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Unsanitized: The COVID-19 Report for Dec. 16, 2020

The Return of Checks Checks Checks

And what progressives are fighting for in the relief package

 

That COVID check is coming, but if you made "too much" money in 2019 you
might be out of luck. (Focusonmore.com/Creative Commons)

First Response

With three days to go before government funding expires, the leadership
in the House and Senate finally got in a room together

to discuss a year-end deal that packages an omnibus spending bill and
coronavirus aid. Mitch McConnell has said that the Senate will not leave
Washington without a deal, and both sides cited progress and sounded
optimistic

this morning. Sen. Steve Daines (R-MT) said the deal could be announced

as soon as today.

Multiple outlets have reported that there would be a deal along the
contours of what I suggested yesterday , using the
bipartisan relief bill as a baseline

and leaving off the more contentious elements shunted into a second
bill, namely the $160 billion for state and local government aid and the
corporate liability shield. That left a roughly $750 billion package,
and I suggested that, if the Republicans were willing to go to $900
billion, that left some headroom for the return of the long-awaited
second stimulus check. (It's not a stimulus check, it's an emergency
survival check, but everyone calls it a stimulus check so what can you
do.)

A stimulus check at $1,200 per person and $500 per child is typically
scored at $300 billion. Cut it in half and you're at $150 billion,
which paired with the bipartisan relief bill would get you to $900
billion. That appears to be precisely what's going down
.
So adults would get a $600 check, and children $250, if that holds.

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One issue, of course, is that the stimulus checks in March were
means-tested, and if you're keeping the total cost to $150 billion
they would likely be means-tested in this bill to the same degree. That
means that any individual making over $75,000 would see the $600 reduce,
and phase out completely at $100,000/year income. For couples it would
be $150,000, and a total phase-out at $200,000.

This was problematic in March, because the means test was based on 2019
(or, for those who hadn't paid taxes yet, 2018) tax data. So someone
who lost their job in March but made a good living previously would not
get the check. This problem is even WORSE now. Basing the means test on
2019 tax data wouldn't capture any of the COVID-related job loss and
the wild swings in people's incomes since the virus hit.

That's insane. Someone who made $100,000 in 2019, lost their job in
February, and never found new work would then get nothing. (They would
get unemployment insurance, depending on their state, if it hasn't run
out already.) I know people in this position. It's true that most of
the job loss has occurred at the low end, but even if only one-tenth of
workers still unemployed by the virus had higher wages, you're talking
about a million people who clearly are in the desperate need category
who would not get a stimulus check.

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The Wall Street Journal's smart tax guy Richard Rubin noted
that you
could make the checks a 2020 tax return event. The stimulus checks were
bizarrely structured as a tax refund. If you structure the latest check
that way too, then people get the $600 ($1,200 for couples and $250 for
each child) as part of their 2020 tax refund. That would delay the
receipt of funds until February at the earliest, as people do their tax
returns. By this point, nobody would get a check until January at the
earliest, so you're talking about one month. Of course, at this point
a month is a lot given the desperation out there. This would be a huge
bonanza for H&R Blocks' "revenue anticipation loan" product, which
gives people an advance on their refund for a small fee. You can
actually get a version of these, sometimes called "the Christmas
loan," before tax season starts. So you'd see mass borrowing and a
lot of money flowing to tax preparation companies instead of the people
who need the checks.

The other, superior way to handle this is to send out the check to
everyone ASAP, regardless of income, and then claw back from those who
are ineligible in the 2020 tax returns. In other words, if you made
$100,000 this year, you'd get the check now, but whatever you owe in
tax, you'd add the value of the check to it. The government would only
be put out for a matter of a few months for the extra funds, which
they'd get right back. Yes, tax cheats who don't file would get away
with a free $600. Of course, they're tax cheats, they're getting
away with a lot more than $600. And the loss there is minimal compared
to having a million families or more screwed.

But then someone will get to say "this bill gives millionaires an
interest-free loan" (for like a month! And it's a whopping $600!)
and anger will crest. Anything intelligently designed in policy is a
nice thing we can't have.

We Can't Do This Without You

So What Would You Do?

What we're hurtling toward, then, is a relief bill of $900 billion,
with half the unemployment boost relative to the CARES Act, with half
the stimulus check relative to the CARES Act, with no money for state
and local governments to cover budget shortfalls, with not enough for
schools as schools say they need, not enough for vaccine distribution as
public health experts say they need, and with a bunch of other worthy
but maybe slightly less than needed odds and ends. I broke down
everything in the bipartisan bill here
,
and this will fall along similar lines.

Should progressives vote for it? I think they should try to limit the
obvious giveaways that were in the bipartisan bill, and plow all of that
into individual relief. Chambers of commerce and other 501(c)(6)
organizations, venture capital and private equity-backed companies can
get PPP loans
,
though investors (and VCs) enjoyed a bonanza

in 2020 from the backstopping of capital markets. There's a good
argument to cap PPP loans

at $500,000, and move that money into unemployment and checks. There's
no extension of paid leave, returning the country to a rare global
Grinch on letting sick workers stay home. There's a provision allowing
PPP-receiving businesses to use the forgivable loan as a tax deduction
,
which could be worth at least $100 billion to pass-through companies
mostly composed of rich people. I would zero in on that last one.
Eliminating this "double-dip" provision could allow more money to be
put into boosted unemployment or stimulus checks. (This giveaway is a
Richie Neal special
,
by the way.)

But what you're left with is that most of this $900 billion is
legitimate relief for small businesses and individuals, and it cancels
the corporate bailout facilities that are really no longer necessary,
given the propping up of markets throughout the year and the expectation
of vaccine-led boom times in the future. This is emergency aid where
each dollar is better than the nothing on offer right now, and the
horrors that would result
.

The lack of state and local aid is a huge mistake that will have
long-lasting effects, and clinching an omnibus spending bill along with
this means that no must-pass bill will be around until next September.
But that mistake was baked in long ago. This is a bill that's bigger
than the 2009 stimulus, and it's going mostly to people who need it.
Fight to remove the giveaways and expand relief. But there's a deal
worth taking.

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Today I Learned

* I was on the Intercepted podcast

today talking about various matters, which you won't notice because
most of the pod is with AOC. (The Intercept)

* Most small businesses see the worst to come
.
(Reuters)

* Speaking to the previous item: retail sales fell in November
. (Census
Bureau)

* Families in the bottom third of the income distribution are down 17
percent in wages and salaries
compared
to last year. (Ernie Tedeschi on Twitter)

* The poverty rate is up 2.4 percentage points

just since June, the biggest jump ever. (Washington Post)

* No Times Square ball drop

this year. (The Hill)

* How campaign organizers in West Virginia focused on mutual aid

in the pandemic. (The Forge)

* Haha Mike Pompeo held a COVID Christmas party and nobody showed up
.
(Washington Post)

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