Memo to Washington: We need another COVID-19 relief bill — now

Photo by Getty Images.

What are they waiting for?

Back in the spring, federal policymakers acted quickly to address the emerging pandemic and economic disruption.

Among various measures taken, they expanded unemployment insurance to respond to the record number of people out of work. They boosted federal dollars for affordable health care through Medicaid, and provided some modest funding for states, tribal nations and local governments to cover some of the costs of responding to COVID-19.

It wasn’t perfect, but strong federal coronavirus response legislation meant that more Minnesotans could stay healthy and better make ends meet.

Policymakers should have built on this rapid response, given the ongoing public health crisis and severe economic downturn.

The HEROES Act passed by the U.S. House in May took the kind of comprehensive, at-scale approach that this moment requires, including the essential support for both people and state and local governments that is needed to jump-start the economic recovery and reduce hardship. Unfortunately, the U.S. Senate’s response fell severely short of what’s needed, and we’re left waiting for federal policymakers to take action.

What are they waiting for?

If they need evidence of the persistent and deep harm being caused by the recession, that’s demonstrated by the staggering increases in hardship documented in July by the Census Bureau:

  • There has been a dramatic increase in hunger; 326,000 Minnesota adults lived in households that sometimes or often don’t get enough to eat.
  • More people are at risk of homelessness, with 16 percent of Minnesotans falling behind on rent.
  • Job losses remain high; workers with low wages are much more likely to be out of work.
  • Black and Latino people are more likely to face hunger, have difficulty paying the rent, or be out of work. Past policy decisions and ongoing discrimination means that people from communities of color are more likely to work in low-wage jobs, not have enough emergency savings to get through prolonged economic challenges, and face greater barriers to receiving economic assistance.

And, the earlier federal policy actions are starting to run out even as the need for them remains.

In the meantime, state and local governments have stepped up to promote public health and provide economic supports for their residents struggling to pay the bills. But it is getting harder for them to do so. The recession is causing their revenues to fall steeply; and states must balance their budgets every budget cycle, regardless of economic conditions or emerging needs. 

Only the federal government can act at the scale needed to stimulate the national economy, and it should authorize additional funding to protect essential services provided at the state and local levels, as it has in past recessions.

In Minnesota, declining revenues contribute to a projected $2.4 billion state budget shortfall in the current two-year budget cycle and a $4.7 billion shortfall in the next biennium. That’s the mismatch between existing budget commitments and expected state revenues — those figures don’t include the full costs of fighting the health and economic effects of the pandemic.  

The things that state and local governments often do when federal assistance is inadequate — such as cutting services everyday people count on and laying off employees — would be a further drag on the economy.

In contrast, federal aid to state and local governments stimulates the economy. Harvard economist Jason Furman notes that, “For every dollar we spend on state and local assistance, it adds probably $1.70 to the size of the overall economy. There’s nothing that economists have studied better and more carefully when it comes to fiscal policy multipliers, probably, than state and local assistance.”

Governors, legislators, mayors and other local officials across the country warn that Congress’ failure to act “would lead to massive cuts to the very services that are sustaining millions of Americans during the pandemic and recession, and that are necessary for a rapid and sustainable recovery,” as well as risk further job loss.

What are they waiting for?

Historically high numbers of people are out of work, wondering how their families will get enough to eat, and how much longer they will have a roof over their heads. States have already cut funding for K-12 schools, colleges and universities, support for people experiencing homelessness, and other services — actions that balance their budgets but weaken their communities.

Our common humanity and basic economics demand that federal policymakers quickly enact a new COVID-19 relief and economic recovery bill so that Americans can be healthy and come back from the economic brink, and provide aid to state and local governments so they can continue to do their part. That’s what’s needed to stave off worse economic hardship, as well as a deeper and longer recession.

Minnesotans can’t wait any longer.