Republicans' coronavirus aid bill is a joke. It might take a stock market crash to change their minds.
Why Americans might want to root for a plunge
Congressional Republicans are in the process of pulling a Thelma and Louise on the American economy. As I feared would happen, they have not extended super-unemployment in time to prevent the program from expiring. They struggled mightily to even agree on where to start negotiating with Democrats, and when they finally released a proposal late on Monday, it was patently inadequate.
We all better start praying for a stock market crash. It's probably the only thing that will shake Republicans (and Democrats, to a lesser extent) out of their deluded stupor and force them to take action.
The Senate GOP dubbed its plan the HEALS Act. It would slash the boost to unemployment from $600 to $200 per week for the next two months, after which states would be required to implement a new payment formula of 70 percent of prior earnings, which would run through the end of 2020 (though they could apply for a waiver to get another two months to make the transition). They would also cap this latter bonus at $500 per week, meaning that "workers in some states earning as little as $50,000 annually would hit the cap on wage replacement and not be compensated at 70 percent or more of their income," reports the Washington Post.
This idea is horrible on several levels. Most importantly, it is going to be a gigantic hit to the income of millions in the middle of a depression — a cut of something like 43 percent on average. That is going to tank overall spending, kill jobs dependent on unemployed consumers, and make the overall economic crisis much worse. Secondly, it is highly unlikely that states will be able to retool their unemployment system in such a short period of time. Basically every state struggled mightily just to implement the first benefit boost, which was much, much simpler. Badly understaffed unemployment agencies have been working around the clock to clear out the backlog of claims, and still a huge chunk of people have been unable to get the benefits they qualified for back in March. Tens of thousands have taken to Reddit to get technical advice because they simply cannot get through to unemployment offices.
Moreover, states currently do not even collect the data that would be necessary to make the 70 percent calculation. They use quarterly income figures reported by employers, not broken down according to hours or weeks. "We're not the IRS. We don't have your taxes. We don't know what you made last year," Mark Butler, Georgia's Labor Commissioner, told Bloomberg Law. Even Trump's Labor Department strongly opposed this change back in May.
The Republican bill does include $2 billion to help states revamp their systems, but that is plainly inadequate — just $40 million per state on average. The National Association of State Workfare Agencies (which represents all the state unemployment officials) reports that it would take at least 1-3 months to set up such a new system, and probably a lot more for some states. Given the problems we've already seen, it beggars belief to think this could be set up and functioning well in most states before 2021.
The rest of the Republicans' bill is a grab bag of decent-to-horrible stuff. There's another round of $1,200 rescue checks (good, although still just one payment, and not nearly as generous as super-unemployment), tax credits for employers to hire people and other things (fine), $105 billion so schools can reopen (almost certainly not going to work), and a Mitt Romney-backed measure laying the groundwork to cut Social Security and Medicare (terrible). There's also the wretched idea to protect businesses from coronavirus liability, an inexplicable $29 billion for defense, and $1.8 billion for a new FBI headquarters.
But as The American Prospect's David Dayen argues, probably the most significant part of the bill is what's not in it:
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.
Democrats, meanwhile, are already itching to fold. In some states they control, like Virginia and Maryland, they have not extended eviction moratoriums, and people are already being thrown out on the street. Tens of millions more will follow if something isn't done. House Majority Leader Steny Hoyer recently assured CNN that he was more than willing to cut the $600 unemployment boost (that the House actually passed in March). This is because he believes the Republican argument that it's bad for people to be paid more after being laid off. "I think that's an argument that is — has some validity to it. And we ought to deal with that," he said.
So we have a Republican Party that is out in a fantasy dreamland, and a Democratic Party that is clearly uncomfortable with its own best accomplishment since the Voting Rights Act, even in the midst of the worst economy in nine decades.
The way super-unemployment got through back in March was because the stock market crashed. That seems to be the only thing that can make Republicans black in and look around — what? Rich people are in trouble?? To arms! — and the only thing that can put the spark of life into the ancient, feckless Democratic leadership. We all better pray to whatever god is handiest for the markets to go into a nosedive. (Some people's retirement investments may take a hit, but with another adequate rescue package, they'll come back.) It's the only way of even muddling through this mess that I can see.