Moneybox

Democrats Are Fighting the Right Battle Over the Stimulus

Schumer speaks and gestures with his right hand
Senate Minority Leader Chuck Schumer speaks to reporters before a meeting with a select group of Senate Republicans on Friday.
Drew Angerer/Getty Images

The trillion-dollar economic aid package that GOP senators unveiled this week was widely savaged by both Democrats and some Republicans because its proposal to send Americans emergency cash payments would have cut smaller checks to poor families than the middle class. But as morally bankrupt as that feature may have been, the bill had even bigger failings.

Most glaringly of all, it did nothing to significantly expand unemployment benefits. Well over a million Americans (possibly more than 2 million, if you trust Goldman Sachs) have likely lost their jobs this week—an all-time record—as states and cities have ordered businesses to shut down and Americans have been forced to stay at home. Sending checks to everyone will of course help those people too. But bulking up unemployment insurance—and making sure states have the resources to administer it as an avalanche of applications roll in—is an absolutely essential step to target aid to people who need help most and to make sure they can keep paying basic expenses. The “phase two” bill written by House Democrats and signed this week by Donald Trump provided states $1 billion in extra support, but that amount now seems quaintly insufficient in the face of this escalating crisis.

Now, as negotiations over the stimulus bill continue on, and its potential price tag swells to a reported $2 trillion, Senate Democrats, led by Minority Leader Chuck Schumer, are arguing that it’s time to put unemployment benefits “on steroids.” Jobless benefits are run and primarily funded by the states, and in most, they typically cover around half of a worker’s previous earnings and last up to 26 weeks. Democrats have asked to bump payments up to cover 100 percent of income and extend benefits for an extra 13 weeks. It’s a bold position that seems like it’s mostly designed as a maximalist starting point for negotiations, but if Congress even covered 75 percent of workers’ previous wages, it would be a huge boon. “That is our bottom line. It is our single most important issue,” Sen. Ron Wyden said to reporters Friday about amping up unemployment insurance. The Democrats say they are pushing for other important changes as well; they’d like to waive the waiting time that some states require before applicants can start receiving benefits and create automatic triggers that increase aid as the unemployment rate rises.

It seems likely that some increase in unemployment will make it into the bill, given that Republicans such as Lindsey Graham of South Carolina and Mitt Romney of Utah have also supported bulking up these benefits. But the fight over how much to increase them might be the most important debate over this aid package during this weekend’s negotiations, especially since it already seems likely that Congress will tweak the cash aid proposal so it doesn’t penalize the poor.

Some Republicans have reportedly raised concerns about juicing unemployment benefits because states are already having so much trouble dealing with a massive volume of applications, which has led to backlogged phone lines and crashing websites. One answer is of course to simply give states more resources to manage them. But it’s also important to keep a broader point in mind, which is that there won’t be a silver bullet solution to this crisis. Any single proposal to ease the economic fallout of this pandemic is going to have shortcomings, which is why we’ll need multiple, complementary programs to get families money and help people retain their jobs. Expanding unemployment insurance will help people who have already lost their jobs so that they can continue paying for basic necessities like rent and food. Getting aid to endangered small businesses so that they can keep people on payroll will limit the number of layoffs in the first place (the Senate bill already includes a promising loan program that will help on this front, though it could use some improvements). Sending people checks will make sure that everybody gets at least some help so that nobody falls through the cracks completely. None of these measures does everything necessary. But combined, they can limit the near-term economic damage and suffering while setting us up for a faster recovery. We need each piece of the puzzle.