The Senate’s new coronavirus aid package is a mixed bag, according to a new report from The Heritage Foundation.
“Any action that Congress takes should be targeted, temporary, and linked directly to the coronavirus epidemic in order to address the source of the economic shock while limiting any political abuse that can develop in a moment of crisis,” states the report’s summary.
“Unfortunately, the Senate’s coronavirus bill, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, misses this mark by including special benefits to specific industries that will exceed $200 billion.”
The Heritage Foundation’s report is titled “The Senate’s Coronavirus Bill: Bailouts, Missed Opportunities, and Positive Reforms.”
The Senate’s aid package, which was released by Republicans Thursday and could be voted on as soon as this weekend, would cost up to $1 trillion. It would give monetary relief to airlines and other industries impacted by the COVID-19 pandemic, as well as send checks to many Americans.
Among other provisions, couples who make up to $150,000 a year would get checks for $2,400 in the mail and individuals earning up to $75,000 would get checks for $1,200, The Daily Signal’s Fred Lucas reported.
Individuals who make over $99,000 a year and couples making over $198,000 would not receive any federal assistance under the current legislation.
The Heritage report, authored by eight researchers focusing on health care and economics, states:
Broad-based relief is not a well-targeted prescription for this crisis. … Government supports should be targeted toward keeping people employed and supporting those who do lose their jobs due to the coronavirus crisis.
The CARES Act would allocate $208 billion in loans and loan guarantees for three entities: $50 billion for passenger air carriers, $8 billion for cargo air carriers, and $150 billion for other businesses.
“A bailout of this magnitude of large firms and with so few taxpayer protections is unwarranted,” the Heritage report states, adding:
Furthermore, turning the Treasury Department into a large investment bank with almost unlimited discretion is a recipe for cronyism, favoritism, poor results, and taxpayer losses. At the very least, firms should be able to secure loans only in amounts that are demonstrated to be directly related to their crisis-related losses.
Instead, Heritage researchers write that businesses should first explore obtaining economic support from the private sector before turning to the federal government.
“For instance, the firms should be required to demonstrate that they cannot obtain credit from private sources on commercially reasonable terms, and the legislation should establish detailed criteria for what is deemed commercially reasonable,” the report recommends.
Sen. Mike Lee, R-Utah, said in a formal statement Thursday that any legislation must recognize that “Americans are all in this epidemic together,” adding:
That means fighting for broad-based action to help all Americans through the social and economic disruptions this emergency is creating.
Americans are all in this epidemic together. So the federal response—from loan guarantees to tax reforms to regulatory relief to direct aid to families—should be as inclusive as possible, rather than carved out only for select special interests.
Sen. Marco Rubio, R-Fla., said in a written statement that “the economic uncertainty and potential global impact we are facing due to the coronavirus pandemic are unprecedented.”
Rubio urged passage of the proposed Keeping Workers Paid and Employed Act, which he introduced along with Sens. Susan Collins, R-Maine, and Lamar Alexander, R-Tenn. This bill is part of the larger Senate aid package for the coronavirus.
“America’s more than 30 million small businesses—and the 59.9 million individuals they employ—today face the prospect of going bankrupt,” Rubio added. “They face this threat due to no fault of their own, but because of a global pandemic that takes human lives and grinds productivity to a halt. The Keeping Workers Paid and Employed Act is the best path forward to help businesses and their employees endure this catastrophic disruption.”
Jason Pye, vice president of legislative affairs at FreedomWorks, said his organization is reviewing the package and expects it to further evolve as negotiations continue. In a statement provided to The Daily Signal, Pye wrote:
In addition to the impact of COVID-19 [on] public health, we remain concerned about the budget deficit. According to the most recent [Congressional Budget Office] baseline, as of March 6, the deficit is projected to be $1.073 trillion. That projection didn’t include the Phase II package [of COVID-19 relief]. It also doesn’t include Phase III, which will reach $1 trillion, or any future action related to it. Such a large deficit could prolong the recovery.
Thomas A. Schatz, president of Citizens Against Government Waste, wrote in a blog post on the organization’s website that “Washington needs to use every available resource to rescue the American people.” But, he said, that does not mean a blank check to implement programs such as “Medicare for All” or forgiving student debt.
“Liquidity is the key to rescuing the nation from the worst potential economic impact of the coronavirus,” Schatz said. “If the airlines can’t fly, they can’t pay bills. If individuals can’t pay rent or buy food, they need help from the government. This does not mean that fiscal responsibility should be completely abandoned. The funds must be used as intended for only as long as necessary.”