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Congress cannot ignore the need for COVID-19 relief

Congress cannot ignore the need for COVID-19 relief
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COVID-19 is not even close to being contained. More Americans — over 5 million — lost health care coverage in six months of 2020 than in any previous full year. Jobs have rebounded a bit, but then the health crisis intensified and it undoubtedly will take some of those regained jobs away again. States are hurtling toward a fiscal crisis unseen in our lifetimes.

Yet, the economy is keeping afloat because Congress put cash in people’s pockets all spring, with direct payments and expanded unemployment insurance benefits. The CARES Act, passed in March, contained much to criticize, including tax cuts to the richest and $500 billion for big corporations. But the provisions to people saved the economy — until now. 

That could end as parts of the CARES Act expire. Policymakers can’t let that happen. Instead, they must learn from, and build upon, what worked as they advance a next round of relief.

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Unemployment insurance expansions were the single best element and should be extended until the economy returns to healthy employment levels. These payments prevented steep plunges in earnings for many laid-off workers. Ending them would deepen the recession and clobber families, torpedoing an additional 5 million jobs and $500 million in personal income, according to the Economic Policy Institute. Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellOn The Money: Unemployment gains lower than expected | Jobs report lights fire under coronavirus relief talks GOP senators back Christian school's push for COVID-19 carve-out Bipartisan governors call on Congress to pass coronavirus relief package MORE (R-Ky.) knows this but wants to cut the size of the payments. That’s unacceptable.

Although the CARES Act provided needed help, many provisions could have been better. Its relief to states was too stingy, with too many strings attached. States face a fiscal cliff that threatens to plunge millions of additional workers into unemployment, kneecap essential services, and disproportionately harm Black workers and women. This time, Congress should provide at least $1 trillion to state and local governments. Without it, employers in Sen. McConnell’s Kentucky would cut nearly 70,000 jobs. He has set an arbitrary — and absurd — overall ceiling on what the whole next bill can cost. 

Relief in the next bill should be targeted to families who have been most harmed, and should leave nobody behind. This means strengthening the earned income and child tax credits and including additional cash payments that are automatic and ongoing until recovery is complete. The CARES Act intentionally omitted some people from cash payments. It left out dependents 16 and older and many new graduates seeking jobs in an abysmal labor market. It excluded more than 7.8 million undocumented immigrants who file taxes using an Individual Taxpayer Identification Number, even those with citizen spouses and children. Immigrants who have filled roles in food supply, delivery and care work are essential workers, not expendable, and deserve inclusion in relief.

The Trump administration has bungled its response to the virus, making us an international embarrassment. As Europe and Asia have begun to successfully contain the health crisis, new cases rage throughout the United States, particularly in states that flouted public health advice. 

But in one regard, President TrumpDonald John TrumpAppeals court OKs White House diverting military funding to border wall construction Pentagon: Tentative meeting between spy agencies, Biden transition set for early next week Conservative policy director calls Section 230 repeal an 'existential threat' for tech MORE and Sen. McConnell have excelled: pushing tax cuts for their wealthy donors. Trump wants a pricey payroll tax cut, which is of no help to people who are not on a payroll because they lost their jobs. They’ve mentioned further slashing taxes on capital gains, which already are taxed at lower rates than other types of income. Three-fourths of the benefits from this break would go to the richest 1 percent. Policymakers should focus on containing the health and economic catastrophe — not more tax cuts they’ve long sought. 

COVID-19 has proven that the most important public problems can’t be solved by tax breaks for the rich. To the contrary, we need a well-funded public sector, resourced and empowered to solve problems such as a pandemic that has killed more than 140,000 Americans and continues to threaten our lives and our economy.

Amy Hanauer is executive director of the Institute on Taxation and Economic Policy. Follow her on Twitter @amyhanauer.