With Congress already having passed two emergency measures in response to the coronavirus crisis, the question isn’t whether there will be a third, but rather, what the “Phase 3” package will entail.
Senate Majority Leader Mitch McConnell (R-Ky.) yesterday afternoon released his initial pitch, as NBC News’ report noted, it includes roughly a half-trillion dollars in emergency aid for distressed industries and small businesses. But it’s the direct cash payments to the public that raised eyebrows.
The proposal, expected to cost around $1 trillion, calls for direct payments on a tiered scale. Individuals making $75,000 based on a 2018 tax return would be eligible for $1,200 payments, or $2,400 for couples filing jointly. The payments would decrease for those making more than $75,000, with an income cap of $99,000 per individual or $198,000 for couples. The payments would also increase $500 for each child a person or couple has. However, taxpayers with little or no income tax liability but at least $2,500 of qualifying income would be eligible for only $600 or $1,200 for couples.
As a matter of propriety, it’s difficult to defend the idea of making direct payments, but imposing limits that tilt the scales in ways that disadvantage those who have the least. And as a matter of economic policy, it’s just as bad: as was obvious during the last economic crisis, those with the lowest incomes are the most likely to spend any benefits that come their way, which necessarily helps boost economic activity at a critical time.
Yes, it’s obviously callous to shortchange those with the least, but in a proposal intended to boost the economy, it’s also needlessly counter-productive.
What’s more, this element of McConnell’s plan is a one-time payment. Congressional Democrats have pushed for multiple rounds of payments, which is in line with the position the White House espoused this week.
All things considered, McConnell almost certainly knows that the Senate Republican leadership’s plan won’t pass — there’s a Democratic-led House, after all — and it seems like an opening bid as negotiations get underway. That said, if this is where McConnell wants the talks to start, it’s going to take precious time to work toward a final solution.
Postscript: Congress’ top two Democrats — House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer — issued a joint statement late yesterday sketching out their expectations:









