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Unsanitized: The COVID-19 Report for Dec. 18, 2020

Crawling Toward a Deal on COVID Relief

A few final issues include who gets checks, and whether to retire the
money cannon

 

The interior of the Capitol building. (Timothy Neesam/Creative Commons)

First Response

All the momentum for a year-end COVID relief deal made contact with
reality yesterday, and in today's Washington that means a stall-out
.
Congress will have to work through the weekend (without overtime pay??
The shame) and there's probably going to be a short government
shutdown
,
the third (I think) of the Trump presidency. Mitch McConnell went back
to scheduling nominations for executive branch positions.

A deal looks imminent and also not imminent at the same time. Here are
the outstanding issues:

Checks: Donald Trump bum-rushed the negotiations

yesterday, demanding broad-based payments more than three times as much
as the $600 for adults now on the table. Aides talked him out of it.
It's hard to argue with his point! If you're going to do broad-based
relief-and there are reasons to do it, to get at non-working and poor
people that unemployment insurance won't reach-it should at least
come close to covering even a month's rent.

The issue in negotiations appears to be eligibility. Millions of
mixed-status families did not get a CARES Act payment

because of eligibility rules that required everyone in a household to be
a U.S. citizen. Democratic leaders are trying to alter this so only one
member of a household with a Social Security number makes the household
eligible. Meanwhile, almost 9 million non-tax filers

who were eligible for a check last time haven't received one;
mechanisms to ensure their participation need to be discussed. And I
spoke yesterday with Scott Roberts of Color of Change, which has been
highlighting another sub-group that has struggled to get checks:
incarcerated people.

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There was no language on this in the CARES Act, making incarcerated
people eligible. But the IRS tried to block them from receiving payments
anyway. State corrections departments were intercepting checks intended
for people in prison. A federal judge ordered

that these payments get made in September, but that set up an
application process. Color of Change has been helping get people through
it; of course there are fees associated with flowing money into prison
bank accounts, which should be waived.

On this bill, "one would hope we wouldn't have to do anything,"
Roberts told me. "Everything we're building is with the intention in
mind that there will be at least one more wave (of checks)." It's
just another example of the lack of value placed on incarcerated
people's lives; the IRS hasn't intervened to exclude any other class
of eligible people from payments. So care must be taken to make sure as
many people get the relief as possible. Of course this costs more, so
that's the fight.

Robbing Peter: There's a lot of grumbling, from economists in
particular ,
about how making room for checks ended up cutting the length

of extended and enhanced unemployment, which is now down to 10 weeks
from 16. Again, there is no reason to have pitted both of these types of
relief, which have their place, against one another. The balancing act
is predicated on a hard line at $900 billion that Democrats are
currently honoring, even though Republicans, worried about Georgia,
appear desperate to get a bill. Even despite that McConnell is getting
most of what he wants

out of it. I'm not in the room, but that bluff should at least be
called. Shrinking the UI length is unacceptable.

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State and local aid: There is none, but Democrats seem to be trying to
plus-up certain earmarked budgets in a way that would stand in for that
aid. They've asked for $30 billion for governors to control for health
care and vaccine distribution; Republicans have rejected that so far.
There's also money given to FEMA for state and local
"emergencies," (isn't every budget shortfall an emergency?) which
the last I saw was $90 billion. But Republicans are also resisting a
separate pot of just $1 billion for FEMA, so they're clearly targeting
that.

Save our Stages: This is legislation for entertainment venues; Democrats
want $17 billion. Both sides want to broaden the definition to include
zoos and museums. This will probably affect the level of PPP funding;
whether to fold this all into one number or to segregate some money for
entertainment and leisure.

The money cannon: This is frankly the dumbest point of contention. Sen.
Pat Toomey (R-PA) wants to rescind the authority

for the Federal Reserve's corporate credit facilities, reducing the
flexibility for the incoming Biden administration's Fed to lend to
medium-sized businesses or state and local governments. This is now
being termed the main stumbling block
to a deal.

The Fed has had nine months to use that lending authority, and they've
done next to nothing with it. The "Main Street Lending Program" is
mostly an oil and gas lending program
. The state
and local lending has yielded two loans, and the Fed leadership appears
ideologically opposed (and conflicted with the muni bond industry
)
to doing more. Furthermore, the Fed has the tools

to undertake this lending anyway, through Section 14(2) authority.

We Can't Do This Without You

Yet Democrats are going to great lengths to paint Steven Mnuchin as a
schemer

(hey if the shoe fits) bent on sabotaging the next president.
Republicans don't exactly have good intentions here, but the Fed's
actions haven't really done much for regular people, either. Thanks in
part to propped-up asset prices, 45 of the 50 biggest companies made
money during the pandemic
,
laid off workers and leaked cash out to shareholders. Corporate
bond-buying has pushed investors to seek high returns, and is
facilitating private equity dividend recapitalizations
,
another extraction tool to loot companies.

These facilities will not be missed. They have almost exclusively
fattened the wallets of the investor class, and there's no reason to
think they would suddenly benefit the average worker. Especially when,
rhetorically speaking, proceeds from the money cannon are being
distributed

to people who need it. I can't think of anything less worth fighting
for.

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Unemployment Tax Update

Just to follow up on my story from yesterday about unemployment benefits
being taxable
,
and how Congress should exempt that from happening amid the pandemic.
The Wall Street Journal's excellent tax reporter Richard Rubin
reminded me that Congress did this during the Great Recession, at least
partially. In the American Recovery and Reinvestment Act (the stimulus),
the first $2,400 of unemployment insurance
in 2009 was made exempt
from tax.

Remember that the 2009 stimulus only added a meager $25 weekly boost to
unemployment benefits. The $600/week this time, over a four-month
period, comes to $9,600 on its own, without factoring in the standard
state benefits and any additional time on unemployment. So there's
good reason, based on this precedent, to exempt a lot more unemployment
benefits from taxation now. Why isn't Congress doing this?

Days Without a Bailout Oversight Chair

266
.  

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Today I Learned

* Something is going haywire with state expectations on the Pfizer
vaccine; much less than they assumed

would be allotted is going through. (Talking Points Memo)

* Meanwhile, an FDA advisory panel unanimously approved the Moderna
vaccine
,
and I'd expect agency approval today. (Vox)

* I'm living in the biggest spread zone in America. There are no ICU
beds left

in southern California. (Los Angeles Times)

* Even with the "tax windfall
"
(mostly on capital gains), cities and states are going to be anywhere
from $200 billion to $400 billion in the hole. (Bloomberg)

* One health care worker in Alaska had an allergic reaction

to the vaccine, but he quickly recovered. (Washington Post)

* 2020 encapsulated: a federal Death Row inmate scheduled to be executed
contracted the coronavirus
.
(Politico)

* White House adviser-in-waiting Cedric Richmond has the virus
,
along with 50 members of Congress. (Axios)

* Why are people so dead-set on a pandemic wedding
?
(New York Magazine)

* Former California unemployment system worker's scam: fake being
Dianne Feinstein

to grab jobless benefits. (Los Angeles Times)

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