As we went to press, details of the coronavirus stimulus package had not yet been hammered out, though the House and Senate appeared to be approaching a deal. We were likely to get something, and it’s fair to assume that something was going to be quite large. But after two weeks of lobbying and horse-trading the final package could be quite different from what many people expected.
The battle lines have been drawn: on the Republican side, there are maximalists such as Senator Josh Hawley and treasury secretary Steve Mnuchin, who have called for direct relief for individuals and families without means-testing. Senator Mitt Romney was one of the first to propose writing cheques for individual Americans. On the other side are fiscal hawks who want the relief to be means-tested and limited.
An alternative to direct payments is to expand unemployment benefits. Unemployment programmes are probably going to need substantial shoring-up anyway, and this is an approach favoured by Senate Democrats and Republican Senator Lindsey Graham. Other Republicans wonder if it will provide an excuse for businesses to dump employees onto the welfare rolls – something that has already happened to many restaurant workers. One DC restaurateur explained that it made more sense for them to start collecting unemployment now, rather than to muddle through a few weeks of work with few customers and thus very little tip income.
Second-order issues that will probably call for some substantial public support are pension funds (which have lost a great deal of value due to the stock market crash) and housing. Without a freeze on mortgage and rent payments, workers who have become unemployed could be at risk of losing their homes due to a policy decision to shut the economy down.
As of Sunday afternoon Democrats and Republicans seemed to have come to an agreement on direct payments and unemployment insurance, though questions remained about corporate bail-outs, which are the final big piece of a relief package. The aerospace company Boeing, which was plagued by issues before coronavirus hit, is asking for $60 billion.
The corporate welfare part of the relief package so far doesn’t seem to include many of the provisos one might hope to see, such as limitations both on stock buybacks and executive compensation; equity stakes in big companies vital to national security such as Boeing; and provisions aimed at reshoring jobs, capital and supply chains.