Thoughts on a Third Stimulus Package
Oddly enough I found myself in agreement with Senator Lyndsey Graham “don’t throw money at the problem”; have a plan. You cannot simply jump start an economy by writing one check to every American when everyone is sheltering in place at home; they won’t be going out to dinner, to the ballgame, the barber or hair salon, the bar, the dance club, or to the mall. And this is going to last more than one month. You do need to help those who have lost their jobs, their incomes, their small businesses. So here’s my thoughts on a plan for helping the low and moderate income workers without the resources to get by.
First, use UI (Unemployment Insurance) to help all of those being laid off due to the coronavirus. Second, use DI (Disability Insurance) to help the gig economy/flex workforce/self-employed who have lost their incomes; it would have to be temporarily reconstituted to parallel UI during the coronavirus crisis. Third, use the SBA to provide loans to all the small businesses losing their customers and their livelihoods. Fourth, use Food Stamps, TANF, Section 8, LIHEAP; beef them up and fund them appropriately to quickly help all in need of help with food, utilities and rent. Fifth, use Medicaid; open up the eligibility rules to pay for health services for the uninsured with Covid 19. Sixth, vastly expand public health to tackle the outbreak, to test and track and help with isolation of the infected, and use emergency powers to manufacture and deliver the medical supplies now in short supply.
1) UI. Unemployment insurance is the existing program for people who are laid off or lose their jobs. It should be expanded to cover anyone who was employed and is not now getting a paycheck and sheltering in place. It pays a percent of lost wages up to a cap. The benefits may well need to be increased and extended as well during the crisis. We certainly don’t want people showing up and waiting in long lines to apply or get weekly benefits or check in on job searches, as we really don’t want people congregating. It’s a program in place; it works; it just needs to be tweaked. But it doesn’t cover the flex workforce, the gig workers, the self-employed who now no longer have work.
2) DI. For workers in the gig economy (flex workforce, temps, provisional, self employed, contract workers), there is no comparable safety net because they are not linked to an employer. There should be a program to offset their lost income using a structure parallel to UI, but we don’t have time to create the infrastructure for a new program. They do pay into Social Security so it is possible that we can track their loss of income through their reduced payments into Social Security and then simply reverse engineer their lost income up to an income cap for as long as the crisis lasts. This, however, may be too slow to help since tax payments coming into SSA from the flex workers are typically paid quarterly or annually, while their income loss and needs are immediate. Many in the flex workforce may well have little in savings to tide them over. Furthermore we lose the ready connection to their payments of their Social Security and Medicare taxes once they are out of the labor force. Maybe we just cover them through the existing UI programs and use federal General Fund revenues to pay for a percent of their lost incomes (calculated by their most recent past annual earnings) through UI.
There is a shadow or informal economy consisting of workers paid in cash. Workers in the informal economy cannot be reached through either UI or DI.
3) SBA. The SBA provides loans and other assistance to small businesses. It might be the right entity to provide low cost or no cost loans to allow small employers to stay in business and meet payroll during the work stoppage due to the coronavirus. I’m not sure how well this would work. I ran a small business for twenty-three years, but I never had any connections with them outside of shared advocacy. I’m not at all sure about their capabilities in a crisis like this and I doubt their capacity to successfully reach vital micro-businesses such as child care or street vendors.
4) Food Stamps, TANF, Section 8, LIHEAP, EITC. They pay for food, rent, utilities, child care. The eligibility standards are low (too low to meet the crisis), and confusing and restrictive, and highly different from program to program; their funding is quite limited. It’s a simple matter for the federal government to expand their eligibility standards and to dramatically increase their funding levels so they can reach many more low income and moderate income Americans facing severe financial distress in this time of truly urgent need. But it’s up to state and local programs to implement these changes and that’s where the bottlenecks are likely to occur. These programs would not as readily reach the middle class as UI or DI due to the unfortunate welfare stigma associated with them.
5) Medicaid (MediCal in California for 13 million Californians) is a large safety net program covering the poor and some moderate-income citizens and legal residents for a full range of health care services. Eligibility could be extended to the uninsured needing coronavirus testing and follow up treatment regardless of immigration status or income. The federal government could pay 100% federal financial participation for the expansion. This would be easy to do and to administer as a fee for service program of a specific limited time duration. It would ease the worries many have that they cannot afford the Covid 19 test and then the hospitalization if the disease becomes acute and life threatening. Medicaid already covers the undocumented uninsured for genuine emergencies and maternity care; it is easy to add Covid 19 testing and treatment to the approved benefit package for the undocumented.
6) Public health is the governmental entity that seeks to control pandemics like Covid 19. It operates at the county, state and federal levels; cities like Long Beach and Pasadena also have public health departments. Public health has been systematically starved for funding since the 08-09 financial meltdown and Great Recession. It is not so easy to rapidly build it back up again with qualified high performing staff. Yet, this must be done for the nation’s safety.
We have a badly broken supply chain for hospitals. Some entity, maybe its FEMA, more likely it's the military, needs to manufacture, secure and distribute the respirators, masks, ventilators and personal protective gear in such short supply to the nation’s hospitals and to set up the auxiliary field hospitals and isolation units to treat those who become severely ill.
Maybe it’s time to think a bit more about our nation’s seniors and the disabled living on fixed incomes and at the highest risk for this new virus. Their savings have been denuded by the crash in stock market values. They could certainly do with some extra help from their government when their lives are on the line and they must rely on others for chores, groceries, cleaning, shopping and other essentials of daily living.
Prepared by: Lucien Wulsin
Dated: 3/21/20
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