Is it any wonder that so many people have lost faith in organized politics? After a week in which the daily tally of coronavirus cases and deaths both hit a new record, and the Labor Department announced that another 1.3 million Americans applied for unemployment benefits last week, Congress still hasn’t managed to pass a new spending bill to extend a number of emergency relief measures that were enacted back in March, as part of the CARES Act, and which are due to expire at the end of the month.
In an effort to force through an agreement, the leaders of the two parties have tied approval of a new COVID-19 relief package, which is reportedly worth about nine hundred billion dollars, to passage of a broader spending bill that is needed to fund the rest of the federal government. On Friday evening, the House and the Senate passed a stopgap spending measure, the second such bill in a week, which will keep government agencies running until the end of Sunday. The hope is that by then the two sides will have resolved their differences over the COVID-19 bill, the thorniest of which involves a Republican effort to restrict the Federal Reserve’s freedom to maneuver in the coming months.
In theory, the approval of two vaccines for the deadly virus should have made reaching a deal easier. Finally, there is an escape route from the pandemic, and the task facing legislators is a straightforward one: providing sufficient financial support for individuals, businesses, and state and local governments to get through the next few months, until most people are vaccinated. With the interest rates on Treasury bonds near record lows, there should be no problem financing a new spending bill. The barrier is raw partisan politics on the part of the G.O.P.
Led by Senator Pat Toomey, of Pennsylvania, a group of Republicans is trying to include a stipulation in the COVID-19 bill that the Fed must gain congressional approval before restarting a series of emergency-lending programs it introduced earlier this year, after the stock market plummeted and problems emerged in the credit markets. You may ask what tying the hands of the central bank has to do with the other elements of the spending bill, which include extending unemployment benefits, keeping restaurants and other small enterprises in businesses, preventing a wave of evictions of people who have fallen behind on their rents, and providing another cash handout to low- and middle-income families. The answer is virtually nothing. The Republican demand isn’t about helping people make it through the rest of the pandemic. It’s a partisan ploy to hobble the incoming Biden Administration, which Toomey and others fear might try to use the Fed’s ability to create money to bypass a Republican-controlled Senate.
It would be one thing if such a maneuver on the part of a Biden Administration was a real possibility, but it isn’t. The emergency Fed programs that were designed this spring to enable credit to flow to small and medium-sized businesses, as well as states and municipalities, are set to expire on December 31st anyway. Despite the severity of this year’s coronavirus recession, they didn’t end up being used that much. At the instigation of the Treasury Secretary, Steven Mnuchin, the Fed has already promised the Treasury that it will return unused funds that Congress provided to the central bank through the CARES Act. Furthermore, Jerome Powell, the chair of the Fed, has made perfectly clear that he doesn’t want the central bank to be used as a surrogate for fiscal policy. Biden’s economic team, which includes Janet Yellen, Powell’s predecessor at the Fed and the nominee to be the next Treasury Secretary, is fully aware of this stance. And, like Powell, it’s committed to maintaining the independence of the central bank.
About the only conceivable circumstance in which the Fed would try to restart its emergency lending programs is if there was another blowup in the credit markets. But, if that happened, Congress would almost certainly authorize this action anyway—as it did earlier this year, and in 2008, during the financial crisis. In other words, Toomey is raising a phantom threat. But he won’t give it up. According to the Wall Street Journal, the language he wants inserted in the spending bill would bar the Fed and Treasury from establishing, without congressional approval, not only the expiring programs but any new lending facility “that is similar to any program” created with money from the CARES Act. If this became law, Congress would potentially have veto power over the Fed using other funds that have long been provided to it for use in a crisis. And, in pursuit of this end, Toomey and some of his colleagues are apparently willing to torpedo a spending bill that is essential to the welfare of tens of millions of Americans.
According to the Labor Department’s figures through November, 3.9 million Americans had been out of work for twenty-seven weeks or more, and this doesn’t count people who have dropped out of the workforce. The department also says that about two million people have already exhausted their eligibility for Pandemic Emergency Unemployment Compensation, a CARES Act program that extended jobless benefits from twenty-six weeks in most states to thirty-nine weeks. If this program and another one that caters to gig workers aren’t extended further, millions more people who were cast out of work through no fault of their own could well find themselves ineligible for any benefits at all.
Such an outcome would only worsen the hunger epidemic, which is already rampant. According to data collected between November 25th and December 7th from the Census Bureau’s Household Pulse Survey, 27.4 million American adults—about thirteen per cent of adults in the country—said that their household sometimes or often didn’t have enough to eat in the last seven days. This figure has risen by five million since late August, Catlin Nchako, an analyst at the Center on Budget and Policy Priorities, pointed out in a blog post this week. Like many other problems associated with the pandemic, the hunger crisis is most severe among minority groups: more than a fifth of Black and Latino adults reported not having enough to eat.
The new spending bill, of course, won’t be a panacea for the deep-seated problems that the pandemic has highlighted and accentuated. But enacting it would prevent or alleviate a great deal more needless suffering. This could still happen in the next couple of days—if Toomey and his colleagues stand aside.