This week, the House of Representatives passed a $1.9 trillion coronavirus pandemic aid package by a 220-210 vote. It now moves to the Senate, where it will have to make it past a Republican filibuster. HuffPost reporter Arthur Delaney and Elizabeth Pancotti, policy director at Employ America, join Ryan Grim to discuss what’s actually in the bill.
Ryan Grim: Only the Democratic Party can put together a $1.9 trillion relief package — that’s trillion with a “t” — and manage to get on the wrong side of public opinion for being too cheap.
Newscaster: How much is enough when it comes to Covid relief?
Newscaster: Is the Covid relief bill enough?
Newscaster: Some on the left say it’s not big enough.
Newscaster: We’ve already heard frustration in some quarters of the progressive wing saying things like “That almost $2 trillion bill doesn’t go far enough.”
RG: Much of it goes back to a fateful promise Democrats made in Georgia in January ahead of the Senate runoffs.
President Joseph Biden: By electing Jon and the reverend, you can make an immediate difference in your own lives, the lives of the people all across this country, because their Election will put an end to the block in Washington and that $2,000 stimulus check. That money that will go out the door immediately.
RG: Shockingly, promising to make people’s lives materially better worked, and Democrats swept both seats, taking control of the Senate. And if not for that promise, there would be no Covid relief package at all, or at least nothing approaching this size. McConnell had made it clear he was done with all that, and he certainly wasn’t about to do anything that might make Joe Biden look good.
To Democrats’ credit, they didn’t flinch at the price-tag of the stimulus.
Sen. Jon Tester: I don’t think $1.9 trillion, even though it is a boatload of money, is too much money. I think now is not the time to starve the economy.
RG: But once that fight was won, Democrats started flinching fast. Early on, they floated the idea of strictly limiting the number of people who’d be eligible for those promised checks. As we’ll talk about with our guests on today’s show, they ended up backing off their more draconian proposal, but they still narrowed who’s eligible — that’s on top of the confusion over the size of stimulus checks which will be $1,400, and not $2,000.
Now, on the upside, adult dependents will be added to this package and be eligible for checks, even though they weren’t in the first CARES package last March. And that $1,400 is just a small piece of what’s coming to people.
But Democrats also said they were going to put a $15 minimum wage into the package; then they signaled it clearly that they had zero intention to fight for it if the parliamentarian ruled it couldn’t go through under the complicated rules of reconciliation; when she did, they bowed to her decision. So, with no pressure from Republicans, the stimulus has appeared in the press to be one disappointment and betrayal after another.
Yet behind all of this failure is an extraordinary break with how Democrats have legislated for the last 40 years. People ready to be disappointed by the product might well be stunned to see eye-popping amounts of money landing in their bank accounts.
We’ll get into the details of what’s coming your way with our two guests, Elizabeth Pancotti, who is policy director at the organization Employ America, and Arthur Delaney, a reporter for the Huffington Post who has been covering social welfare policy fights on Capitol Hill as his sole beat for more than 10 years.
But first, two quick updates to two previous episodes.
You may recall from our episode on the Yemen war that Rep. Ro Khanna relayed this anecdote:
Rep. Ro Khanna: You know, I’ve never had an ambassador of another country come to my office and literally yell at me, but that’s what I had with the ambassador to UAE. I was just taken away, I guess. It led me to think there’s a real arrogance; a real sense of entitlement; a sense that he thought himself so powerful that he could act that way.
RG: After the podcast aired, the ambassador reached out to Khanna to invite him on to his own podcast to talk through the situation, and Khanna said that he would be happy to appear, but not until the UAE freed Adel al-Hasani, a journalist being held by forces loyal to the Emiratis. al-Hasani remains in captivity.
And on Wednesday night, the House of Representatives passed H.R.-1, the For the People Act, by a 220-210 vote. It now moves to the Senate where the filibuster stands in its way. HR-1 was the subject of an episode in early February, followed by our show on the history of filibuster and the effort to eliminate it.
As of today, the filibuster lives, and Senate Democrats are moving their Covid relief package through the Senate under rules known as reconciliation, which allows for legislation to pass with a 51-vote majority. That’s exactly what Democrats got when they put the bill on the floor and voted on the critical motion to proceed to debate; 50 Republicans voted against even debating it. That left Kamala Harris to break the tie.
Vice President Kamala Harris: On this vote, the yeas are 50; the nays are 50. The Senate being equally divided, the Vice President votes in the affirmative and the motion to proceed is agreed to.
RG: The next step is supposed to be a formality, waiving the need for the clerk to read the entire piece of legislation. It didn’t go that way, thanks to Sen. Ron Johnson, a Republican from Wisconsin who’s up for re-election in 2022.
Sen. Majority Leader Chuck Schumer: I ask consent to dispense with the reading.
KH: Is there an objection?
Sen. Ron Johnson: Madame President?
KH: Senator from Wisconsin.
RJ: Reserving the right to object.
CS: Is he allowed?
RJ: One thing — one —
KH: Is there an objection?
RJ: I object.
KH: The objection is heard. The clerk will continue the reading.
Clerk: As the American Rescue Act of —
RG: Given the rules, though, Republicans can slow the bill down, but they can’t stop it. Because the political conversation has focused exclusively on the checks, and Republicans have been more worried about Mr. Potato Head and Dr. Seuss, more than $1 trillion of the rest of the package is going largely under the media’s radar.
So where is all of that money going to wind up? How much might you get? That’s what we’ll discuss with our guests today.
RG: So we are now joined by Elizabeth Pancotti, who is policy director for Employ America, and Arthur Delaney, a reporter at the Huffington Post, who has been on this particular beat for, what, 12 years now, Arthur?
Arthur Delaney: Yes!
RG: You might be the longest-running kind of mainstream media, federal benefits, non-trade publication reporter out there.
AD: And it’s a privilege to have this job! I love it!
RG: So for people who are wondering what the next few weeks are gonna look like for them. Let’s say you’re a middle class family of four: What kind of check are you looking at getting? And when are you going to be looking at getting it?
AD: If they pass this bill in the next few weeks, which it looks like they’re really going to do, in a matter of weeks, that family will receive $5,600. That’s how much a family of four would get if they are earning less than $160,000 per year.
RG: So the people above that, Elizabeth, what are they going to get? And at what point are they getting nothing?
Elizabeth Pancotti: Yeah, so this week, they pared down the phase out of the check. Rather than cutting the income cutoffs down to $50,000 for single filers, they made a steeper cut off between $75,000 and $80,000, and for families between $150,000 and $160,000. And so rather than having kind of a longer lead-way to having no check, there’s a steeper phase out now. So if you make $80,001, you’ll be excluded from any check, and if you make $78,000, you’ll get a much lower check than you had in the previous rounds.
RG: And do you have a sense of how many millions of people fall into that category, who are getting less than they were promised?
EP: I think estimates show about 17 million people fall into the category now that the new phase outs have been included in the bill.
AD: But an amazing thing about this is it’s still the vast majority of people getting checks: 86 percent will still get payments versus 91 percent before.
RG: And I think a bunch of people listening might have done a double-take, might have kind of hit the 15 seconds back button when you said that people are going to get a check for $5,600. That is a big check. And it’s related to the kind of chaotic history of how this came about.
In December, you know, Bernie Sanders and Josh Hawley, kind of at the last minute, forced the $600 checks into the final relief package that Trump was working on. So, Arthur, how did we get from there to $5,600?
AD: Fifty-six hundred dollars is a huge amount of money for the government to just be sending people on an ad hoc basis. And this would never have happened before Trump and the pandemic.
It started with the CARES Act. People didn’t even know what the pandemic was gonna look like then. It was really scary. This is when we thought you would get it from your takeout and everyone was washing their hands. And lawmakers thought it would be over in a few months. And they said: Let’s just throw money at people. And Republicans were all for it because Donald Trump was president and it was an election year, and the CARES Act gave people $1,200 for adults and $500 for their kids. And that itself was pretty remarkable.
RG: It turned out to be popular!
AD: People loved it! Go figure!
The pollsters asked: Did you like receiving thousands of dollars? And the overwhelming majority of people, including Republicans, were like: Yes, I did. That was great. And they liked it so much that they did it again! They did it in December.
So now Democrats are in power. And they have all these ideas that they’ve been kicking around for years, that actually you can just say that this is checks because it involves giving people money, or at least an in-kind benefit or a tax benefit. And there’s been a strong taboo against giving people money because that’s welfare, and I think Donald Trump and Republicans sort of accidentally put a crack in that taboo and now Democrats are going to shatter it, both with these checks and with the other stuff in the bill.
Democrats are continuing what Republicans had done before, but they’re also adding in some of their own things, including a huge expansion of the child tax credit, which sounds boring, but they are trying to make it so that the IRS will pay parents this money in advance; it would be a child benefit, worth hundreds of dollars per child, for practically everyone in the United States who has children. This could basically transform the federal government’s relationship to families. It’s a huge deal.
So Democrats are shattering a taboo after Republicans had cracked it with the CARES Act and the other bills last year.
RG: And I want to get to everything else that’s in the bill in a moment. But before we leave these first checks, there seems to be a dynamic that people have mostly missed that has created the situation that we’re in today. And it seems like when Hawley and Sanders were able to put that $600, check into the December package, dependents, children at that point, got the same $600. And I assume that that was because look, hey, $600 is less than the $1,200 that was in the CARES package, so let’s just make it the same. So all kids get the same as their parents are getting.
Then Trump comes back and says: $600, what are you doing? That’s not enough money. People need $2,000! Trump loves to pick round numbers. And so then AOC in the House says: OK, here’s an amendment that ups the $600 by another $1,400 to get to $2,000.
And what nobody really noticed happened while she was doing that, was that it also upped the amount for dependents. And so that’s why you wind up with this eye-popping $5,600 figure for a family of four. Elizabeth, does that sound to you like how that unfolded? Because there never really was a national conversation about how we’re going to arrive at that figure.
EP: Well, I will say that the first person to throw out $2,000 was not Donald Trump. It was Bernie Sanders and Sen. Markey back last March and April when they said we should send every American $2,000 every month until the pandemic is over.
RG: That’s right. That’s where that original $2,000 came from a year ago. Right.
EP: Yeah, Donald Trump’s signature got to be on the checks. They thought they were going to win Georgia with $600 checks. You know, fortunately for Democrats, that didn’t work and Warnock and Ossoff won on the fact that they would get you your $2,000 check. But a $2,000 number did not come from Donald Trump’s temper tantrum in December when he refused to play a role in negotiating that package.
EP: But, I will say, House progressives, Bernie Sanders, Ed Markey — they really did change the conversation of what age should go to families and how children should be calculated in that. They were having the same conversation and pushing for I think Bernie Sanders’ floor thing is $600 for every parent and their children, or for every married couple, for every single person, and their children, you know, he’s really pushed that talking point. And now for $1,400 checks to make the total $2,000. So I will say, that does kind of sound like the conversation that unfolded. But I don’t know that I would credit the Trump administration with the $2,000 number that we’re now at. And really, that number certainly paid off for Democrats in those special runoff elections in Georgia.
But it was the kind of fluke of beginning with $600 in December, and then changing it midstream to $2,000, and bringing along the dependents, without much debate, up to $2,000 as well. Whereas if they were starting in December at $2,000, you could easily see them saying: OK, it’s $2,000 for adults and it’s $800 for dependents, or it’s $1,000 for dependents. But because they didn’t do it in a rational way — they did it in this ad-hoc, ping-pong, electoral game back and forth — you wind up with $2,000.
And then you wind up with Biden saying:
JB: By electing Jon and the reverend, you can make an immediate difference in your own lives […] that money that will go out the door immediately.
And even after the $600 checks were out, Democrats kept referring to $2,000 rather than $1,400. That’s been a big deal online, on Twitter. How big a deal do you think that that is going to be on the ground? And is it going to be seen as a broken promise? Or when these bigger families of four get a $5,600 check, are they going to say: You know what, this is actually more than we thought we were gonna get?
EP: Well, well, no, no, no — because the Bernie and Markey bill back last spring also had $2,000 per child, up to three children. So that conversation was already happening among congressional progressives.
I think the thing that happened in the winter was when Bernie Sanders and Holly got together and said, we need to put checks in this bill, they said, let’s make it one flat amount for everyone because $600 is kind of a measly amount. So I think we were already having that conversation of: should parents receive the same number as their kids. And Bernie Sanders was really able to champion that in December to make sure that was what the formula was.
I would suspect that this may not be the last time that direct payments are included in a package. It might be the last time they pass. But I don’t think it’s out of the question for them to be in the second package where we’re doing infrastructure, they might tack it on, especially depending how vaccine rollout goes. But no, I think we’re really grappling with this. And I think, to Arthur’s previous point about the child tax credit, we are really grappling with the fact that we do not support parents, we do not support families in our economy. And that given the childcare and the schooling constraints of the past year, that really needs to happen. And it’s a good thing that these go to families. It costs a lot of money to raise your kids. And it’s kind of nonsensical, that you would pay kids less — we’re not writing checks to kids — but that you would count kids less than adults for costs associated with getting through this pandemic.
AD: It’s great how we’re explaining where the checks came from. Because imagine if Republicans were the ones who seized the initiative on this, and they won that election, they’d still have control of the Senate, super-power demagogues like Donald Trump and Josh Hawley stealing the initiative on giving people money, that’d be unbelievable! I mean, that could be really dangerous for the Democratic coalition. And so it’s good that they put themselves on the hook with these campaign promises. Because for a minute there, it was Republicans being the party of checks.
And so talk about those child tax-credit checks. What are people looking at on that front? Let’s say this same middle-class family of four.
AD: This is potentially another ginormous pile of money, relative to what is provided before. Just expanding the tax credit by itself for a family with children under six, it’s $3,600 per child. And then it’s, I believe, would be $3,000 for kids who are between 6 and 18.
The other element of it that’s really important is that Democrats want to make the IRS do this as an advanced monthly payment or periodical payment instead of a refund at tax time. So they’re pulling a child allowance out of the tax code. And there are a lot of questions about the implementation and it’s only for one year in the rescue plan bill. They’re going to have to try to make this permanent, which is the White House’s and congressional Democrats’ ultimate goal. But that’s another $3,600 per young child for almost every family in this country.
RG: And so, if you have two young kids, under 6, you’re looking at a $600 monthly check. I’m doing my math there, right?
AD: Yes. I think it might be actually more than that. But sure — hundreds of dollars.
RG: Right. Right. So the IRS has been tasked with this. But Mitt Romney has suggested, meanwhile, that the Social Security Administration do this. Elizabeth, do you have a take on the wonk debate over what agency would more effectively be able to deliver this aid to people?
EP: Sure, I have an opinion [laughs]. So yes, the Romney plan would put it in the Social Security Administration, which cuts monthly checks to disabled individuals and to senior individuals. The problem with the Social Security Administration is they do not write checks for children; they don’t have that information on file for if folks have children. And so you’d have to, you know, put a lot of data infrastructures in the Social Security Administration to be able to cut checks to an entirely new group of people for whom they only collect, people are paying into the Social Security system every month with their wages. But it’s not like you’re telling the Social Security Administration along the way, Hey, I have five kids. Right? Your employer is writing your FICA check to the Social Security Administration.
Conversely, the IRS only gets data on your wages quarterly, but really on your children and on your financial situation — outside of wages — annually. And so it’s kind of a catch-22. We have a very fractured social safety net and federal economic program, and you could imagine an entirely new agency that could handle this, though, that would take a lot of time to stand up.
And so both the Romney plan and the Biden plan that would put it in the IRS, neither one of them are perfect. And I would assume you’d see hiccups with either. So I’d say given that the IRS knows information on your family structure, that might be quicker than having the Social Security Administration set up those data infrastructures.
RG: So, Elizabeth, what about the unemployment benefits? So if Republicans had taken the Senate, what was going to happen with unemployment? And what’s going to happen assuming that this legislation passes as-is?
EP: I mean, it’s difficult to say what Republicans would have done given the fact that they let millions of workers fall off of a cliff of the $600 last July. We saw a very last-minute attempt to save 12 million workers from falling off that cliff the morning after Christmas. I mean, we’re talking about the bill that was literally signed the day after the lapse. So it’s unclear if they would have actually saved the 11 million workers that are at risk of a cliff over the next month.
Arthur, what’s your read on that?
AD: Well, so much of this has to do with how it takes the Labor Department to issue guidance to states and then states are all different and have these old systems. I don’t know. It’s likely that there will still be problems.
RG: But do you think Mitch MccCnnell would have re-upped it?
AD: Oh my god, no! Mitch McConnell was very clearly killing the unemployment benefits this month. That was his whole plan. Republicans were going to keep control of this Senate, and he wasn’t going to get cliffed again. He said it so that they wouldn’t expire all at once, there would be an initial phasedown where you can’t apply but if you were already receiving benefits as of the 14 of this month, you would continue until the beginning of April. So that that was his plan. And it has been thwarted by Democrats taking the Senate.
But Democrats are going to set up another cliff in August. And it looks like they are not doing it in September, like Joe Biden had originally proposed. I don’t understand why they don’t do it for the rest of the year. Except that I do understand it, because they’re sort of cynical and they like having this fight over unemployment. They think that they can win it whether it’s in August or September. But we’re gonna have this fight again.
EP: Yes, as Arthur said, we’re getting those re-upped programs — the program for self-employed workers and low-wage workers, as well as the extension on state benefits — through the end of August, August 29.
As it stands, the House passed a version that says $400 per week, so that $600 check that then turned into nothing that was then $300, it goes up by another $100 from mid-March through the end of August, and it extends benefits through the end of August.
Sen. Wyden, chairman of the Finance Committee, who’s in charge of writing these and finalizing these for the Senate side has said that he will fight tooth and nail to get it through the end of September, if he can. But, in addition to what Arthur was saying, this is a problem because right now they cut off in the middle of Senate recess; senators will literally be at home doing whatever they do in their home states, not on the Senate floor fighting for unemployed workers. Chairman Powell echoed this last week, several other economists have said there’s no way we are going to be at anywhere close to a full labor market rebound by the end of August. And so I’m sure millions of workers will fall off that cliff. And my co-author Andy Stettner and I will have to write another paper about the cliff, and it’ll be a great time.
RG: And something you’ve talked about before and fought over are stabilizers that would grapple with part of that problem. There are no stabilizers in this bill, as I understand it. What does that mean? How do you explain that to people, and how ought they do it instead?
EP: Yeah, so as Arthur said, some people might prefer that we just extend these through the end of the year. That, to me, is still a band aid. And so what groups like mine and other economists have proposed is that the benefits stay in place until our labor market recovers and we would do that by saying they are in place until the unemployment rate or whatever other employment measures that you could use, reaches what it was before the pandemic or gets close to that — you know, maybe we make up 90 percent of that lost ground.
And so, right now, the unemployment rate is about double what it was in January. And we know that the real unemployment rate, there’s a lot of misclassification, involuntary part-time work, people out of work who aren’t classified as unemployed, people who have dropped out of the labor force, et cetera, all of those people aren’t counted in that rate. And so you would want the labor market to really reflect something close to January’s levels before you took away extended unemployment benefits. And it’s not a particularly hard thing to do.
In fact, one unemployment insurance program, the Extended Benefits program is already driven by triggers or automatic stabilizers, and so you could just beef that program up. They’ve decided not to because they’re afraid of the CBO score. And I think, as Arthur said, they kind of like this game of having the leverage of 12 million people dangling off a cliff. That’s unfortunate and just bad policymaking.
RG: Right. Right.
EP: But that’s what they’ve decided to do several times over.
RG: Another thing that’s gone under the radar in this bill, and this could be for either of you, is the Obamacare subsidies. It might sound you know, technocratic, but let me try to explain it in a way that makes it quite simple: This legislation would say that nobody in the country should have to spend more than 8.5 percent of their income on health care. That’s my understanding of what the legislation is trying to do.
If you were going to do a Medicare, single-payer type of legislation that you know, the simplest way, and the way that is most often proposed to pay for it, is just a simple payroll tax, something in the range of 8.5 percent. There are lots of other ways you could fund it, but that’s that’s one that’s thrown out. In that case, you’re paying a tax and you’re getting back universal coverage.
In this case, you have a convoluted system of payments, some people are on public, some people are on private, some people have regulated Obamacare exchange plans, some people are employer covered. But nobody is supposed to have to pay more than 8.5 percent of their income toward health care, which genuinely could qualify as affordable coverage. So that that has gotten very little attention as Republicans instead have been freaking out about Dr. Seuss and Mr. Potato Head. You’re seeing this pretty substantial change to Obamacare. Am I describing that right? And is this as impactful as it seems?
EP: [Laughs.] I am not a health expert. But yes, the CBO, it’s effectively about $35 billion to get Americans brought into the individual marketplace for those who do not have health insurance, either through their employer or for whom it’s unaffordable; they estimate that almost two million workers would or two million Americans would be brought into that system. And so it’s a big policy; it’s certainly necessary. I mean, it’s crazy that when 40 million people over the last year have entered the unemployment insurance system, meaning that they’ve lost their employer-sponsored coverage, this is a band aid fix. And I think the Biden Administration has more in store in terms of increasing health insurance coverage and lowering premium costs.
AD: It’s another example of the cliff setup, though, isn’t it? It lasts for two years, and then you take it away, and then it has this bad effect on a certain number of people whose premiums will skyrocket. It’s just like with the child tax credit, and it sets up a future fight when that is only for this year and child poverty is cut by 40 percent, reverting to not having the expansion of the tax credit means doubling child poverty, almost. And so like with unemployment insurance, Democrats feel good about that fight. It’s basically their only plan right now for continuing those programs is that they’ll be in a very advantageous political situation. And a lot of temporary policies, over the past decades, have become permanent exactly this way — most notably, the Bush tax cuts in 2001 and 2003. So it’s a serious strategy.
RG: What’s also notable and fits into what you were talking about is that under Obamacare, as it stands today, there is a pretty low income cap for who can get help, which has fueled resentment from people who go to the Obamacare exchanges, and they feel like they’re paying all these taxes, they pick out a plan, and they plug in their income, and they find out they’re not eligible for any subsidies. And that’s, that’s how you breed this kind of middle class versus lower class political resentment. This busts a cap off of that. Now anybody can get subsidies to make sure that they’re not paying more than 8.5 percent of their income. Do I have that right, Arthur?
AD: Yes, that’s my understanding of it. I think it’s another example of just the insight of checks. Politics of the past years has shown that you can throw money at middle, and upper-middle class, and downright rich people, and that’s OK. It creates a stronger constituency for the program you’re doing. And it will be popular. People won’t be mad at you, and Republicans are going to talk about Dr. Seuss. They have no strategy for countering the Democratic arguments that materially benefiting people is good.
RG: Right. The only counter-arguments come from fellow Democrats, like Manchin, who seems to have a hard time getting to a place where he can universalize a benefit like this. And this one seems to have gone under the radar, so he’s not objecting to it.
AD: Republicans used to have inflation. I mean, they used to say, Oh, if you deficit spend — this is what they did in the Obama years — you’ll break the economy, and there will be inflation. And it just didn’t happen for 15 years. And now nobody cares about that.
It’s a thing to watch for: Will inflation go up? That will become a powerful argument if it does, but nobody thinks it will. Not even the Republicans at the Federal Reserve.
AD: So it’s an advantageous situation for good social policy.
RG: Right. And I do think we’re gonna see some price increases on airline tickets, and maybe beer and wine and bars, as the economy opens up, and supply chains take a while to catch up to everybody’s enthusiasm for traveling and going out, returning to the economy, but that’s different than inflation driven by deficits.
Elizabeth, what about the tax consequences for people who have gotten unemployment over the last year? States are supposed to tell people that they should withhold and that they’re going to have to pay taxes; they don’t always do that. Some of them don’t allow for that to be done easily. Are people going to get hit with tax bills or is the fact that most people are going to be in a low enough bracket that they won’t feel a bite of this. How did Democrats approach the problem of unemployment taxes becoming due in April?
EP: I mean, they have ignored the problem, largely.
RG: They have ignored the problem.
EP: That’s not totally true. So, Bernie Sanders has said publicly that you know, all taxes on unemployment insurance income should be forgiven for last year, and Sen. Durbin and Rep. Axne actually have a proposal to forgive about $10,000 of that. I think that comes up short.
So, two problems: So one, states are required to offer withholding, but they do not have to tell you that you should do it. And they did not have to offer withholding for CARES Act benefits. So for the $600 top off, or for PUA or PEUC, any of those extended programs, they are only required to offer withholding for normal state benefits.
So $580 billion were paid out to jobless workers last year as a result of the CARES Act expansion, and only about 40 percent of that had taxes withheld. And so we’re looking at about $300 billion subject to taxation that was already subject to taxation but nobody withheld on it. And so we’re looking at tax bills — we’re looking at probably a $30 billion problem.
To your question of: Are tax brackets so low that it won’t really matter? No, because a lot of folks received $20,000 to $30,000 worth of unemployment insurance last year as a result of the $600 top off, and the fact that 40 percent of unemployed workers have been out of work for more than six months. And so it’s very easy to rack up $20,000 of unemployment insurance income. And if you had worked for a couple months before being laid off, you’re very easily in the second, if not the third, bracket. And so we’re looking at 12 percent of your income in taxation, and the standard deduction doesn’t cover all of that.
And so we’ve seen stories from workers on the ground where they’ve logged on to TurboTax to file their taxes, and they find that the owe the IRS $1,000, they owe their state governments $500, in New York City they might owe the New York City Government 5 percent of that income, and there you can easily rack up a $2,500 tax bill, you’re still out of work, you’re still receiving unemployment benefits that don’t cover all of your pre layoff wages. It’s a huge problem. And they’ve told us that they’re going to take their stimulus checks that are meant to stimulate the local economy and put roofs over people’s heads, and they’re going to turn around and write the check back to the IRS. And that is not the purpose of the checks and it doesn’t serve our economy; it doesn’t serve these jobless workers. And it’s, as a senior Democratic aide put it in an article the other day, it’s political malpractice for these senators to just leave these people out to rot and to pay the IRS right now.
RG: So Arthur, 10 years ago, Rahm Emanuel told Barack Obama that he couldn’t do anything with a “t” when it came to pushing legislation through Congress. And that applied both to Obamacare and to this stimulus. This time around, Democrats just plowed right through that. They did not just something with a “t,” but almost pushed it to $2 trillion — they kind of hilariously did $1.9 trillion, as if it’s like some some late-night set of pots that they’re that they’re selling and trying to keep it to $19.99 with your first payment of $9.99 — but they broke that taboo of a “t.” And the next day, people were just talking about what’s in it rather than the size of it. Do you think that this kind of transforms what Congress is able to do on the spending side?
AD: Definitely. What’s happening is Republicans have never believed the stuff they said about deficits. And after they passed trillions of dollars, and approved trillions of dollars, of tax cuts and spending, Democrats are not letting them put it back. They immediately — as soon as it looked like Trump would lose and then Trump did lose — Republicans switched back on a dime to saying we can’t spend money and Democrats just said no. And that was really important. And it’s important for them to pass this bill and to prove that they’re not scared of those talking points.
And it is hilarious that it’s $1.9 trillion. And, as a result of their unwillingness to go above that number, they’re nickel and diming the unemployed on tax bills, like they’re very consciously doing that and stopping short on unemployment insurance. But I do think that this taboo will remain broken after they pass this bill. It’s entirely up to Democrats to keep the money going, and to keep politics changing in a favorable direction for making life better in the United States.
RG: Elizabeth, Arthur, is there anything else hidden in this legislation that people should know about?
EP: Yeah, I think two big pots of money are about $40 billion each for rental and homeowners’ assistance, and $40 billion for a childcare bailout. We know that childcare and daycare centers have been largely left out of the kind of school and education aid conversations in previous packages, and a lot of women going back to work depends on having dependent childcare. And so I think those two buckets, with one in five renters behind on rent and with a lot of women dropping out of the labor force for child care concerns, getting kids back in schools, but also back in daycares, and pre-Ks, and all of those things, those are both going to be really important, as we kind of “build back better,” as the President puts it.
AD: I can tell you about one other really tiny thing, but that is sort of interesting. In the last bill, they made it so that news publishers and TV stations and radio broadcasters would be eligible for Paycheck Protection Program loans, which are essentially grants if you don’t fire people. And Marco Rubio excluded internet-only news publishers —
RG: [Laughs.] What?!
AD: For no reason! His office wouldn’t say why. And so Democrats are putting them back in.
RG: The HuffPost bailout! The BuzzFeed bailout!
AD: Well, I think there was concern that an internet publisher that’s attached to a big company would be able to get money, or that a Google or some giant web portal would be able to sneakily claim it. But whatever the reason, they said, as long as you’re a legit internet news publisher, like HuffPost you could qualify for this. I don’t believe HuffPost would apply for it, but that’s a little change that they did.
EP: I think, I think the one last thing I mentioned is that the earned income tax credit was expanded, so there’s a lower income threshold, and a higher payment, and a lower age. So that’s a big thing for low-income workers.
And then the last thing we haven’t touched on is that the minimum wage increase was scrapped from the bill due to the parliamentarian ruling, which I know was a devastating blow to progressives and to a movement that’s really organized around the fight for $15 for the last decade. So I think that’s the big omission from the bill that is really unfortunate. And it will be interesting to see how the administration —
RG: And do either of you have hope?
EP: — it’ll be interesting to see how the administration moves forward with the minimum wage fight given, even, opposition within their own party on whether $15 is the right number.
RG: I mean what you can say for them is that they started the fight, at least. Because it just wasn’t a big part of the national conversation. And now it is. Joe Biden put it in his rescue plan, seemingly knowing from the start that this would happen, and telegraphing for weeks that he wouldn’t want to overrule the parliamentarian or anything like that. And now, it’s a big conversation, and Republicans have put up counter-proposals. And so it does seem like they will try to find a way — with Republicans, which might not work — but it is at least a big topic for the first time in a long time.
RG: So you don’t think there’s any chance Kamala Harris overrules the parliamentarian, but you do think there’s an actual legislative path?
EP: Yeah, I think that first part is 100 percent right. Every member of the White House team has said there’s no chance that Kamala would overrule the parliamentarian. And even senators in the Democratic Party have said they would not support that.
Conversely, for the path forward, I don’t know. We’ve seen Republican compromise attempts. I think Lindsey Graham has this whole spiel about Waffle House, has this great pitch. And Mitt Romney and Sen. Cotton came out with a pitch that would combine with E-verify.
I don’t know. Hopefully there’s a path forward for the sake of the 30 million workers who deserve to not live in poverty after working full-time, but I don’t know what it will be, if we’re looking at an $11 or $12 increase, if we’re looking at more incrementalism, if we’re looking at excluding small businesses, it’s unclear what the path forward is. And I think progressives are really going to have to come up with a plan B over the next few months if they want this to happen.
RG: And that plan B could be busting the filibuster, which we have an episode on in February, people can go back and listen to.
EP: That would be a great one. Yeah.
RG: Arthur Delaney, Elizabeth Pancotti, thank you so much for joining me on Deconstructed.
EP: Yeah, thanks for having us.
AD: Thank you!
RG: That was Arthur Delaney and Elizabeth Pancotti, and that’s our show.
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