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Unsanitized: The COVID-19 Report for Dec. 22, 2020

Congress Again Taxes the Time of Benefit Recipients

The ridiculous hurdles one must go through to survive

 

A job notice outside a Greek restaurant in Salt Lake City, Utah.
Exceptionally cool people who didn't get the job must endure the new
unemployment rules from Congress. (Rick Bowmer/AP Photo)

First Response

The eight-month impasse for additional COVID relief, unconscionable as
it may have been, opportunistically gave time and space to those members
of Congress most interested in policy. The 5,500-page
,
entire-session-of-Congress-in-a-bill that passed last night

reflects some of their ready-made language. It's going to take weeks
to dig through this thing and fully decipher it, but I've already
noticed several good measures. Still, Congress cannot help but throw up
roadblocks for people who need help.

Let's start with the good. The House Judiciary Subcommittee on
Commercial Law got in language
to allow
bankruptcy filers to discharge debts, even if they missed payments on
their mortgage due to the pandemic. They also protected bankruptcy
filers from utility shut-offs
. During the
CARES Act, it emerged that survival payments could be legally
commandeered by banks

to offset existing debts. This time, that's explicitly prohibited
, and the
payments will be properly encoded so banks know not to take them. And
501(c)(6) entities like chambers of commerce and trade associations,
while eligible for small business PPP grants, are ineligible if they
spend more
than $1 million in lobbying.

But the default hardship Congress creates is best exemplified in the
unemployment provisions, which many would consider the most important in
the bill. As you know, the bill extends two expiring provisions by 11
weeks, until about mid-March. One is called Pandemic Unemployment
Assistance (PUA) and it helps gig workers and freelancers, who
historically weren't eligible for unemployment. The other program,
Pandemic Extended Unemployment Compensation (PEUC), adds 13 weeks of
benefits when an individual's initial unemployment (determined at the
state level) expires. On top of that, anyone collecting unemployment
gets an extra $300 in checks for the next 11 weeks.

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It sounds great-not as great as the $600/week in the CARES Act, and
not long enough to break through to a robust job market, but more than
Congress has really ever offered before as a federal boost. However,
then you get to the implementation pieces.

For example, there's a brand new verification system for PUA. I assume
this came out of the unending unemployment fraud investigation

in California and expectations of scams everywhere. What it means is
that every new applicant for PUA-and there were 455,000 just last week
-must
substantiate their self-employment within 21 days, through some
documentation showing prior work. For those already on PUA, they have 90
days to do this. Previously there was a self-attestation. Now paperwork
must be tracked down and forwarded.

There are something close to 10 million people on PUA. There are a bevy
of reasons people can be eligible, so no situation is quite the same.
The kind of pay that many 1099 workers get-a check without taxes taken
out-may not count, because they may need proof of net income. We
actually don't know yet
what
unemployment systems will require.

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It takes time (and free time, we've recently learned, costs about $19
an hour
)
to run this stuff down, especially if you didn't need it when you went
on PUA in March. More important, state offices will now be collecting
millions of pieces of documentation, which they must process. If you
thought application processing was slow before, wait until this clogs
systems.

The thing is, the IRS has this information, employers have this
information, credit bureaus or banks might have this information. The
burdens could conceivably be placed elsewhere. But that never happens in
our atomized country; the worker must suck up the tax on their time.

Meanwhile, there will likely be lapses
for PUA and
PEUC recipients, because Congress waited too long to renew the programs.
Eventually the unemployed will get what's owed to them, but those few
weeks (depending on the state) with no income at all could get dicey.
Getting the $300 enhancement could also take a couple weeks to program.
In the meantime, haggling with landlords over the rent, or bill
collectors who aren't interested in a lapsed program that won't give
people cash flow for a few weeks? That's another tax on time.

Then there's a bizarre PEUC rule. States have programs known as
"Extended Benefits" (EB) that can stretch people whose standard
unemployment runs out. Because PEUC is at the moment only good for
another 11 weeks, it would be proper to switch everyone over, so people
can get on before it expires. Of course, it doesn't work that way
. If you're
on EB, you stay there, and pick up PEUC after. At that point, PEUC could
run out again.

Even things that look like victories just aren't. For example,
so-called "mixed" workers with some nominal 1099 income along with
W-2's (this was me for many years) can get a $100 increase
in their
unemployment benefits. But states can just nullify the provision
at their
discretion! States are also required to set up "snitching" websites
so employers
can report workers who feel unsafe for coming to work or uneasy coming
in without hazard pay.

We Can't Do This Without You

This is of course a pattern. Unemployment benefits are taxable

but plenty of people are unaware of that, and will get hit with a giant
tax bill. The CARES Act payments were based on the wrong tax year; you
can get the money you were owed, but you have to know to do it and file
a special form
with your tax return. (I follow this stuff pretty closely and I just
learned about that.)

These are just little pinpricks at vulnerable people, making them
increase their diligence or strategize how to keep survival money
flowing, or decide whether to go into work or protect their health. (The
loss of guaranteed sick leave

doesn't help matters.) The uniquely American system just throws these
people into the system to navigate unclear rules and hurdles.

There are definitely more prominent failures in this legislation: the
lack of state and local government relief, the inability to stretch
relief measures past the time when immunization will be complete. But in
a way, these slights are more consequential. They come from a
conservative faction of government that just isn't on the side of the
people they serve. They mean to make benefit recipients suffer for their
supper. The point is to make these systems impenetrable; it makes it
easier to demonize them, and starve them of funding because they're
"dysfunctional," or if they get lucky, shut them down. It's
pathological.

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Odds & Sods

I was on All In with Chris Hayes on MSNBC last night discussing the
COVID relief bill, here's the full episode
,
my segment is at the end, about 52 minutes in.

I was also on the BradCast with Brad Friedman discussing the bill (I get
a little more time to talk on this one. Listen here
.
Thanks to ProMarket for naming Monopolized one of the best political
economy books of 2020. Read the list here
.

Ball's in Your Court, Joe

Interestingly, the relief package did not extend the pause

on student loan payments, now set to expire January 31. It was done at
the end of this year, but Betsy DeVos added a month. And that's the
point. There's an expectation now that the executive branch can just
pause student loan payments at will, and it's just a hop and a skip to
believing they can cancel the payments
,
too. We'll see how Joe Biden reacts to this, as he must now make a
decision on whether to extend the pause days after coming into office.

Days Without a Bailout Oversight Chair

270
.
Only a few exciting days left!

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Today I Learned

* All 5,500 pages of the relief and omnibus packages, the sublime and
the ridiculous, is here
.
The Dalai Lama reincarnation measure, the repeal of the ban on licensing
Smokey Bear, the sale of 94 acres in North Dakota to the Teddy Roosevelt
Presidential Library. All that and more. (House of Reps.)

* Of course this new strain of COVID is in the U.S.
,
it started popping up in Europe three months ago. (CNBC)

* Deep dive into decades of exploitation

that led to the meatpacking tragedy in the pandemic. (ProPublica)

* I'm leaving L.A. today for a few weeks and not a moment too soon, as
the hospital system is swamped
.
Tough times for my city. (Los Angeles Times)

* Corporate America angles to jump the line

on vaccination. (Vox)

* Frontline SEIU workers in Cook County, Illinois going on strike
.
(SEIU)

* There's been very little planning on vaccine distribution beyond the
initial stages. That could be by design
,
to trap Biden. (Talking Points Memo)

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