Successful Push For Stimulus Checks Worsens Covid Relief Bill

The bipartisan covid relief bill working its way through Congress appears to have worsened thanks to demands by the Congressional Progressive Caucus, along with Sens. Bernie Sanders (I-VT) and Josh Hawley (R-MO), that the package include a second round of stimulus checks. Because Senate Republicans have refused to support a package that costs more than $1 trillion, the inclusion of checks is likely coming at the expense of other provisions that would better target assistance where it is most needed. As Sens. Mark Warner (D-VA) and Joe Manchin (D-WV) have argued, there is nothing progressive about taking money from people directly affected by the covid pandemic to finance a poorly targeted stimulus check.

The first casualty is $160 billion in assistance to state and local governments. The provision faced opposition from Republicans who decried it as a “blue-state bailout” (despite the fact that many of their own states also desperately need help closing budget shortfalls caused by the pandemic). Negotiators had originally suggested holding a separate vote on this aid, paired with a liability waiver provision that Republicans support, to isolate the controversial sticking points from the rest of the deal. It now seems likely that both provisions will be dropped altogether and the money redirected to finance a $600 per-person stimulus check, which many governors complain could hamper their vaccine distribution efforts next year.

Some have argued that the state and local aid was unlikely to pass anyway before President-elect Biden takes office, so the inclusion of stimulus checks is simply making use of dollars that otherwise would have gone unspent. But lawmakers are now also considering reducing unemployment insurance benefits to help make room for the checks as well – a development which would be far more harmful.

The original bipartisan proposal included a 16-week extension of emergency unemployment insurance (UI) benefits, as well as a $300/week increase in benefits. But to ensure there is enough space under the trillion-dollar cap for stimulus checks, leaders are reportedly considering cutting the UI extension from 16 weeks to just 10. Even worse, Senate Republicans are proposing to restrict the $600 checks so that they only go to people who are not claiming unemployment benefits. These changes represent a direct transfer of income support from those who need it to those who don’t – that’s the antithesis of progressivism. Furthermore, both UI benefits and aid to state and local governments provide a greater benefit to the economy than stimulus checks per dollar spent, making the trade-off even worse.

Perhaps advocates of the swap believe that leaving state and local aid on the table for next year and having an earlier cutoff for UI benefits will increase pressure on lawmakers to do another deal early next year. But beneficiaries already saw a benefit cut in August thanks to Congressional inaction at a similar juncture and millions now face the prospect of losing benefits altogether at the end of this month. Guaranteeing benefits through April, when the covid vaccine should finally be available to most of the population, is essential for reducing uncertainty and helping families survive the pandemic financially intact. Undermining the financial security of the pandemic’s economic victims to give a stimulus check to those who do not need it is cruel and counterproductive.

Of course, lawmakers could avoid these painful trade-offs altogether if Republicans loosened their devotion to an arbitrary price cap. The difference between a final bill that costs $950 billion and one that costs $1,050 billion is insignificant from a fiscal responsibility perspective amidst a national crisis at a time when borrowing costs are near historic lows. But so long as Republicans hold the Senate and are content with doing nothing, Democrats must be willing to compromise. Progressives do our agenda a disservice by prioritizing handouts to those who don’t need them over life-saving benefits to those who do.

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