The Senate has one economic relief package down, God knows how many more to go.
As the coronavirus pandemic sent unemployment claims soaring and the Dow Jones plummeting Wednesday, Mitch McConnell rallied the overwhelming majority of his caucus behind House Democrats’ initial bill for redressing the economic harms of the present crisis. By a 90–8 vote Wednesday, the Senate approved legislation that would provide workers at businesses with fewer than 500 employees up to 12 weeks of paid family and medical leave to cope with virus-related problems. The bill would also boost unemployment insurance, nutritional assistance, and send tens of billions in aid to cash-strapped state governments.
The legislation’s relatively modest aims — making it a bit easier for infected workers to stay home when sick and for the economically disadvantaged to make ends meet — marks it as an artifact of the archaic economic era known colloquially as “last week.” With employment rolls rapidly contracting and U.S. markets forfeiting all of their Trump-era gains, the bounds of political possibility have shifted dramatically in the past 72 hours. McConnell and the White House are already finalizing a subsequent, $1.3 trillion relief bill that would combine direct cash assistance to ordinary American households with subsidized loans to small businesses and bailouts for discrete industries.
Specifically, the plan would (reportedly) include $500 million in direct cash payments to all Americans below a certain income threshold, $50 billion in loans to the airline sector, $150 billion to other “severely distressed” industries, and $300 billion in aid to small businesses to prevent them from laying off employees. The Washington Post details that last (exceedingly complicated) scheme:
One of the goals of the White House’s decision to seek $300 billion for small businesses in the plan would be to help firms continue paying employees, as there has already been a wave of layoffs, particularly at restaurants and other companies where business was suddenly halted as millions of Americans began staying at home under government warnings about contagion.
These credits, which Treasury is calling “Small Business Interruption Loans,” would come with a 100 percent government guarantee. Eligible borrowers would have 500 or fewer employees, and the loan amounts would be targeted to finance six weeks of payroll, capped at $1,540 per week per employee. The loans would come from U.S. financial companies but would have U.S. government backing. The Treasury Department would have the power to issue regulations about interest rates and loan maturities.
This vaguely resembles a pale imitation of the Danish government’s plan to pay 75 percent of any distressed firm’s wage bill, so long as that firm agrees not to lay off workers for the duration of the crisis.
McConnell plans to negotiate an agreement with the White House and then bring Democrats into the process once that proposal is in place. Senate Minority Leader Chuck Schumer’s asks on the new bill reportedly include six months’ forbearance on all federally backed loans, and new funding for hospitals and other public-health initiatives related to the virus. He is also mulling various conditions to attach to any bailouts, including a ban on stock buybacks or a potential requirement for firms to appoint workers’ representatives to their boards.
Even as a bipartisan consensus for drastic, deficit-financed interventions in the economy has emerged in recent days, a gap between the politically thinkable — and economically necessary — persists.
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