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Unsanitized: The COVID-19 Report for Dec. 1, 2020

The Precarious State Unemployment Systems

Plus, another bipartisan gang pitching a probably fruitless deal

 

Unemployment claimant LaToya Horne at a press conference outside
California's beleaguered Employment Development Department, which has
been criticized for a backlog of unemployment claims and rampant fraud.
(Adam Beam/AP Photo)

First Response

There's an incredible scandal happening here in California around
unemployment insurance. A ring of scam artists filed 21,000 benefit
claims

to incarcerated people throughout the state, including high-profile
inmates on Death Row like Scott Peterson. The cost so far has just been
upped to $400 million. There have been charges against small cells

in the ring, but it's unclear who filed fraudulent claims at this
level, and whether it was an inside job.

This is a small amount of the $109 billion California has paid out in
unemployment since March, though the number of accounts flagged for
fraud is about 30 times higher

than the prison ring. The bigger problem is that the state has taken a
hammer to the entire system while it tries to figure out which claimants
actually qualify for unemployment and which are fraudulent.

In late September, the state paused new claims for two weeks to
institute a more secure system. With the revelations of the prison
fraud, the state system has been frozen again, with 350,000 debit cards
frozen
.
Bank of America manages the debit card system through an exclusive
contract, and there have been countless reports

of money clawed back when it should not have been, frozen cards that
should be unfrozen, and backlogs in the hundreds of thousands. This is
critical, as California is one of only three states with no other option
for unemployment benefits than a BofA debit card. Most states have debit
cards as an option, and four banks run most systems (BofA, Key Bank,
Comerica and U.S. Bank).

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The near-term impact of all this is probably that the head of the state
Department of Labor, Julie Su, who was pitched as a potential Secretary
of Labor in a Biden cabinet, is not going to get the job. I've heard
good things, but presiding over the California unemployment system right
now is a bad look.

The bigger impact is that the unemployment system itself, and the
statistics that the federal government supplies on it, are being called
into question. Since those numbers form a large basis of the economic
picture and the need for additional support, having unreliable figures
is really bad. Yet that's what we're dealing with
,
says a new report from the Government Accountability Office.

Not only did GAO find that the weekly first-time jobless claim report is
consistently inaccurate, both with undercounts that ignore backlogs and
overcounts due to double-counting, but those with Pandemic Unemployment
Assistance (PUA), the program instituted to help independent contractors
and freelancers, are being underpaid. Many states implemented PUA but
just paid out the minimum level for millions of participants, putting
income under the poverty line in 70 percent of the states studied
.
Of course, PUA goes away on December 26, replacing that minimum payment
with nothing.

Inaccurate data is brutal. Furthermore, we entrusted the main individual
payout for millions of desperate people to state unemployment systems of
generally poor quality, which allowed far too many to slip through the
cracks. If the pandemic isn't an argument to federalize unemployment,
or at the very least standardize benefit eligibility and delivery so
Bank of America cannot play havoc with people's lives based on one
lucrative contract in California, we'll never do it.

We Can't Do This Without You

Blessed Are the Dealmakers

One thing I've been repeating consistently about COVID relief is how
easy it would be to put something together to solve the problem. We know
we're about six months out from widespread vaccine take-up. We know
the major factors that cause community spread. So a limited but robust
program that allows people to stay home, lets the attendant businesses
survive, fills the state and local budget gaps, and perhaps most
important, provides the money to actually get the vaccine distributed
around the country would do the job.

So a bipartisan group of Senators went ahead and put together a deal

that does just that. Only because it's a bipartisan group of Senators,
it's not quite as good as it needs to be, it adds in completely
unnecessary elements, and it's more about the vanity of these
politicians showing themselves to be above politics than anything else.

This deal continues to make the mistake of not building something
coherent. It includes a $300/week expansion of unemployment insurance,
$300 billion more for the flawed PPP program, $240 billion in state and
local grants, $50 billion for vaccine distribution and health measures,
and a temporary (six-month) liability shield for corporations where
workers or employees are infected. There's also transit funding and
rental assistance.

The vaccine money (which should be an immediate disaster relief package)
is good. State/local isn't enough but it's a start; same with
transit and rental assistance. The liability shield is downright
ghoulish, a license to kill. But you have a boost to UI and also the
PPP, which is mostly a pass-through to employees (though we don't have
the details of this iteration). In other words you have two programs to
compensate employees and nothing to keep the businesses alive, as well
as a PPP system that kind of induces people to come to work when
everyone should be staying home.

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Some have endorsed the RESTAURANTS Act, which grants restaurants and
bars money with no payroll guarantee
,
on the idea that unemployment will pick up the slack for workers and
this sliver of businesses would stay afloat. I've outlined above
issues with the unemployment system, and of course you're only talking
about one set of businesses (albeit an important one given the spread of
the virus); surely others would come calling too.

The bigger issue, of course, is the political one. This deal has been
pushed out with one week left in the lame duck session. Mitch McConnell
has been promising a deal

for months without ever talking to the other side. He only cares about
giving immunity to businesses for a "flood" of lawsuits that have
not at all materialized, and his liability shield lasts five years. And
he's more concerned with giving Joe Biden a bad start than helping
those in need. It goes without saying that there's no White House
interest in this, as it wouldn't overturn the election results.

So that's just reality. It was reality in March when the one main deal
was struck, the one that was too time-limited to stretch the relief.
It's reality now. I don't want to be right that there was only one
bite at the stimulus apple in this Congress. But here we are.

Days Without a Bailout Oversight Chair

249
.

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Today I Learned

* I was on KPFA in the Bay Area yesterday talking about COVID and
inequality. Listen here
.
(KPFA)

* Amazing title on this report

on pandemic harassment in the restaurant industry: "Take off your mask
so I know how much to tip you." (OneFairWage)

* Harrowing story about an outbreak at an assisted living facility

and the hiding of the dead. (The New Republic)

* Ashish Jha explains
that the bar
for hospital admission is getting higher, just as you'd expect with a
surplus of patients. That will lead to needless deaths. (Twitter)

* The obese are likely to get priority

for the vaccine given their increased susceptibility to the disease.
(Washington Post)

* Herd immunity enthusiast Scott Atlas is no longer a White House
coronavirus advisor
.
(CNBC)

* Death threats for health officials

instituting COVID restrictions. (The Intercept)

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