Moneybox

What the New Stimulus Bill Provides

And what’s still missing.

Mitch McConnell is seen wearing a face mask while standing front of U.S. flags.
Senate Majority Leader Mitch McConnell listens to a news conference at the U.S. Capitol on Dec. 8. Sarah Silbiger/Pool/Getty Images

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Nine months after the passage of the CARES Act, Congress has finally gotten it together and churned out a new economic stimulus. This bill does provide some of the things Democrats wanted: one-time $600 payments to most people, an extension on unemployment insurance and the eviction moratorium, and some funding for public transportation. The bill even allows U.S. citizens who are married to undocumented immigrations to get in on direct payments, something the CARES Act didn’t allow. What isn’t in the bill are some other high-priority items for both parties; all competing interests got a little something, and everybody lost a little something too. But it’s amazing a deal happened at all. Jordan Weissmann, Slate’s senior business and economics correspondent, thinks that without the runoff elections that are about to take place in Georgia, a compromise wouldn’t have been possible. Mitch McConnell was even quoted telling his caucus that the reason this bill was getting off the ground was because “Kelly and David are getting hammered” in the state. So what’s actually going on with this bill? Will it provide any material aid to those who need it? To figure out what to think of the stimulus, I spoke with Weissmann on Tuesday’s episode of What Next. You can read an excerpt of our conversation, edited and condensed for clarity, below.

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Mary Harris: To understand why negotiations went the way they did, you have to start back at the beginning of the month, when a bipartisan group of senators announced they were ready to make a deal.

Jordan Weissmann: The original bipartisan framework that Mitt Romney, Susan Collins, and Joe Manchin unveiled included about $160 billion of aid to state and local governments. That was the big ask from Democrats that Republicans didn’t want because they saw that as a “blue state bailout,” which I think is ridiculous. In return, Republicans were going to get some form of a liability shield that was going to protect employers and businesses from lawsuits over COVID: If an employee gets COVID on the job, they can’t sue.

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And McConnell had set that up as the hill he was going to die on.

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Right. That was his red line, and that was the thing Democrats absolutely did not want. This issue has been confusing for some people: Not everyone understands why Democrats were so opposed to this and, frankly, why Republicans wanted it. Nobody really expects there to be that many personal injury lawsuits related to COVID—there has been only a trickle so far, but McConnell said there would be this tidal wave of them. It hasn’t materialized.

Workers’ rights groups and unions saw that the threat of liability was keeping employers from being totally irresponsible: The threat of being sued, even if the chances of it were small, was making these companies take precautions that were potentially saving their employees’ lives.

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Originally the idea was that you would trade these two things that each side didn’t want. The Democrats would get their state aid. Republicans would get some version of the liability shield.

In the end, they just could not come to an agreement there, so they dropped both. At the same time, there was this push from some Republicans like Josh Hawley, who wants to brush up his populist credentials, and from left flankers, like Bernie Sanders and AOC, for another round of checks. So they dropped state and local aid from the deal and made more room to just put checks in.

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I think checks are good, but given a choice, I would have wanted state and local aid. Checks are really, really good for helping all the people that unemployment insurance isn’t reaching, and that includes some of the poorest people in America. It includes some people who have had their hours cut but are still employed. It includes people who have been frozen out by malfunctioning unemployment systems. But Moody’s recently came out with a report saying that states are looking at a $171 billion shortfall over the next two fiscal years. It means that eventually they are going to have to cut more services and more workers. That is going to obviously cause individual hardship and slow the recovery down the line. In an ideal world, you would have both checks and state and local aid, but given one or the other, I would have picked helping state and local governments.

The other thing the Democrats had to fend off was an issue involving this really wonky demand from Republicans with regard to Federal Reserve emergency lending programs.

How much power the Fed has.

This was the last big conflict they had to resolve before they reached a deal on Sunday night. The fundamental question at the core of it was whether Republican presidents should have more tools to fix the economy than Democratic presidents.

What happened was that the Federal Reserve created a series of emergency lending programs. Republicans essentially wanted to wind these programs down before Joe Biden took office, in part because there was thinking that he could use them as a backdoor way to get aid to cities and states. Steve Mnuchin had started that process administratively. Republicans wanted, as part of this bill, to put a dagger in these programs. This Republican senator, Pat Toomey, had pushed for language that wouldn’t only wind these programs down but would ban the Federal Reserve from creating new ones that are even similar to them.

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This was a really big deal for Democrats, in part because it was actually putting new limits on the Fed’s powers that it had before the CARES Act. It was rolling back powers that they had written into the Dodd-Frank bill back in 2010. Republicans wanted to make a permanent change to the Federal Reserve Act that would strip tools from the central bank right as a Democratic president was entering office. It was like a giant fuck-you.

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What I’m hearing you say is that what the Democrats had to do here was fight very, very, very hard to just get the basics.

That’s the problem: Democrats want to do more to save the economy, and Republicans fundamentally want to do less.

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This bill is like a ticking clock because we’ve given ourselves till spring to work some things out. Is that enough time to set the economy right again?

This is actually my biggest concern about this bill: It gets us to late March, early April. At that point, the unemployment aid is going to start to expire and run dry. And what then? If we’ve managed to vaccinate a lot of Americans, if everything goes really well with the rollout and people can go back to living some semblance of a normal life by mid-spring, early summer, we might be in good shape—if everything goes swimmingly.

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But we’re already seeing the incoming surgeon general float these warning signs and saywe might not have a lot of people vaccinated until the summer or the early fall.

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Vivek Murthy went on MSNBC recently and said that while there’s a chance all Americans could have access to the vaccine by early summer, the more realistic timeline is probably late summer or early fall. If that’s the case, the question is, will enough people who have faced high health risks be vaccinated that even before then we can sort of get back to normal and not be in full-on crisis mode like we are right now? If not enough people have been vaccinated by the end of March, are we going to be back to where we started? Are we going to be looking at a situation where businesses are still shut down, cases are still happening daily, and people don’t have aid? I don’t think it’s going to be a worst-case scenario, but there is a risk that we are going to find ourselves in the midst of another crisis soon.

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I wonder if you think about the damage that’s been done in the time we’ve burned figuring this bill out. There have been real changes that’ll be hard to unwind in the economy. A lot of women have left the workforce. We’re seeing these disproportionate impacts of economic change based on race. This bill doesn’t do a lot to address those fundamental shifts, does it?

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You can’t have the last six months back. We don’t know how much damage has been done. And that’s part of what’s a little bit worrisome. But that’s another reason it was important to get something passed now. Playing chicken over this bill and saying “See you in Georgia” was not a great idea because if things didn’t go exactly right and this turned out to be our last chance to pass something, then the cost of failing to do so would have just been completely tragic.

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What are the chances you give the incoming Biden administration of being able to pass its own additional stimulus once he’s in office?

It’s hard to say. If Democrats manage to win in Georgia, then yeah, he’ll be able to pass something. If Republicans win those one or two of those Georgia seats, there might not be another bill. But again, I didn’t think McConnell was going to pass anything after the election. If there needs to be more aid come March, I think there are some areas he could be amenable to. Republicans are pretty happy to pass more Paycheck Protection Program funding—

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To support small businesses.

Small and midsize businesses. I’m pretty sure they’d be happy to spend more on vaccine distribution because that’s something everyone agrees on. But things like unemployment insurance and another round of checks and more rental assistance and any kind of aid for state and local governments, it’s hard to imagine you’re going to see more of that if McConnell is still the Senate majority leader.

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I keep wondering if I should be angrier about this bill.

Yes and no. The U.S. has made some very obvious mistakes. It was incredibly obvious that certain businesses, like restaurants and gyms, needed to be shut down in order to control the virus. The way to do that was to shut the businesses down and bail them out, pay them to stay closed. My whole thing is we needed a national bar rescue. We could have also, early on, paid more people to stay home entirely for two months. We could have thrown even more financial support at businesses and at workers and maybe actually suppressed the virus very early on. There were definitely missed opportunities, and that’s part of the reason we are having to throw another $900 billion dollars at the problem. At the same time, I think we should appreciate just how much the U.S. has spent trying to support people in this time of crisis. Our fiscal response has been pretty remarkable. I know you see all those memes about how there’s been only one $1,200 check, which are just completely inaccurate. When you count the direct cash payments to families and unemployment insurance that we’ve provided and the small business support that is really payroll support, we’ve done a lot. The U.S. has gotten a lot wrong, and it is insane that it took this long to pass a new bill. But we should appreciate the ways in which we’ve gotten some things right. On the economic front, it could have been much worse.

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