We need to get the next CARES Act right. Not that the first one was so bad; despite its flaws, the emergency required rapid action. Now more careful crafting is called for: many small businesses that employ millions of Americans are permanently closing, bigger businesses that employ additional millions are facing strong headwinds, local governments are preparing for layoffs and the federal checking account is badly overdrawn. We need to take additional action at the federal level to weather the damage.
I believe five key components should be included in the Phase 4 package: support for employers in severe distress, extension and repair of unemployment insurance; aid to states and localities to help fill COVID-19-related revenue gaps; liability protections to guard against a flood of lawsuits; and finally, a measure to tame the burgeoning federal debt once the crisis has passed.
With the pandemic largely unabated in certain sectors and regions, employers and industries in distress will need financial aid to keep from permanently shutting down. I would extend federally guaranteed lending, but only to those businesses small and large which are demonstrably suffering. Further, any loan forgiveness should be limited to very small enterprises. The Paycheck Protection Program’s requirement to hire staff even when there is no work for them to do should be relaxed.
To quickly administer increased payments, the CARES Act’s $600 per week addition to the standard unemployment insurance benefit had an unintended—and predictable—consequence. Because many people make more money unemployed than when employed, it has slowed hiring. The next relief bill should extend unemployment insurance but limit the weekly benefit to no more than the person was previously making.
Many states and localities are requesting help to fill the revenue shortfalls created when their economies were shuttered. The CARES Act allocated $150 billion to states but limited it to reimbursement of direct costs due to the pandemic. Of course, the federal government should not borrow money to bail out states for past or present overspending. At the same time, we don’t want states and localities to be forced to lay off health care workers or first responders because their 2020 tax revenues dried up with the shuttered economy. The answer is to provide each state with a proportion—say 90%—of its actual lost tax revenues, to be shared by that state with its counties, cities and towns on the same basis.
Utah is right to have already addressed liability claims due to the pandemic; Congress should follow Utah’s example. If schools, colleges, hospitals and businesses fear a tidal wave of COVID-19-related lawsuits, they will delay re-opening and re-hiring. COVID-19 liability claims should be limited to cases of reckless or wanton behavior.
To date, we have authorized over $4 trillion for coronavirus relief. The next package will add to that figure. In a time of crisis like this, borrowing is not inappropriate. But massive deficits and adding trillions to the national debt during the good times is wrong: It puts us in financial danger and even threatens Social Security and Medicare. This is the time to put in place a bipartisan process to tame these annual deficits and restrain the national debt.
The TRUST Act, which I’ve introduced with Sen. Joe Manchin, D-WV, and several other Republican and Democratic colleagues in the Senate and the House, is one solution. Modeled after the Simpson-Bowles fiscal commission, it would create a process to rescue each of the major, endangered trust funds which are now headed for bankruptcy. At the same time, it would put us on a path to eliminate the federal deficit and reduce the national debt.
America wants to get back to work. America needs to get back to work. If drafted with Americans and not politics in mind, the next rescue package can provide critical support for workers, families and employers and at the same time lay the groundwork for safeguarding Social Security and Medicare and rescuing us from financial distress.