Where’s My Check?

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S1: Hey, guys. Henry Agrabah here filling in for Mary Harris. Just wanted to give a heads up to the people listening with kids nearby. This episode contains a few swear words. If you haven’t left the house in four weeks, your kids may have heard worse. But I wanted to warn you anyway.

S2: Pendry just see you now also. I’m in a little bit of a down mood cause I was trying my hand at making an olive boule.

S1: This is my colleague Jordan Weisman.

S2: And the recipe is just like just add the Kalamata olives and into the hand stand mixer with the dough and it’ll mix and obviously didn’t cause the column out of olives are very oily.

S1: And so it just like Jordan covers business and economics for Slate. Before we all retreated to our closets, Jordan and I used to sit next to each other in New York and probably who we’d compare notes on a hobby we shared kneading, baking.

S3: So it was a whole ordeal.

S4: Well, this is just more evidence that ham meeting can get the job done. Yeah, I think so.

S5: There’s a reason Jordan and I are spending so much time swapping bread stories right now. That’s because for so many of us, there is so little else to do.

S6: We’re either cooking, planning to cook or posting about what we cooked. And by we, I mean America. There’s not a lot of economic activity going on at the moment.

S7: I want to take you back to the last time you were on. What next? You were talking with Mary.

S2: I was in a state of despair.

S7: It was it was four weeks ago. And if you thought you were despairing, then let me remind you of some of your indicators of despair. You said, you know, things are bad because restaurant reservations are down 40 percent.

S8: That was a month ago. Oh, my God. Time. Not even not even a month.

S9: I would cease to have meaning today on the show.

S5: Jordan and I are going to talk about what Washington is trying to do, freeze the economy right where it was on March 1st.

S10: Maybe you’re expecting your government check this week. Maybe you’re a small business owner looking for a loan help on the way. What’s the holdup? I’m Henry Goodbar, filling in for Mary Harris. You’re listening to what next.

S1: About a month ago, Jordan Weissmann was on what next, talking to Mary Harris about an economy on the verge of a breakdown. Things were shutting down left and right and layoffs were just beginning. At the time, Jordan was faintly hopeful that Congress would do something to catch Americans in financial freefall.

S2: And actually, what followed in the days after that conversation surpassed my expectations. In some ways, the conversation very quickly went from just doing the absolute bare minimum to whether or not we should deliver checks to people, pay cash payments to how we can improve the unemployment system, to how we can bail out small businesses that are not going to be able to pay their bills. And I had written this article that I called Bail Out Everyone. I think that was the title, just bail out everyone. You need to bail out the whole economy. And that really did become the attitude in Washington. And they really, I think, kind of set out to accomplish that goal of sort of as much as possible freezing the economy and amber. Right. Or putting it on ice for a while. We tried to keep everyone at home and fight this illness. The question is whether or not they’ve actually gone about it the right way and if those efforts are succeeding.

S11: Okay, let’s let’s take it step by step. We’ll walk through the big portions of the CARES Act, which is the corny acronym, because there’s always a corny acronym for every big piece of Washington legislation. The CARES Act is the big Corona virus relief bill, 2.3 trillion dollars. One of the big components was the one you predicted or perhaps you shaped with your agenda setting column at Slate, which was that stimulus checks have been mailed out to every American or at least every American making less than a certain threshold in on their 2018 or 2019 tax returns.

S7: Everyone’s getting a check. How’s that going?

S2: You know, the checks haven’t arrived yet, so we don’t know for sure. But they’re supposed to arrive. They start arriving this week via direct deposit. That’s probably going to be a a B plus a minus initiative. I forgot to give letter grades to everything. They’re probably going to get the money as promptly as possible to people who have filed their taxes and have to add in the last two years and have direct deposit. And also people who get Social Security benefits obsessively, Social Security, old age disability benefits. The reason why I’m not saying this is a plus effort is because it’s still not clear if the many lower income workers who don’t file their taxes are going to get this money in the end. Or how soon they will get it. There’s a large population, people who just do not file income taxes. You know, if you’re a single worker who makes like ten thousand dollars in a year below the standard deduction, you don’t have to file. These are very vulnerable people, a lot of whom have probably been laid off. And it’s not clear if our tax authorities have the information to track them down. And then on top of that, even if they do have an address, they’re going to send these people probably a check. If they don’t have direct deposit, that can take weeks. And then once those lower income people do get a check, there’s lower income Americans. They’re probably end up having to take a to like Ace Cash checking or something. Right. You know, to actually cash it. And that means like a part of that money is going to get taken off the top and given to a intermediary. And that sucks. I think it really just highlights more of a systemic issue, which is we don’t really have great ways to send people money in this country. It sounds like something we should be so simple and yet we don’t know how to do it right.

S11: And I guess part of what you’re saying is that even programs that should be accessible, that should help people. Lots of people don’t follow the news that closely and wouldn’t know how to get this if they wanted to. And they may be moved to a different address. And yeah, people are complicated, yet lives are weird.

S2: Lives are complicated. People aren’t always tuned into what’s going on other than in like. Oh, that things are bad kind of way, you know. And the issue is that the people who we don’t have contact information for bank account information for tend to be the ones who are a little bit to doubt. They’re the ones who are really hard to reach. And for obvious reasons, they’re dealing with poverty and very difficult lives. So it’s it’s sort of self-fulfilling, right? Like that. The hard people to find are going to be harder to are going to be hard to find. And. Right.

S11: And and we’ll be the ones who probably need the money most a lot.

S2: Very often. Yeah, there are gonna be people who need help. You know, I will say that some of them might be a little bit more tuned in if they’ve just been laid off and there they’re going to find unemployment insurance and they’re being told there are all these programs that could help.

S11: Well, that brings me to another. Another portion of the stimulus bill, which is the boost to unemployment insurance. Six hundred dollars a week, which in some states I think more than doubles what you would have been able to receive. Now, this is another program where Thierer. Medically, an enormous number of people should be taking advantage of this and receiving help from Washington at the time when they need it most. What’s the evidence we’ve seen that this is working or not working? What’s the grade you give for the unemployment insurance boost?

S2: So the concept I want to give like an A-minus, a two, they decided to add this unemployment bonus essentially. That was a flat. Six hundred dollars for everyone. I’ll get into why they did that in a second. It actually it’s actually a little bit of a frustrating story. But the outcome of this was that some people are are going to get more than they were previously earning on their jobs through unemployment.

S11: Right. And this was the nightmare scenario of Republican senators like Tim Scott and Ben Sasse, who said we are incentivizing people not to work right now.

S2: Yeah. And that’s that, you know, in the end, most people in Congress realized this was probably a good idea. And here’s why they did it, though. And this is going to get to why I am I I’m not going to give the unemployment insurance for all out an A or an A-plus or anything. What a lot of people wanted to do initially was just replace people salaries or wages at a 100 percent rate, just give them what they were making before. So they don’t they’re not poor. So they can still afford their their basics. They can still pay rent. The issue is that state unemployment systems are so technologically backward that that was impossible. There was no way to do that sort of a calculation quickly for that many people. And roll it out within less than a few months. It was just. It was the administrative constraints just made that a nonstarter. And what state said they could do is, yeah, we could just tack on an extra few hundred bucks to everyone’s check. That’s possible. And so that was the policy. That’s what they went with. And even Mitch McConnell, when there was this very short-lived Republican rebellion, said this is the best way we can figure out to give money to people like this is it. This is what we can do.

S12: It’s very interesting.

S11: There’s there’s two things that have come up both with the the checks and the unemployment insurance, which is that for all America’s mighty federal government and, you know, military spending and big businesses and big ideas are administrative state is in shambles. We just can’t figure out how to do anything.

S2: I’ve spent the last three or so weeks referring to America as a jank ocracy because all of our systems are just janki as all hell. It just nothing works. The fact that we couldn’t even do the unemployment policy that we really wanted because our systems were so bad was kind of it was kind of a preview of what was to come because the second people started applying. You had these you had these more than 10 million, more than 16 million. Now, unemployment claims in several weeks, this thing hard happening. These state systems are starting totally overwhelmed. Web sites started crashing. Phone lines were jammed. Nobody could get through. People are spending a week trying to apply. It’s also that the United States loves to run programs on a local level. Right. We love to run things through states like the unemployment system is entirely run through states and state offices and states are very much budget constrained. So they’re not going to put fixing their, you know, unemployment insurance interface or their their backend systems for administering it anywhere near the top of their priority list, like they’re just not going to unless it’s a disaster like this that forces them and they get some federal money to help them. And so we’re I think we’re also seeing some of the perils of both localism, like governing localism, but also just like this balkanized kind of administrative welfare state. It’s you you’re seeing all the weak points being stressed and breaking.

S11: All right. Let’s move on to another part of the stimulus program, which is the payments for small businesses.

S12: They were structured as loans, forgivable loans that in many cases could be converted into grants if you kept your workers hired through June 30th. What is your grade that you give to this segment of the CARES Act?

S2: OK. So we’re we’re talking about the paycheck protection program. Frankly, I want there to be restaurants left when this is all over. I want there to be bars and restaurants and, you know, little bookstores and fitness studios and the things that make living life in a city worthwhile to still be around. And if we don’t save small businesses, that stuff is all just going to die in the course of this crisis. If those sorts of small independent operators all get wiped out, this economic recovery is going to take much, much longer than it otherwise will have to. And so this is what I always refer to as the most boring and most important part of the bill, the small business rescue. So this thing, the paycheck protection program, if you’ve tuned into the news, you read sites like Slate or Fox or the time you’ve probably heard people talk about what they’re doing in Denmark, where they’re basically paying employers to keep their people on the payroll. Right. And they’re essentially paying people’s wages just to not lay them off. That’s pretty much what this is. But it’s in this weird cock to American format.

S7: It’s like, excuse me. Destocked for Costa.

S13: It’s like a Yiddish. It just totally messed up. It is a loan to small businesses that if they keep their people employed, it can be converted into a grant that they don’t have to pay back.

S3: And the loan is made by a private bank. And then the private bank then basically now is selling that loan to the Federal Reserve in the form of a security or handing it over to the Federal Reserve. So we’ve come up with this Rube Goldberg device that involves the Federal Reserve. Private banks, small businesses and the Small Business Administration to get people money.

S14: It’s like they heard you. They heard you complaining about how programs are run through the states.

S13: And they were like, hmm, what if we get them private banks in here? Let’s just see.

S14: What if we ran this program there, every other large institution could just see what happens.

S3: And there were a lot of issues. One issue is just the way this program is designed. Who it will actually help? Will it really save small businesses? As it kind of evolved, it became more of a program just to make sure businesses kept paying their employees and there was less in it to help them keep paying expenses like rent or utilities, for instance. There’s still money in there. They can use these loans to help pay their rent. But 75 percent of it is required to go to their payroll. And the size of these loans slash grant things are based on the size of their payroll. So if you’re a if you’re a small business that doesn’t have a lot of employees, it doesn’t do a lot for you. Is one problem with it just conceptually? The other thing is just like actually getting the money out the door, like. Would this work?

S2: The jury’s out on that one. We’re two weeks in and two weeks is lightning speed by federal standards, but not a lot of money has gone out the door.

S3: There’ve been all sorts of problems with getting it started, getting the banks and the information they need, getting the banks confident that they won’t have legal liability. The banks creating interfaces for their clients, clients knowing where to go. I talked to this guy for a story who runs a Dairy Queen in a mall in frikkin northern California who on the day it started, he was driving from bank to bank looking for somewhere that would give him a loan and couldn’t couldn’t find anyone like a desperate holder of a savings account on the eve of the Great Depression, like driving from bank to bank trying to get his money out.

S13: It was he just went from one to the next all author because his bank wasn’t going to make him a loan on it. And it was, you know, one after another. You just knock and that’s it. Sorry, we’re only taking our current customers and. Right. You know, it was that was it really bred this sense of desperation among small business people. And I’ve been talking to a lot of them. And that really is the overwhelming feeling right now is just desperation and disappointment, because the programs that are supposed to keep them solvent, keep them liquid and also make it so they don’t lay off their workers and throw even more people on the unemployment rolls aren’t working yet.

S11: You got this letter, the a customer from a president of a small bag in Texas. And I’ll quote in my best Texas accent, he said, What I thought was a brilliant plan is turning into a quagmire of quicksand.

S13: Yeah. The people who run small banks are feeling as much despair about this program as some of the small business owners.

S2: I’m giving it like a C-plus right now. That’s that’s where I’m at. Like, that’s and that’s like the pluses there for like for hope. So a C plus because hope springs eternal.

S12: The other big part of the plan, obviously, was bailouts for four big companies, airlines, Boeing, etc..

S7: One thing that has changed in the interminable four weeks since you were last on this show is that when you were last on this show, stocks were in a seemingly never ending slide. The stock market just had its best week since 1974. So at least one thing seems to be clear, which is that people are feeling optimistic about America’s biggest companies, right? Yeah. I mean, how is this possible? Twenty million people are unemployed. The entire country is shut down. We have no sense of how we’re going to find a way out of the Corona virus pandemic as a public health issue. And people are feeling optimistic about the stock market.

S15: I would say optimistic is maybe not the exact right time. If you look at, yes, the stock market had its best week since 1974, but that was after a historic plunge. It has not even come close to gaining back everything that it lost.

S13: It’s you know, it’s like a little hook at the bottom. I think the better question is why has it stopped plunging?

S2: And yeah, the bottom line is Congress acted and collaborated with the Fed to set up a bailout fund for large businesses. And there are still aspects of that that are being worked out. How are the airlines going to be handled, et cetera. But the the the fact is that there is a safety net there and it if it takes a little extra time to get it up and get this facility.

S3: Functioning. It’s not a it’s not the end of the world for a Fortune 500 company.

S13: Jay Powell is going to write in on his white horse about being the chairman of the Fed Federal Reserve, that he is going to make the money printer GOPer. As the saying now goes, and that these companies are still going to be around.

S7: So there’s already talk about a fourth coronavirus bill in Washington.

S11: What do you think is next for a total crisis meltdown? Is it widespread? Small business failure? Is it the U.S. Postal Service? Is it state and local bankruptcies, pension plans? What should we panic about next? And what should we wait for Nancy Pelosi and Mitch McConnell to look at next?

S2: I mean, postal service is just I almost don’t want to start talking about it because it makes my. It makes my head hurt so badly. It makes my brain melt.

S7: Remind me, if you can, in a few words, why the postal service is in such a troubled state.

S13: So there are two questions here. Why is the postal service been in trouble in the past and why is in trouble now? In the past, it’s been in trouble largely because Congress foisted these completely unrealistic financial expectations on it that it would pre-fund its pension funds and that created billions of losses on paper. It was kind of left the postal service really ravaged in a lot of ways. Why is it troubled now? It’s in trouble for the same reason everybody is, you know. You know, revenues are falling for every business across the board. In the end, the postal service is always sort of on a knife’s edge. So it needs a bailout. Unfortunately, the administration does not want to give it one. It has back channeled to the Democrats that giving a bailout to the postal service would be a poison pill in any kind of rescue legislation, economic relief, registration. And as far as anybody can tell, this seems to be because Donald Trump. Wants it to raise rates on Amazon because he’s angry at Jeff Bezos. That’s that’s the closest anyone can figure out what the source of this. The only other possibility is that maybe someone within the administration just has like some pro privatization agenda going where they just want to like bleed the postal service dry and move it out, move its business off to, you know, U.P.S. or whatever. But the going theory right now is that Donald Trump wants to use this moment to exact some revenge on, you know, the fuckin bases.

S11: That sounds like that sounds like the Trump. I know. I am skeptical of the privatization scheme or conspiracy theory, because if only because I think Trump’s voters are actually the ones that are the biggest recipients of postal service subsidy, which is to say they live in far flung rural places where no private mail carrier in their right mind is going to fund delivery.

S13: Yeah. Yeah. I mean, I mean, old people and farmers are the ones who need the postal service most. And it’s like who votes for Trump. Right. But right now, it’s become this point of contention.

S11: Right. The other way, the other big one is the states and cities, which we’ve or we’ve already seen in New York, which has been the heart.

S13: Oh, yeah, that’s it. It’s you know, the word it’s weird. I got to tell you, as a reporter, I have not been paying as much attention to what’s happening with states and cities, but mostly because the answer to me seems very simple, which is just like where they gave them about $150 billion and they need to give them about 300 billion to 400 billion more. Well, let’s look at sort of the answers. Like if you don’t give states and cities money, they are going to have to cut their budgets and you’re going to see massive layoffs from city governments, from state governments. And that’s going to result in a longer, more painful recovery. The same way we saw as in 2008.

S16: Jordan, always a pleasure to talk to you. It’s a little dark, but okay. Yeah, it was a pleasure. It was a dark pleasure. A dark black like a like a Kalamata olive loaf. Thanks. Thanks for having me on.

S17: Jordan Weisman to Slate’s senior business and economics correspondent and Slate Junior Breadmaker. And that’s the show I’d love to hear what you think of the episode. You can find me on Twitter. I’m at Henry Goodbar. What next is produced by Mary Wilson. Jason De. Daniel Hewat and Maura Silvers. Our federal money printer is Allison Benedicte. Thanks for listening, Mary Harris. We’ll be back tomorrow.

S7: I can’t help but imagine with pleasure the way that Mary will be able to use snippets of this when she talks to you four weeks from now and say, Jordan, look how naive you were, you were still baking with olives. We haven’t had olives in this country in ten days, but we have no olives.

S13: We had a lot of guns. Everyone has a gun now.

S14: Everyone has a gun and everyone has a pot of gas. That’s it.