What Will the Next Covid Stimulus Bill Look Like?

Mish

There will be another Covid stimulus package from Congress. But Democrats and Republicans have competing views.

Which View Will Win?

Democrats want to extend benefits. Republicans, led by Trump seek a back-to work bonus.

Fox News comments Here’s what Trump’s back-to-work bonus could look like

Republicans are resisting an extension of the $600 expanded unemployment benefit implemented as part of the CARES Act in March, and the Trump administration has instead pushed a so-called “back-to-work bonus.”

Ohio Republican Sen. Rob Portman has a plan that would provide individuals returning to work with a temporary $450 a week payment on top of their wages for several weeks.

Kudlow called Portman’s plan a “good idea” during an interview with Fox News.

Texas Republican Kevin Brady has proposed turning unemployment benefits into a bonus for returning to work. Specifically, it would give workers two weeks’ worth of $600 payments if they find a job, or $1,200.

Expiring Benefits

The $600 pandemic benefit will expire on July 31 unless Congress agrees to an extension. At the end of June, more than 19 million people received benefits.

At Least for a While, It Pays Better to Be Unemployed

On May 18, I commented At Least for a While, It Pays Better to Be Unemployed

That must end, not slowly, but immediately. Unemployment insurance should never pay more than someone was making before.

Pick a limit, but I suggest something like 60% maximum.

If you make it zero, you immediately throw people off the cliff edge via government-mandated shutdowns.

Trump's View

Trump wants to cut payroll taxes (FICA etc.) for those who find a job.

The nice thing about Trump's idea is the that it benefits lower wage employees the most because of the FICA cutoff at $137,700 for 2020.

But what if previously-employed people cannot find a job or simply do not want to?

Two Flawed Approaches

  • House Speaker Nancy Pelosi's approach encourages people not to work.
  • Republican approaches punish people who genuinely want a job but cannot find one.

The correct compromise is not to to do both but rather to provide some benefit to those who return to work while tapering benefits for those who don't to ensure people do not take advantage of free benefits.

As a Libertarian, it pains me to suggest government to do anything. But doing nothing also implies there never would have been any shutdowns, with clearly disastrous consequences. 

In this case, if Government mandates a shutdown, then it has to properly mitigate the consequences. Competing views show that is easier said than done.

Getting the compromise wrong would be a huge disaster.

Mish

Comments (81)
No. 1-22
tokidoki
tokidoki

Jobs? LOL. Nobody cares about those.

Whichever bill provides the most benefits to corporate sponsors will pass. That's it, full stop.

shamrock
shamrock

The pandemic was shutting things down before any government mandate. And as long as there is a pandemic things won't really come back no matter how hard Trump blows at it.

vanderlyn
vanderlyn

i agree with above sentiment. whichever deal gives the most to the most connected big corporations and bankers will get passed. this is amerika. we don't care about actual quality of life of the majority of humans. we care about business.

Felix_Mish
Felix_Mish

Out-of-work you hire me, while out-of-work me hire you. We pay each other from the paychecks we get from the US gov's printing press. Hey. Works for me. :) Hmmm. That would be a great way to improve the productivity of people on Social Security!

Then we hook a generator to Keynes's corpse.

gregggg
gregggg

It depends: How much livestock do they have left in the nursing homes to sacrifice this keep this big corporate commercial running? Ya gotta have big complicated numbers to keep the sheep in line.

njbr
njbr

Wouldn't an effective coordinated response been better--masks, distancing, testing, tracing etc--all embraced wholeheartedly from the top down? Quick shut-down, a period of intensive preparation, and re-engagement with life? Cheaper? Better for jobs and the economy? WTF sort of incompetence is being tolerated here?

We are destroying the economy with wishful thinking and politics.

We are stumbling our way into another 6 months of pain....

CNN)Internal documents from the US Centers for Disease Control and Prevention warned that fully reopening K-12 schools and universities would be the "highest risk" for the spread of coronavirus, according to a New York Times report, as President Donald Trump and his administration push for students and teachers to return in-person to classrooms.

The 69-page document obtained by the Times marked "For Internal Use Only" was among materials for federal public health response teams deployed to coronavirus hotspots to help local public health officials handle the outbreak, the newspaper reported.

The document was circulated this week, the Times reported, as Trump slammed the CDC guidelines around reopening schools and he, Vice President Mike Pence and Education Secretary Betsy DeVos increased their pressure on schools to fully reopen by the fall.

Anda
Anda

So you have to pay for people to go into lockdown because otherwise they will take to the streets demanding why the borders weren't closed earlier and some sensible plan of action put into place to mitigate any possible outbreak. Well OK, that's the US and various other countries.

Meanwhile in france there was a large procession in tribute to a bus driver who had the life beaten out of him for trying to get a passenger to wear a mask. Notice something odd about the image of that (and not that they are all dressed in white, whatever reason that is for) ?

Maybe surreal is the new normal now, but it's too senseless to keep track of.

Realist
Realist

Arguing over what is in the next stimulus bill is a low priority. Priority one should be “How to stop the spread of the virus.” Once you have the virus under better control, the economy will come back on its own, without stimulus.

Dodge Demon
Dodge Demon

How about a pay-per-view of everybody in government the past 40 years committing hari kari?

Mish
Mish

Editor

In Vail Co for the evening. Dead tired. of the way to our new home in Utah.

amigator
amigator

Cmon' on Trump! Drain the swamp.
Payroll Tax Holiday that becomes permanent. Should have done it immediately.

FromBrussels
FromBrussels

It would only take a paltry 330 trillion bucks to make each and every American a fckn millionaire ......Let's do it , YES YOU CAN !

Herkie
Herkie

I think it is possible that there will be no stimulus bill Mish, the two sides are so far apart even though as you point out both have some good ideas. I always thought that the $600 per week was far too generous on top of state UI that ranges up to $1,250 per week in Massachusetts. I mean the federal government thinks that $716 TOTAL is all your disabled vet needs per week, these unemployed are getting more than 100% disabled vets.

Here is the tangled path in my own mind as to DC's thinking, we are now just 16 weeks from the election, the democrats in the house passed a new stimulus bill quite a while ago and the GOP in the senate has blocked it. In the minds of the democrats the GOP is what is blocking vital assistance to tens of millions of really scared people, those will vote against the GOP come November so it is in the political interest of the democrats to stand there and point fingers at the GOP.

I actually agree with the GOP on a few things here, the UI is far too much money and January 31 is too long to re authorize any money. But that will make no difference come election day.

There is now also a push on to give a lot of money to cities, counties, and states which the democrats want distributed out based upon population. That of course would greatly benefit blue regions because they are concentrated in urban areas. Meanwhile rural poor regions would get what feels like the shaft, even though it really is just a lesson in how much less those red regions have in the way of population, you might say a very hard nosed object lesson in just how much political power they have had relative to their population. Sort of like a reverse poll tax. They got a president elected via the EC in spite of being well outnumbered by democrats. When the money is distributed on a per capita basis they will see how much more power they have had on the same basis.

But I digress. There are two competing ideas that are really holding things up. On one side you have the idea that the lion's share of the funds have to go to the hardest hit individuals and on the other you have the idea that it should go to all people no matter their circumstances so long as they are not already wealthy. One is an individual bailout based on need, the other is a bailout for the economy and not focused on need but on fairer distribution.

One thing is certain, millions of people have never even gotten their stimulus check from the first round yet, and clearly the IRS was not the way to go. It should have been done through social security which has a far broader database of names, addresses, and living arrangements in homes. The moment you start imposing conditions you introduce factors that just muddle everything. Billions start going out to dead people and billions do not go to those who need it.

If they do another round we should have the two sides agree that corporations should not be funded as the Fed has already given them more welfare than the entire population has gotten to date. If saving people from homelessness is the object, along with saving the economy in which people have to be spending on items above and beyond the meanest basic necessities, then the answer is simple, they would vote to give us a small UBI for 6 months. After which the party is over and everyone back to work. Say $2,000 per month per adult, and $500 per month extra per child. They will have to mean it though when they say 6 month only, so people will be encouraged to save as much as they can of that in case need goes beyond the 6 months, and that is compatible with stimulating the economy because the economy needs savings as well as consumer spending.

As pointed out below, in the most condescending and snide way possible, we could in fact turn every American into a millionaire, but in fact the Fed has pumped up the already rich top 10% with more money than the entire other 90% have gotten from the federal government, by a factor of at least three to one. So, as long as we have such magnificent largess for the very richest among us it will be seen by the other 90% as the straw that broke the camel's back come election day when the republicans tell Americans the answer is to go get a job you lazy bums, stop worrying about dying of Covid and go get a minimum wage soul sucking job waiting on rich folks. AKA your betters.

This pandemic could not have been better timed to force the introduction of socialism as a UBI is very quickly gaining momentum. A third of people under 35 even say now they have a favorable view of communism. Makes sense since they have no idea what real communism even is, they are too young to remember. But if socialism does wiggle it's way in, and the degree to which it does, at this point depends entirely upon the recalcitrance of the GOP to help the people of the 90% as opposed to the corporate owners of the 10%. Right now I would bet all I have that they will fuck it up monstrously. A little generosity and compassion would go a long way to staving off socialism right now, so get ready for socialism folks.

Herkie
Herkie

Here is the real story for those that want to sit and squabble about who gets what and how they get it.

Looming evictions may soon make 28 million homeless in U.S., expert says

Of course homeless people don't vote, for the most part they cannot. But still, if this is even half true it would be an EPIC event in our history. And that level of homelessness would not affect just those now sleeping in cars or parks, it would kill off millions of landlords that have empty units, it would kill the housing market as millions of houses are abandoned by people that cannot pay the mortgages. It would kill the zombie banksters..... no wait, of course what am I thinking, the Fed will make sure they get enough money to keep their shareholders afloat and rolling in cash.

Tony Bennett
Tony Bennett

"The $600 pandemic benefit will expire on July 31 unless Congress agrees to an extension."

...

BUT ... from CBS news:

Some of the roughly 33 million workers who are now claiming unemployment benefits may be in for an unwelcome surprise next month. The extra $600 in weekly unemployment benefits that are due to expire on July 31 may end a week earlier in some states.

The reason comes down to a technicality: the schedule for paying out unemployment benefits. The Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, set July 31 — a Friday — as the final day for paying the additional $600 in weekly pandemic-relief benefits. But some states pay out their unemployment benefits on weeks that end on Saturdays or Sundays.

If that's the case in the state you live in, according to the U.S. Department of Labor, the last week to receive the extra benefit will be the week ending Saturday, July 25, or Sunday, July 26.

Among the states where unemployment benefits will end earlier than July 31 are California and New York, with their labor departments ending their payment cycles on July 25 and July 26, respectively. They also have more workers claiming unemployment than any other states, with more than 3 million in California and 1.8 million in New York, according to an analysis from the left-leaning Economic Policy Institute.

After that date, unemployment benefits will return to their pre-pandemic levels, which vary according to state but are considerably less generous. For instance, the regular unemployment benefit in California is $167 per week, while laid-off New Yorkers receive up to $504 per week, depending on their income while working.

Montana33
Montana33

It pains me that we aren’t putting more money toward fighting the virus! China tested 10 million people in less than two weeks. They and many other countries spent heavily to beat the virus which then heals the economy. We are doomed if we don’t invest in fighting the virus.

121263
121263

If Trump wants to have any chance of re-election he needs to extend benefits at the end of July. This reminds me of Herbert Bush who completely missed the point and held back stimulus. Even if the numbers appear to be turning up, probably a dead cat bounce, the unemployed are going to need help for a while. Besides talking about a payroll tax cut or bonus for returning to work doesn’t cut it when people can’t return to work. Talking about infrastructure jobs , which take months to put in place, while people are forced to lock down is pretty useless.
“Remember it’s the economy stupid.”

jeff44
jeff44

I see that the Catholic Church sucked up $1.4 billion dollars of "free money". Nothing like having a major pedophile group sponsored with taxpayer money. Maybe Jeffrey Epstein's estate will get some of the cash this go round.

Casual_Observer
Casual_Observer

Does anyone believe in this banking system anymore ?

CA2020
CA2020

Mish does the inability of libertarianism to deal with a pandemic cause you to reconsider your views?

Bungalow Bill
Bungalow Bill

Are we sure the GOP hasn't become the party of Bernie Sanders with all this free stuff they want to hand out?

FoonTheElder
FoonTheElder

As the governments and courts of the US are owned by the wealthiest and big corporations, any bill to help average workers must include big portions of welfare for the wealthy and big corporations. After all, they bought the government and they are going to use it to their advantage.


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