While some states have responded to COVID-19 by quickly using Medicaid's flexibilities to help people maintain their coverage and remove barriers to care, others are instead restricting Medicaid. Some still aren't implementing the Affordable Care Act's (ACA) Medicaid expansion, even though they could collectively make up to 4.4 million low-income uninsured adults eligible for coverage by doing so, while others are advancing or proposing new restrictive policies that will take away people's coverage. These states should swiftly reverse course, especially since the pandemic and almost-certain recession are making health coverage more important than ever.
Oklahoma Governor Kevin Stitt took the most dramatic restrictive step on March 16, releasing for state public comment the first waiver request under the Trump Administration's recent guidance that invites states to seek federal waivers to convert parts of their Medicaid programs into harmful "block grants." When grassroots efforts to put a Medicaid expansion on the ballot this year gathered unprecedented signatures, the governor agreed to implement the expansion, and it's slated to take effect July 1. But instead of a straightforward expansion, which would provide Medicaid coverage to an estimated 200,000 Oklahomans — a number that would likely grow during the coming recession as people lose jobs and income — the governor's waiver plan would:
Take coverage away from people who don't meet a work requirement. Governor Stitt proposes to take coverage away from people who don't report 80 hours of work each month, even though federal courts have repeatedly struck down similar waivers in other states.
While Oklahoma estimates that only 5 percent of beneficiaries will lose their coverage, the actual loss will almost certainly be far higher. When Arkansas implemented a work requirement in 2018 — which was less stringent than what Governor Stitt proposes — more than 18,000 people, or nearly 1 in 4 of those subject to the rules, lost their coverage. In New Hampshire nearly 17,000 people — about 40 percent of those subject to the rules — were on track to lose their coverage before policymakers suspended the program. And in Michigan, more than 80,000 people — about a third of those subject to the rules — were in danger of losing coverage before a federal judge suspended the state's policy.
Take coverage away from people who can't pay premiums. Oklahomans newly eligible for coverage through the Medicaid expansion wouldn't get it until they make a monthly premium payment, and any missed payments would end their coverage. Studies have consistently found that requiring premium payments causes people to lose Medicaid coverage and become uninsured.
Make it harder for people to enroll in coverage. Oklahoma's waiver proposal would eliminate hospital presumptive eligibility, which lets qualified entities like hospitals and other providers enroll people in coverage. As we've explained, states should expand their use of this option right now, since it offers an expedited pathway to enrollment during a public health emergency.
Make it harder for people to get to the doctor. The proposal would eliminate non-emergency medical transportation (NEMT), an important benefit for low-income adults, who often face transportation barriers. People rely on NEMT to reach appointments for behavioral health services, dialysis, preventive services, and specialist visits, among others.
Put Oklahoma's federal funding for the Medicaid expansion at risk. The pandemic and likely recession illustrate the importance of Medicaid's funding structure: as more people sign up for Medicaid or per-person costs rise when people need expensive care related to COVID-19, federal funding automatically rises to cover most of the extra costs. Yet Oklahoma seeks to become the first state to impose a limit on its federal Medicaid dollars and put itself on the hook for 100 percent of the costs from higher-than-expected per-person costs for expansion enrollees.
Meanwhile, lawmakers in other states blocked efforts to expand Medicaid coverage or are moving forward with policies to take Medicaid away from people unable to meet work requirements.
In Kansas, a small group of Republican legislators blocked a bipartisan Medicaid expansion bill that would make an estimated 150,000 Kansans eligible for Medicaid — a number that would likely grow in a recession.
In Nebraska, voters passed a ballot initiative in 2018 to expand Medicaid, but Governor Pete Ricketts has refused to implement a straightforward expansion, insisting on a complex alternative that won't be in place until October and will likely deprive many Nebraskans of access to needed care. Even with COVID-19, the governor has refused calls to accelerate the expansion, which would provide Medicaid to approximately 80,000 Nebraskans — again, likely more in a recession.
Utah voters also expanded Medicaid through a ballot initiative in 2018 but, after delaying the implementation of a full expansion, Governor Gary Herbert and state legislature insisted on adding a policy taking coverage away from people who don't meet work requirements. Utah hasn't altered its policy in response to COVID-19 and the coming recession, even though the policy requires people to work 120 hours a month or report 48 job searches in three months in order to maintain their coverage.
WASHINGTON—The $2.2 trillion coronavirus economic impact bill Congress President Donald Trump says he will sign contains a lot of pro-worker cash – and very little pro-worker policy.
It wasn't for lack of trying, at least by House Speaker Nancy Pelosi, D-Calif. She produced an alternative with the same spending – but festooned with pro-worker sections.
That version had items ranging from mandates on firms getting federal funds that they (a) limit executive pay and (b) pay their workers at least $15 an hour, to repeal of Trump's anti-federal worker executive orders, and even, Pelosi said, pension reform.
But her measure got sidelined. On the other hand, Pelosi, rightly, called McConnell's original business-weighted bill "a non-starter."
AFL-CIO President Richard Trumka, appearing on Fox Business – despite that network's pro-Trump tilt – had a mixed reaction. "The (Senate) bill makes many important investments" but "it falls short in protecting frontline workers and does nothing to preserve America's pensions," he said in part.
Service Employees President Mary Kay Henry agreed, calling the measure "a good first step to address the economic and health problems faced by working people of all races and ethnicities." But it's "no substitute" for coordinated administration action.
"We still need to do more," she said. "Congress should immediately begin work on a new bill that ensures every working American has paid sick days, everyone can get coronavirus testing and treatment free of charge, no matter their immigration status, and working people continue to come before corporations. In particular, continuing to bar Dreamers, TPS-holders, and undocumented families from access to testing and medical services will have devastating public health consequences."
Their comments came after Senate Majority Leader Mitch McConnell, R-Ky., reached a bargain with Senate Democrats, and senators passed it. Headline items for workers are the $1,200-per-adult and $500-per-child checks, four months of extended and expanded jobless benefits and a strict independent check on the $500 billion corporate "slush fund" Trump proposed. The Senate GOP tried to cut the jobless benefits but failed on a 48-48 tie vote.
"If we err on the side of giving a hardworking family an extra $1,000 or $2,000 because of our approach, so be it. No apologies," Minority Whip Dick Durbin, D-Ill., told Sen. Tim Scott, R-S.C.
Pelosi promised the House would pass the $2.2 trillion bill on March 27. She had little alternative. After the Senate got done, McConnell – unbelievably – sent the Senate into recess for three weeks, leaving Pelosi and House Democrats with their own "take it or leave it" vote.
"We held the line against so many of the ideological issues the Democrats and specifically the Speaker of the House tried to put into this legislation," Sen. John Barrasso, R-Wyo., crowed during floor debate.
Not all was lost for workers. Sens. Maria Cantwell, D-Wash., and Bernie Sanders, Ind-Vt., pointed out that traditional jobless benefits apply only to workers whose firms pay Social Security and Medicare payroll taxes, and most importantly, jobless benefits levies, on their behalf.
That leaves out millions of misclassified "independent contractors," as well as gig economy workers and other workers such as home health care aides.
"For all kinds of absurd reasons having to do with Republican attacks on workers for many years, fewer than 50% of workers today are eligible for unemployment benefits," Sanders said.
"What this bill does, rightly so, is say that in the midst of this terrible economic crisis where…some economists are estimating that by June, unemployment could be 20% or 30%, and what this bill does say is that whether or not you are eligible for unemployment today, you are going to get unemployment compensation.
"And that means many of the gig workers, many of the waitresses and waiters who make starvation minimum wages, many so-called 'independent contractors' will be eligible for the extended unemployment benefits. And that is exactly the right thing."
Cantwell agreed, adding: "I wish we would have come to terms on even allowing for COBRA enhancements, particularly for the aerospace sector," which has already seen 13,000 layoffs, according to its leading union, the Machinists.
"It is so important in fighting this disease that we not only take care of unemployment benefits, but we also make sure people in unemployment have access to health care. We can't be in the midst of a pandemic and not give people affordable access to healthcare," she said.
And, in an ironic twist, the coronavirus economic aid bill was attached to a pro-worker piece of legislation, S748, the permanent repeal of the so-called "Cadillac tax" on high-value, high-cost health insurance plans.
The coronavirus economic aid bill is supposed to be temporary, with many expiration dates on or before Dec. 31. The lead Senate Democratic bargainer, Minority Leader Charles Schumer, D-N.Y., predicted it won't be.
"This legislation will be with us not for days and not for weeks, not even for months, but probably for years. To improve this legislation was worth taking an extra day or two, improving it after the Republican leader just put it down without consulting us and tried to say 'take it or leave it,'" he said.
And its jobless benefits section is "unemployment insurance on steroids," he added.
Pelosi told reporters on March 26 the Dems won't give up, when she started looking forwards towards passing the next coronavirus economic aid bill – but not before refuting Barrasso and McConnell.
"We did jujitsu on it," she said of McConnell's measure. "It went from a corporate-first proposal that the Republicans put forth in the Senate to a Democratic workers' first legislation."
The next measure, she promised, would mandate not just free testing of people for the coronavirus – paid for by the government – but free treatment as well. It would also have "a better definition of who qualifies for family and medical leave" a 15% increase in food stamp funds, and "stronger OSHA protection for our workers," which she called "essential, essential to life.
The GOP bounced that House Democratic provision requiring OSHA to implement an emergency health care standard, now, requiring hospitals, nursing homes, and other health care facilities to implement and enforce protection plans for their workers against airborne ills – such as the coronavirus.
That's a key goal of National Nurses United, both temporarily and permanently. Trump ordered OSHA to shelve it. As soon as the stimulus bill passed, four Senate Democrats introduced S3568 to force Trump to use his emergency powers to order OSHA to write the rule.
"We would have added even more support for Medicaid, hospitals, community health centers, nursing homes, and new patient protections to ensure everyone with coronavirus can access and afford treatment," Schumer added.
"We would have increased food assistance. We would have included more relief for student borrowers and prohibitions on evictions and foreclosures on Americans for the duration of the crisis. We have gotten many of those but not all on evictions and foreclosures." Sens. Doug Jones, D-Ala., and Sherrod Brown, D-Ohio, introduced an eviction ban, also after the money bill passed.
While there was "jujitsu" by the GOP on policy, money was another matter, with one exception in each category: The legislation bans more funds for Trump's Mexican Wall, and it shorts Washington, D.C., by $700 million.
"Importantly, the bill will not permit the transfer of emergency funding" intended "to battle COVID–19" – the official name for the coronavirus — "to the president's misguided projects including the border wall," said. Sen. Patrick Leahy, D-Vt., the top Democrat on the Senate panel which actually helps dole out federal funds.
Three provisions in the Homeland Security section of the bill confirm that transfer ban, though they don't mention the wall by name.
Banning the wall wasn't the only anti-Trump zinger in the legislation. Sen. James Lankford, R-Okla., a right-wing Trumpite said the measure included "a neat little feature …that no son or daughter or family member or any individual that works with the presidency, vice presidency, or the Congress could get any of the grant programs, loan programs" in the money bill.
"In fact, the language they demanded was interesting: No son-in-law could get that," Lankford continued. "I wonder: Who could that be targeted toward? A particular son-in-law that might be there," Trump son-in-law and aide Jared Kushner.
As for shorting, D.C., the heavily Democratic and majority-minority capital city is a favorite GOP whipping boy and lab for right-wing ideological experiments. It was in line, using a formula for distributing funds to states, for a base of $1.25 billion in general money from the bill., before other targeted funds. The GOP called D.C. a "territory" and gave it a territory's pro-rated share, cutting the base to $550 million. That gave "heartburn" to Sen. Chris Van Hollen, D-Md.
Other key items picked out from a close reading of the bill include, but are not limited to:
No use by firms of federal money for stock buybacks, high executive compensation or CEO bonus pay for as long as firms take the cash – and a year afterwards. And, Schumer said, and reading of the bill confirmed, protection of collective bargaining agreements.
Provisions, especially in the airline industry, but also at hub airports, against furloughs, despite a horrific decline in passengers after imposition of all the "shelter in place" orders in the states.
SEIU's Henry said the airline money earmarks $3 billion to keep 125,000 frontline airport workers on the job. The bill doesn't give a figure but says hub airports will get extra subsidies to keep 90% of their workers – cleaners, luggage handlers, and others — on payrolls, unless doing so would drive the hubs financially under.
A job retention tax credit for firms, inserted by Sens. Ron Wyden, D-Ore., and Ben Cardin, D-Md. It "allows companies that furloughed workers to bring those workers back and get a credit up to 50% of that wage, up to $10,000, as a tax credit in order to bring back those workers," Cardin said.
That provision, and others, "will also allow companies to furlough workers so they can stay on as employees, so when, God willing, this crisis abates, they can quickly resume work with their employer and businesses can reassemble," Schumer said.
$150 billion for state governments and $8 billion for tribal governments. Schumer predicted they'd need it as their workloads would increase – with applications at state unemployment agencies for jobless benefits – as their revenues crashed. He was right on the first count, the very next day: New claims for unemployment insurance soared to a record 3.28 million for the week ending March 21. AFSCME forecasts the states will be short of both money and workers.
"My Republican friends didn't want to do it," during their closed-door talks, Schumer said. "But they had to do it, because local governments are hurting."
"If anyone thinks, just passing this bill, that tomorrow everything is going to flow smoothly, you are sadly mistaken," Sanders warned. "This is a complicated, multifaceted bill, and it is going to take an enormous amount of work to make sure the money goes where it should go in a cost-effective way."
$25 billion to keep the nation's bus and subway systems afloat, despite drastic declines in ridership. Without it, members of the Amalgamated Transit Union and the Transport Workers would lose even more jobs than they already have.
The Democrats banned Trump from spending more money to refill the Strategic Petroleum Reserve, despite low current oil prices. That pissed off right-wing oil-state Sen. Lankford. "It will actually cost us more money in the future," he fumed. "But it was their intention to say that we don't want oil companies to get any support in this downturn."
$75 million each for the National Endowment for the Arts and the National Endowment for the Humanities. Sen. Tom Udall, D-N.M., pushed those funds, to help artists whose suddenly lost gigs and income when arenas, concert halls, arts festivals, and other showcases shut down due to restrictions on movement and groups. Funding is a key goal of Actors Equity and other arts unions.
"When arts and cultural venues are shuttered and artists and all others are out of work, there is no doubt these are exceedingly difficult times," said Udall. The GOP screamed about the arts funds but lost. Sen. John Cornyn. R-Texas, alleged, without proof, the Democrats wanted to insert tax credits for solar panels, and fuel standards for airplanes, but they lost those battles.
$100 million more for the Bureau of Prisons, and lawmakers told BOP to use it to buy N95 masks and other protective equipment for corrections officers. The Assistance to Firefighters grants program, where the feds help local departments with equipment purchases, also gets $100 million for the same reason. That program is a key Fire Fighters cause.
Federal prisons are so overcrowded – and thus breeding grounds for coronavirus transmission – that the officers, members of the Government Employees, need the devices. The money bill also orders the Justice Department to look into more "home detention" of non-violent offenders, to ease the crowding and the danger.
And the Health and Human Services Department got $27.5 billion to, in so many words, devise ways to bring the supply chain for medicines – especially for vaccines against the coronavirus – back to the U.S. Left unsaid: Many of the ingredients for the vaccines and parts for other U.S. medical equipment come from China, including Wuhan, where the pandemic began.
That money will run through Sept. 30, 2024, and go for "development of necessary countermeasures and vaccines, prioritizing platform-based technologies with U.S.-based manufacturing capabilities, the purchase of vaccines, therapeutics, diagnostics, necessary medical supplies, as well as medical surge capacity, addressing blood supply chain, workforce modernization, telehealth access, and infrastructure, initial advanced manufacturing, novel dispensing…and other preparedness and response activities," the stimulus bill says
COVID-19 has struck Europe with stunning ferocity. While we do not know how long the crisis will last, we know that the economic impact will be severe. In Europe's major economies, nonessential services closed by government decree account for about one-third of output. This means that each month these sectors remain closed translates into a 3 percent drop in annual GDP, and that's before other disruptions and spillovers to the rest of the economy are taken into account. A deep European recession this year is a foregone conclusion.
Europe's generally strong welfare systems and social market model will facilitate the delivery of targeted assistance to firms and households, but there should be no doubt about the complexity of this task: these systems were not constructed to meet demands of the magnitude now confronting Europe's policymakers. Countries are responding in innovative and unfamiliar ways, and they can learn from each other what approaches work best. To help them do so, the IMF has established a website that provides information on how individual countries are dealing with the practical problems they are encountering, helping distil emerging international best practice. This is just one of the ways in which we have moved quickly to adjust IMF surveillance to the dramatically changing circumstances.
All countries in Europe will need to respond aggressively to the crisis, in a manner that is both bold and commensurate to its scale. If there ever was a time for using available buffers and policy space, this is surely it. But the scope for responding differs markedly across Europe. To better understand the constraints facing countries as they seek to step up their crisis responses, it is useful to distinguish among three sets of countries: advanced European economies; emerging European economies that are members of the EU, but not of the Euro Area; and non-EU Emerging Economies, especially the smaller emerging markets.
Policymakers in the advanced economies have made good use of their policy space and institutions, putting in place large monetary and fiscal expansions to blunt the impact of the crisis. Fiscal rules and limits are rightly being suspended to enable large-scale emergency support, and fiscal deficits are being allowed to surge. Similarly, central banks have launched massive programs for asset purchases, and financial regulators have eased requirements to allow banks to continue to support customers in distress and the economy more broadly. As to the Euro Area, the large-scale interventions by the European Central Bank, and European leaders' call for the European Stability Mechanism to provide a European supplement to national fiscal efforts, are particularly critical in ensuring that countries with high public debt will have the fiscal space they need to react forcefully to the crisis. The determination of euro area leaders to do what it takes to stabilize the euro should not be underestimated.
Emerging-market economies that are members of the EU but not the Euro Area do not have the same policy space as advanced economies, but they will benefit significantly from having reduced their fiscal and external deficits and debt in recent years, and from having strengthened their bank systems. Substantial effort has gone into building buffers in these countries, and now is the time to use them.
As to policy space, our main concern at this juncture is with regard to smaller countries outside the EU. Fiscal space varies notably within this group, but they all lack the depth of financial markets and the EU linkages that contribute importantly to policy space. With limited access to external capital and smaller and less developed banking systems, many of these countries will find it difficult to finance large increases in their fiscal deficits. They also lack the same degree of potential access to financial support that EU members can benefit from, and from the broader umbrella of policy and institutional credibility that accompanies EU membership.
Not surprisingly, these countries are now turning to the IMF for financial assistance. Excluding Russia and Turkey, most of the nine non-EU emerging economies in Central and Eastern Europe have already applied for emergency assistance via the IMF's rapid financial support facilities. They join more than 70 other member countries throughout the world that have already sought access—totaling some $50 billion—to rapidly-disbursing, low-conditionality IMF emergency facilities to meet the immediate pressures arising from the COVID-19 crisis. More countries are likely to follow in what is already the largest number of requests for assistance ever received by the IMF at one time.
The Fund is moving as fast as possible to support the membership at this time of extraordinary systemic challenges. We are dramatically streamlining our internal rules and procedures so as to be able to respond with the speed, agility, and scale called for by this unprecedented peacetime challenge. Our shareholders—189 countries worldwide—expect nothing less, and we stand ready to play our role in supporting Europe's efforts to fight the pandemic
In small groups and large crowds, through inner-city lanes and down interstate highways, hundreds of thousands of India's poorest are slowly making a desperate journey on foot back to their villages in a mass exodus unseen since the days immediately after India's independence in 1947.
For many, it's a matter of life and death. Prime Minister Narendra Modi's order last Tuesday to lock down the country for 21 days to prevent the spread of Covid-19 has dried up work in urban areas, leaving many rural migrants who keep the city moving while making less than $2 a day -- construction workers, handymen, food sellers, truck drivers and household help -- suddenly wondering how they'll pay rent or buy food.
Migrant workers and their families stand behind a barrier at a police checkpoint in Delhi, on March 28.
Photographer: Anindito Mukherjee/Bloomberg
"We have to go to our village -- we will starve here," said Rekha Devi as she walked with her husband and two young children down a highway outside of Delhi, heading to see her family some 370 kilometers (270 miles) away. The couple lived on the construction site where they worked, but the job stopped suddenly more than a week ago.
"We haven't eaten for two days," Devi said, noting that the little money they had saved quickly ran out. "We are scared of this disease but I think hunger will kill us. We will stay hungry, but how can we watch our children starve?"
The family on Sunday walked with hundreds of others down a highway normally clogged with vehicles, their mouths and noses covered with scarves or handkerchiefs or masks. They clasped their children and belongings -- tattered duffel bags stuffed with clothes, buckets filled with cooking utensils, blankets and sheets.
Rekha Devi feeds her children as they sit along the National Highway 24 in the outskirts of Delhi on March 29.
Photographer: Anindito Mukherjee/Bloomberg
The grim scenes playing out across the nation of 1.3 billion people are some of the worst across the world since the virus crisis shut down much of the global economy. In India, it's brought back memories of the mass migration sparked by deadly religious riots when the subcontinent was split up after the British left in 1947. These days, however, the divide is largely between those in India with money and those who live month by month, or even day by day.
What's worse, the mass movement of people risks speeding the spread of the coronavirus across the country -- undermining the goal of the 21-day lockdown. Right now, it's nearly impossible to tell what will happen because India lacks testing data to determine what stage the pandemic has reached, according to Gagandeep Kang, an infectious disease expert and head of India's Translational Health Science and Technology Institute outside of Delhi.
"Because we are not testing enough, we don't know what this means in terms of disease spread," Kang said. "If very few people are infected today, then they're going home and if they reach home safely then that might be the best thing for them," she added, while saying cases will emerge throughout the country in two to four weeks if many migrants already have Covid-19.
Migrant workers and their families board buses during a lockdown imposed due to the coronavirus in New Delhi, on March 28.
Photographer: Anindito Mukherjee/Bloomberg
Modi last week announced the nationwide lockdown in a prime-time television address, prompting middle-class Indian families to rush to the nearest supermarket to buy food. Panic had been spreading among migrant workers even before Modi shuttered India's massive railway network and grounded all domestic and international flights: Smaller, state-wide lockdowns had already hit daily wage earners, prompting hundreds of thousands to cram into trains and buses to reach the safety of their villages.
Modi's government on Sunday asked states to quarantine migrant workers for 14 days and prevent them from traveling elsewhere in the country as the official case toll rose to more than 1,000, including 25 deaths. In a radio address, Modi apologized to the nation while urging them to understand he had no other option. His government earlier approved a 1.7 trillion rupee ($23 billion) stimulus package targeted at the poor.
'I Seek Their Forgiveness'
"I had to take certain decisions which have put you in lots of difficulty, especially when I look at my poor brothers and sisters," Modi said in a nationwide radio on Sunday. "They must be thinking what kind of prime minister is this who placed us in this difficulty. I seek their forgiveness."
Local media have reported at least 22 deaths already among those trying to reach their villages, some in road accidents and others because of illness or starvation. The chaos reflects a lack of planning by the government reminiscent of Modi's move in 2016 to eliminate more than 80% of India's hard currency overnight, according to Michael Kugelman, senior associate for South Asia at the Wilson Center in Washington.
"Surely New Delhi understood that in a country with millions of migrants and a large informal economy, you can't just shut the country down for three weeks and expect everyone to dutifully shelter in place," he said.
In the western state of Maharashtra, home to India's financial capital Mumbai, thousands of people trekked toward villages in the interior or in the southern state of Karnataka more than 600 kilometers away. As the summer temperatures touched nearly 95 Fahrenheit (35 degrees Celsius), some rested under trees along a highway leaving the city.
'What Will We Eat?'
"Some kind-hearted people gave us food," said one elderly woman, who estimated it would take at least five days to reach her home in Karnataka. "I don't know whether we'll get any more."
As the humanitarian crisis began to unfold in Delhi, the government of neighboring Uttar Pradesh -- India's most-populous state -- sent buses to a crowded station to ferry migrant workers from the outskirts of the Indian capital back to their villages.
Photographer: Anindito Mukherjee/Bloomberg
On Sunday, Neha Kashyap walked there with her husband and three young children, trying to get a ride after their attempts to find transportation closer to their home had failed. Her husband had a small shop fixing sewing machines and small electrical appliances like blenders, but it closed after work began to dry up and they couldn't make the rent.
"When there is nothing left to eat, what should we stay here and do?" Kashyap said, her eyes welling up with tears. "The government says stay where you are. Tell us what will we eat? How will we feed our children? How will we pay our rent? We have to try and get away."
Around her, police sirens blared as hundreds of others slowly walked down the stretch of road hoping to catch one of the buses heading to Uttar Pradesh. "Keep moving, keep moving," police shouted through microphones. Others beat their batons on the road to hurry on the crowds, and chided volunteers who handed out bananas and pouches of water. "Don't you have any poor people in your own areas to help?" one officer shouted.
Migrant workers and their families walk along a highway in Delhi, on March 28.
Photographer: Anindito Mukherjee/Bloomberg
If she didn't get her family on one of the buses, Kashyap's only option was to keep walking toward her hometown some 530 kilometers away -- longer than the distance between London and Paris.
"Whatever little our parents have, they will keep us alive -- we have to go no matter what," she said. "Let me tell you one thing: More people will die of hunger than from this disease."
The Coronavirus Aid, Relief and Economic Security (CARES) Act is an important step in the U.S. response to the coronavirus pandemic. It includes provisions for expanded unemployment insurance ($250 billion), aid to small businesses ($350 billion), cash payments to households ($300 billion), aid to states ($150 billion), emergency funding for health care supplies and investments ($100 billion), and money for industry bailouts ($450 billion). The total package will provide more than $2 trillion in funds.
There is much to like in this package, and timely relief is critical. But it also contains many flaws, largely left over from the first proposal forwarded by Senate Republicans. Because many of the weaknesses of this first proposal remain, the package will not be up to the job of fully protecting U.S. workers and their families from the economic consequences of the coronavirus shock, and it will not allow the economy to reboot quickly enough once the public health crisis ends. Further help from policymakers will clearly be needed.
When we estimated that a relief and recovery package needed to be at least $2.1 trillion just through the end of 2020, we noted that this was the number for a package that was well-targeted and would reliably deliver the vast majority of benefits to workers and their families. The CARES Act does not do that. Even though it includes more than $2 trillion in funding, key design failures mean the legislation will not be large enough to provide the necessary economic relief and recovery. The economy will continue to operate significantly below potential through the end of the year, even in optimistic scenarios where the shock caused by social distancing measures is relatively short.
We'll start with the (mostly) good parts of the CARES Act.
It provides substantial and welcome changes to the unemployment insurance (UI) system and payroll support programs for small businesses. The bill establishes a new Pandemic Unemployment Assistance (PUA) system that expands benefits eligibility to many who have fallen through the cracks of our existing stingy UI system (think gig workers and the self-employed). The new PUA program also provides an added $600 per week in benefits. This leaves the program financing essentially 100% replacement of wage income for the bottom half of the workforce. This is much better than the status quo, but this could have been more generous for higher-wage workers. Importantly, the new PUA program also allows furloughed workers to receive benefits if their place of employment has closed due to COVID-19. This is also welcome—it can allow matches between employers and workers to be preserved during the downturn and restarted more quickly once the all-clear is sounded on public health measures.
Even though the bill does very little to close the enormous gaps in access to paid leave, the PUA program will serve as a backstop for those workers who do not have access to paid sick days or paid family leave but are unemployed, underemployed, or unable to work because of personal illness, quarantine, or the need to care for a family member.
The aid to small businesses could be quite useful as well. The aid starts as loans, but if the money is used to preserve jobs and maintain wages of employees over the crisis, then the loans can be forgiven—potentially keeping tens of millions of small business employees on payroll.
The bill includes $100 billion in investments in health care preparedness and another $150 billion in aid to state and local governments. Both are welcome, but state and local governments will clearly need substantially more federal support to avoid being a drag on recovery later in the year.
The bill also includes one-time cash payments to households of $1,200 per adult and $500 per child. These payments will be useful for families—especially those falling through the cracks of other aid—but could certainly be made more generous. Further, while these payments will be available even to very low-income households, individuals must have filed a federal tax return in order to receive it. Some 30 million people (people with very low incomes, seniors, people with disabilities, and veterans) don't file returns, which means that in order to get this aid, they will have to file tax returns during this pandemic.
Now, we'll move on to the glaring design flaws of the CARES Act.
The single biggest tranche of money in the package is a large pot of money aimed at industry rescues, but with no guardrails to ensure that public money is directed toward saving the jobs, wages, and benefits of typical workers rather than the wealth of shareholders, creditors, and corporate executives. The bill calls for industry bailouts to preserve jobs "to the greatest extent practicable," which is utterly toothless language. Further, there are no explicit protections for worker safety. Given that this entire crisis is driven by an epidemic and that many, including the president, want a premature return to economic activity in the face of this virus, it is imperative that U.S. workers be given protection against being forced to work in unsafe conditions. It is astounding that this basic protection cannot be made explicit for industries seeking public aid.
It is not particularly hard to design rules-based accountability measures that would ensure aid to industries actually protected workers' jobs, wages, benefits, and health. But instead of hard-and-fast rules, the CARES Act provides for an inspector general and oversight committee that will be in charge of making sure this industry aid is spent in the public interest. This is simply insufficient. The deeply flawed financial-sector bailouts of 2008, for example, included an inspector general and oversight committee, and yet far too much of the money went to support financial firms and far too little went to support typical families.
We could undertake a key test for whether corporations genuinely need public aid or are simply trying to exploit this crisis to grab public money by demanding these companies give the federal government equity stakes in exchange for immediate aid. By granting the government equity, these companies would dilute existing shareholders' claims on future profits. If these existing shareholders are unwilling to allow this dilution, this is a clear sign that they firmly expect the company to continue operations even without a bailout. This can be seen in Boeing's response to suggestions of granting equity stakes in exchange for aid—the company said clearly they would find other ways to cope. But if there are other ways to cope, then a bailout is, by definition, not needed.
Finally, this proposal repeats terrible mistakes of the past by not instituting triggers to enable relief and recovery aid to keep flowing as long as economic conditions warrant. Time-based aid makes no sense, particularly when facing as uncertain an economic shock as the current one. Instead, as long as relief is needed and the economy remains depressed, aid should continue to flow. Optimally, the triggers that would enable this aid to keep flowing would be based on employment and hours of work instead of, or in addition to, unemployment rates. This consideration applies not just to the expanded UI benefits, but also to the direct cash payments to households and the aid to state and local governments. None of this aid should be shut off automatically on an arbitrary date. Instead, it should wind down gradually as economic conditions warrant.
The human toll of the economic shock that health measures related to the coronavirus inflict on the U.S. economy is entirely dependent on our policy response. If we are smart and ambitious and driven by a desire to minimize human suffering, we can shield the vast majority of households from the vast majority of potential damage. This bill is a useful step, but we must do better—or the economic damage will be staggering.
The data released yesterday by the Department of Labor showed there was a breathtaking increase in the number of people filing for unemployment insurance (UI) during the week ending in March 21, 2020. Initial UI claims skyrocketed to 3.3 million last week—a nearly 1,500% increase over three weeks ago, when 211,000 initial claims were filed.
The comparable state-level data on UI claims is released one week later than the national data, so the most recent information available at the state-level is for two weeks ago—the week ending March 14th. While this does not capture the staggering spike in claims that we saw last week, the early effects of coronavirus are already apparent in many states. Figure A displays the percent change in unemployment insurance claims from the prior week.
UI is a critical tool for ensuring that those who are out of work or have seen their hours reduced are still able to make ends meet. The CARES Act, which Congress is currently debating, would adapt UI to meet the needs of the current crisis by expanding who is eligible (gig workers and the self-employed are usually excluded), giving an additional $600 in weekly benefits, and reducing burdensome waiting period, job search, and earnings requirements. Still, UI is just one of many policy levers that should be used to support workers throughout this crisis. Policymakers in every state should work to ensure that they are protecting public health while reducing economic harm to workers.
Of all the states, Nevada saw the largest percent increase in initial claims filed compared to the prior week. Initial claims there nearly tripled, increasing by 175% or 4,047 additional claims. This is the largest numerical week-to-week increase in Nevada's history, and the second largest percentage increase. In Nevada, over 40% of jobs are in the leisure, hospitality, and retail sectors. As social distancing measures impact restaurants, bars, hotels, theaters, and other businesses across the country, states like Nevada will feel the effects more acutely.
Washington state, an early epicenter of the coronavirus, was also particularly hard-hit. In terms of sheer numbers, it saw the second-largest over-the-week increase in claims (7,624 additional claims) after California (14,240), and the second largest percentage increase (115%) behind Nevada. Washington's increase for the week of March 14, 2020 was also the second-largest increase in the state's history, both in level and percentage terms. Washington D.C. (158%), Nebraska (58.7%), Rhode Island (58.3%), and Massachusetts (58.1%) also saw claims increase by more than 50%. Data for all states is displayed in Table 1.
The Department of Labor also provides an advance estimate of initial claims by state for one week ago, shown in Table 2. This advance estimate is available earlier than the official count of initial claims in each state, but it is not directly comparable. (The advance claims are based on the state where the employer is located, whereas the historical data of official claims is based on the resident state of the employee.) Still, these advance estimates indicate that when the official data are released next week, they're going to show historical levels of UI claims for nearly every state.