Moneybox

It’s OK if Democrats Fold on Stimulus Checks

Joe Manchin speaks at a podium, surrounded by colleagues in masks.
Sen. Joe Manchin speaks alongside a bipartisan group of members of Congress as they announce a proposal for a COVID-19 relief bill on Tuesday. Tasos Katopodis/Getty Images

Democratic and Republican leaders have now spent months in a maddening standoff over the next round of coronavirus relief, failing to strike a deal as unemployment benefits expired, struggling businesses burned through their government aid, and COVID cases soared. So on Tuesday, with time running out before Congress is scheduled to leave Washington for its holiday break, a bipartisan group of lawmakers from both the Senate and House tried to end the logjam by unveiling a $908 billion compromise package. Importantly, its backers included Senate Republican moderates Mitt Romney, Susan Collins, Lisa Murkowski, and Bill Cassidy.

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The agreement checks off many of the major priorities Democrats have sought to address in a new deal, albeit while funding them less generously than the $2.2 trillion bill the House passed in July. The new proposal includes $300 a week of extra unemployment benefits, $288 billion for small businesses, $160 billion for state and local governments, $82 billion for schools, and $25 billion for rental assistance, as well as funding for airlines and transit systems, the U.S. Postal Service, day care, vaccine distribution, and other to-do-list items.

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But there was one especially notable omission: checks. When Congress passed the CARES Act in March, it send the vast majority of American households payments of up to $1,200 per adult and $500 per child. They were one of the most popular and effective parts of the deal, giving families an instant financial boost to help ride out the national crisis. Part of the reason Donald Trump badly wanted a stimulus deal before the election was that it would have given him a chance to treat the country to another round of cash, which he (probably correctly) guessed would win him more votes.

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The lack of stimulus checks in the new agreement drew some immediate criticism from the left. Rep. Rashida Tlaib of Michigan, for instance, tweeted that it showed “the disconnect of the Senate with people on the ground. There may not be bipartisan support for an additional check, but there is support outside of Congress.”

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Tlaib may be right. But while they are very popular, checks are probably not the most essential thing to include in a relief package at the moment, and leaving them out would be an acceptable sacrifice in return for getting a bipartisan relief bill that addresses Democrats’ other major concerns.

Mailing checks (and wiring electronic direct deposits) made an enormous amount of sense when Congress passed the CARES Act in March. The U.S. economy was in freefall and it wasn’t clear what the fastest way to get people money would be, in part because state unemployment insurance systems were already being swamped by a massive wave of claims, and because it seemed like large numbers of people might need help even if they didn’t lose their jobs.

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Checks would also still be enormously helpful to millions of Americans today. People who have had their hours cut, but still have jobs, may not qualify for unemployment benefits. (All states offer partial benefits for those who’ve had their hours reduced, but the rules vary.) Others are still having trouble getting jobless aid, because their state unemployment insurance system is a bureaucratic wreck (see California, which is still working through a backlog of hundreds of thousands of claims). For them, a new direct deposit would surely be a lifesaver.

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But in the end, the economy has improved enough since March that sending around 80 percent of tax filers another cash infusion just doesn’t make much sense in a world with spending limits. The unemployment rate has declined to 6.9 percent, and broader measures of joblessness have improved too. Consumer spending is down just 1.6 percent compared with February. As grim as the world feels right now, economically things look much more like they did in the dim days of 2013 than the pitch-black ones of 2009, much less the total nightmare 1932. Congress’ two main jobs at the moment are to help states tamp down on the pandemic, which is once again spiraling out of control, and prevent the economy from backsliding in the winter, so that the country is positioned for a quick rebound once vaccines are widely distributed next year.

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Is spending almost $300 billion to send out checks really an efficient way to accomplish either of those tasks? Not really, since most of the money would go to people who have jobs right now. And given that Democrats are going to have to fight Republicans for every penny of aid, checks seem like the obvious thing to leave on the Capitol’s floor. They could, of course, keep trying to play hardball with the GOP for a much bigger bill, but so far that hasn’t worked. Meanwhile, failing to pass any legislation at all before the holidays risks disaster, given how many economic fires still need to be put out. Small businesses desperately need more help, especially now that states are starting to shut down activities like indoor drinking and dining again. State and local governments are bleeding red ink and laying off workers. Transit agencies are in a state of disaster, and are threatening service cuts that could further cripple cities. Meanwhile, 12 million people appear set to lose their unemployment benefits the day after Christmas. The list goes on. If Democrats are truly determined to pass another round of cash payments, the most sensible way to do it may be to turn it into a campaign issue in the upcoming Georgia Senate runoffs: Promise voters that if the party takes back the Senate, they’ll get another COVID bonus.

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In a better, saner political environment, we could address all these issues and send off checks just to make absolutely sure that everybody is secure during this time of tragedy. But Senate Majority Leader Mitch McConnell has made it crystal clear that isn’t going to happen. For that matter, it’s unclear whether the bipartisan proposal actually has a prayer of becoming law. McConnell, who says he wants to pass a relief bill before the end of the year, seemed to write the compromise plan off entirely on Tuesday, telling journalists, “We just don’t have time to waste time.“ He’s reportedly already circulating his own, smaller proposal, similar to the $500 billion deal he’s pushed since since October. Instead, the bipartisan plan is showing us what the largest, most ambitious set of policies that could realistically attract any Republican support might look like. That proposal is check-free.

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