payment won’t solve that, Cleaver said.
The Kansas City congressman was one of 61 Democratic lawmakers to sign a letter this week to Senate Majority Leader Mitch McConnell and House Speaker Nancy Pelosi calling for Congress to enact recurring payments for the duration of the crisis.
“For people who have a nice income even during these difficult times it is infinitely easier to say let’s wait and think this through and observe and take photographs of poor people, but the truth is those people are hurting,” Cleaver said in a phone call. “And after they receive their $1200 check in a week or two, they’ll still be hurting. They’ll still be behind on their bills.”
Cleaver has also introduced legislation to combat price gouging, which he said could be rolled into the next bill.
Health care proposals
Blunt said his top priority for the next package is to ensure additional funding for rural hospitals, noting the $150 billion for hospitals in the last bill.
“I’m certain that will not be the last money we need to put in those categories,” he said.
Rep. Sharice Davids, D-Kansas, said she wants the next bill to include provisions to expand health coverage by extending enrollment periods for the federal health care exchange and incentivizing states to expand Medicaid.
Kansas and Missouri are two of only 14 states that have not expanded the program under the Affordable Care Act to cover low income adults who currently make too much for Medicaid and too little buy insurance on the federal exchange.
The federal government currently pays for 90 percent of the cost of expansion. Davids favors increasing the federal share to 100 percent for the first three years for states that expand now, bringing it back up to the percentage Kansas would have received had it expanded in 2014.
“I’ve been a proponent for expanding Medicaid in Kansas since before taking office,” she said.
Davids said she wants the upcoming bill to focus on keeping workers employed, saying that “making sure we keep people on payroll continues to be the best way to make sure they have health coverage.”
Davids was one of 128 House members to sign a letter to Pelosi calling for the next relief bill to lower the population threshold for cities to receive direct federal aid.
The 500,000 population threshold for direct aid in the last bill means only a handful of cities in the nation can receive money directly from the Treasury Department, but the letter suggests a threshold of 50,000 for the next bill.
The lower threshold would enable Overland Park, Olathe, Independence, Lee’s Summit and other towns in the Kansas City region to seek direct aid without going through an additional layer of bureaucracy at the state level.
Construction projects
Pelosi initially wanted to pursue long-awaited infrastructure projects as part of the fourth bill, but has backed away from that message in recent days.
Cleaver said heavy infrastructure spending should be included to ensure that people who lost their jobs can get back to work quickly when the threat of the virus subsides.
“When the curtain is pulled up and the economy is allowed to get moving we’ll already have a big chunk of people off the unemployment lines and actually working,” Cleaver said, predicting the impact of an infrastructure package.
Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University, agreed that infrastructure spending would be the most surefire way to recharge the economy in the next bill.
“A construction spending part of this would be very effective,” Hill said.
Hill estimated that based on its population Kansas stands to receive $20 billion from the most recent stimulus bill—when the aid to households, businesses and state and local government is totaled— but he said the economic effect of that money will be diluted by the fact that people can’t leave their homes to spend it.
He said an infrastructure bill that enables states and cities to pursue large construction projects would be a more effective tool for stimulating the whole economy rather than directing most of the money to small businesses, which could still fail despite the aid.
“A highway going out to western Kansas that was promised forever… they would love to do that and it would consume all sorts of resources,” Hill said.
This story was originally published April 12, 2020 at 5:00 AM.
