The Senate laid to rest days of strife and legislative deadlock when it passed the Coronavirus Aid, Relief, and Economic Security Act, or the CARES Act, late in the night Wednesday, March 25. The bill was hotly contested but ultimately passed the upper chamber by a vote of 96-0 – with the only senators not voting for it being the four unable to attend due to quarantine.
This is the third Coronavirus relief bill passed by the Senate and the one most awaited by those eager for their checks from the Treasury. Will it sail through the House and Oval Office as so many in need hope? The money would certainly be welcomed by all who worry about making ends meet in this time of crisis, but what price will we pay once the “free money” high wears off and the bill comes due?
A Historic Bill for a Historic Crisis
The CARES Act is the largest economic relief bill in U.S. history, coming in at 880 pages. That said, the Coronavirus panic has the potential to be one of the largest financial disasters in the nation’s history – and the jury’s out on whether this will douse or fuel the fire. This is a historic bill for a historic crisis – and it, along with its predecessors, gained historic bipartisan support. But it wasn’t without its share of partisan fighting.
Senator Bernie Sanders (I-VT) was unhappy that the bill, as he put it, allowed the Trump administration to “expend $500 billion in virtually any way they want,” even though it doesn’t. He also expressed concern over the possibility of an amendment that would gut the Act of a massive bonus for those drawing unemployment.
Four GOP senators – Ben Sasse of Nebraska, Rick Scott of Florida, and South Carolina’s Lindsey Graham and Tim Scott – argued that the additional $600 added to the weekly benefits of those on unemployment would encourage folks not to work. Like Sanders, they were flawed in their theory.
To qualify for unemployment benefits, a former worker typically has to have been laid off. Quitting or being fired for bad behavior tends to disqualify would-be recipients – as do refusing any job offer and failing to make the required number of contacts in a week. Additionally, there are a variety of loans made available to businesses through this Act, some of which can be forgiven – but the forgivable amount decreases with every employee the company lays off.
Any ideas of employers dumping their payrolls on the government or workers storming into offices and telling their bosses where to shove it in order to get a fat government check are little more than uninformed fantasy. While the average career politician might not realize how unemployment works, rest assured that very nearly everyone who punches a clock does – there would be far more unemployed otherwise.
The four senators backed an amendment that would have capped weekly benefits at 100% of the worker’s salary, but they only managed 48 votes of the needed 60. When it came time to vote on the bill itself, they all voted “Yea.”
Meat and Pulled Pork
So what is the meat of the bill? The big news for most Americans is the individual payments the CARES Act authorizes. The one-time disbursements will be based on 2018 or, if available, 2019 tax returns. Those earning up to $75,000 and filing as individuals will receive $1,200. Every dollar over that brings a 5% decrease, and those making $99,000 or more get nothing. For couples who file a joint return, it’s $2,400 for those making up to $150,000 with the same 5% decrease as the income approaches the cap of $198,000. There’s an additional $500 per child as well.
The bill also allocates $250 billion to extend unemployment insurance to more people, who will receive their benefits for 39 weeks rather than the standard 26 and get an additional $600 weekly for four months, as mentioned previously. Another $349 billion is set aside for loans to small businesses, with money spent on rent, mortgages, utilities, and payroll becoming grants that don’t have to be paid back. Passenger airlines get $25 billion for salaries and benefits, as well as up to $25 billion more in loans. In return, the airlines have to promise not to furlough workers until the end of September.
“Distressed companies” deemed essential to national security will benefit from $17 billion in aid. This provision is believed to be primarily for Boeing – which has specifically requested a bailout – though the bill doesn’t name the company explicitly. Another $200 billion or so would be provided in tax assistance to small businesses.
In a notable nod to the necessity of Democrat support, the John F. Kennedy Center for the Performing Arts and the House of Representatives are each granted $25 million, and the rules of the small business loans require recipients to stay out of union organizing efforts.
House Speaker Nancy Pelosi (D-CA) demanded these measures. While Republicans initially balked, President Trump urged them to make concessions for the sake of passing the legislation. Liberty Nation’s Graham J. Noble may have had the best explanation for the president’s reasoning:
“At this point, they are about to spend so much money that voting against it would be like buying $150 worth of groceries and then your wife objecting to you throwing in a yogurt.”
Most of the items on Pelosi’s wish list weren’t included, however. Things like mandatory early voting, ballot harvesting, requirements that federal agencies review their usage of minority banks, and drastic climate change preventative measures were cut – call them the pulled pork, if you will.
The Road Forward – Rocky or Smooth?
While the CARES Act doesn’t include many items demanded by Speaker Pelosi, she still backs its passage. She seems confident that the bill will clear the House with bipartisan support, as it did in the Senate. Pelosi had initially hoped to pass it by unanimous consent – which wouldn’t require the physical presence of representatives or an actual vote – but House Republican leaders acknowledged there might be some members who object. The vote is, as of now, scheduled for Friday.
Should the legislation survive whatever resistance it may meet in the House, it will likely see smooth sailing through the Oval Office. President Trump has signaled his intention to sign the bill as soon as it comes across his desk and praised the unanimous vote in the Senate.
There was some concern about a passage insisted upon by Democrats, which appeared to be a jab at the president. As Liberty Nation’s Mark Angelides wrote:
“In what appears to be an act of electioneering, Schumer insisted that of the business aid spending, not a cent would be made available to companies in which the president, the vice president, members of Congress, their children, spouses, or in-laws have an interest. A very thinly-veiled dig at the Trumps and the Kushners, but also a smart move politically for the Democrats. Should the president refuse to sign the package for any reason whatsoever, Dems and their advocates in the media would swiftly engage in a propaganda war declaring that the ‘only’ reason Trump is not on board is that he wants a chunk of that cash. It may not be true, but in the age of narrative and spin, we can expect to see significant campaigning on this issue all the way through to November.”
If this is what Sen. Chuck Schumer (D-NY) had planned, it seems to have been in vain. The president appears eager to sign this into law, and Treasury Secretary Steven Mnuchin hopes to have money headed to people as quickly as three weeks after Trump’s signature.
What Price to Pay?
The CARES Act is only the third installment of Coronavirus spending – and Congress promises a fourth to come. This $2 trillion bill, if passed, will be a roughly 50% increase in the federal budget. Make no mistake: The American people will pay the price, one way or another. As LN’s economic guru, Andrew Moran, is fond of saying, the government only has three methods of fueling its spending: print, tax, or borrow. We either have the increased tax burden to cover the costs directly or to meet the interest payment on the loans, or we suffer the penalty of decreased buying power as the flood of printed money washes away the dollar’s value. In the case of the Coronavirus spending extravaganza, we can probably bet on all three.
The pandemic has put a lot of people out of work – though that’s largely due to government meddling – and this money will keep many households afloat. But government interference begets government interference. If schools and businesses weren’t closed in states across the nation, such economic stimulus likely wouldn’t be needed. Then there’s the price to pay down the road. The bill will come due someday. What government solution will we get then – and at what cost?
Read more from James Fite.
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