Theo: I spoke to the top lobbyist for the National Restaurant Association on Thursday, who told me the trade group estimates that 3 percent of restaurants have been forced to close for good already. If businesses remain shut for another month or two, I’d imagine that number is going to rise. How many bars, restaurants, newspapers and other businesses will never reopen? And how will those closures and bankruptcies ripple through the broader economy? It’s too soon to know.
Ryan: 100 percent. We still know so little about the virus, including whether it is seasonal or not. So this could become an annual problem even if contained in 2020. And we don’t know which economies can get started again and when: don’t forget it’s still the tail end of summer in the Southern Hemisphere: so just went things smooth out here, many countries including vulnerable regions in Africa could face wipeouts. We are already seeing governments recognize they were too dependent on China in their supply chains, and unprepared in terms of medical equipment supplies. So you’re going to start seeing a lot more foreign investment screening, and efforts to restrict exports of key materials.
How do the direct payments work? Who will get a check? Will small businesses remain solvent? And what sort of oversight will there be to how the money is distributed?
Andrew: Every American whose income was below $75,000 in 2018 will receive a $1,200 direct payment from the IRS, in addition to $500 per child. The overall value of the payment decreases for individuals who made more than $75,000 in 2018, and cuts off at $99,000. If you’ve already filed your 2019 tax returns, your 2019 income will determine the amount you receive. Keep in mind that the IRS has extended the 2019 filing deadline by three months, to July 15. For small businesses, the bill includes more than $350 billion in forgivable loans — that is, if a business uses the funds to keep paying their employees and for other essential purposes, the business likely will not be required to pay the money back to the government. The legislation also establishes strict oversight for the money that goes to larger corporations, including the creation of an inspector general and a congressional panel to oversee the process.
Theo: The structure of the congressional oversight panel is reminiscent of the one designed to oversee the bank bailouts during the 2008 financial crisis. The chairwoman of that panel? Elizabeth Warren, who was a Harvard professor at the time and was tapped by Senate Majority Leader Harry Reid. Will the current oversight efforts launch any political careers?
Caitlin: Another noteworthy detail about that $500 billion corporate relief program — in addition to oversight by an inspector general and a special congressional panel, the final rescue package prohibits businesses controlled by the president, members of his family, members of his administration and members of Congress from receiving loans. The oversight protections were added after Democrats balked at an earlier Senate draft of the bill that they felt granted the Treasury secretary too much power, but Republicans have contended that they never opposed those additions.
Ryan: I only moved to the U.S. in 2019 … I’m assuming my check is never going to be in the mail. And on that note: why does the United States still have checks at all? More and more countries are banning them altogether. For the next pandemic: Direct deposit and one-time debit cards would be more secure and efficient distribution systems.
Victoria: Actually, all three payment options are on the table.
Lawmakers on both sides of the aisle raised strong objections to the $2 trillion relief package. Why did it pass in the Senate 96-0?
Andrew: One word: urgency. The Senate didn’t have time to hold hearings, debate amendments, and otherwise go through the normal legislative motions. To some people, that’s an indictment of the process itself and further evidence that the institution is broken. But lawmakers on both sides of the aisle stressed the urgency of delivering economic relief, given the fast-moving pace of the cascading financial fallout. While the Senate was engaging in negotiations with the White House, American businesses were making immediate decisions about layoffs and long-term closures; senators said those businesses needed certainty, and they needed it fast. So while everyone could find something in a $2 trillion package that they don’t like, in the end they all agreed that the alternative would be worse.
Anita: Of course there are things Republicans and Democrats didn’t like about this bill. The same with Trump, whose treasury secretary, Steven Mnuchin, negotiated with lawmakers on the administration’s behalf. How could there not be some things they didn’t like in a whopping $2 trillion, 880-page bill? But senators have been hearing from constituents who are out of work, industries that are struggling and hospitals, cities and states in desperate need of money. They weren’t about to go home to their states without showing they had done everything they could do to help.
Is Trump’s goal of re-opening at least parts of the economy after 15 days realistic?
Anita: Trump is expected to announce what he sees as the next step forward early next week as his 15-day plan urging social distancing comes to an end. He could end up extending the national guidelines for a while but it wouldn’t surprise me if he starts loosening them for some parts of the country. Remember this important distinction though: Trump and federal officials issue guidelines. Local and state officials are actually the ones who have mandated actions – closing schools, parks, restaurants and restricted gatherings. Most have not indicated they are ready to reopen anything. In fact, they are still ordering additional closures, even as Trump talks about reopening the country. So Americans are about to be more confused than they already are: Their president is going to tell them one thing and their governor is going to tell them another.
Sarah: Public health officials are adamant that 15 days is not enough to contain the virus. The president’s eagerness to reopen sectors of the economy could set up a battle with state and local leaders, who like Anita said are the ones who lay down the rules on whether businesses can be open. Most states and cities with a form of lockdown in place—whether it is a shelter-at-home order in the Bay Area or non-essential business closures in a range of states—have put those measures in place through the month of April if not longer. Meanwhile several states have closed schools for the rest of the academic year—even the Olympics have been pushed back. The president can urge people to go back to work, but realistically that will not be up to him.
Victoria: Agree with Anita and Sarah, and there’s an additional point here: the economy won’t come roaring back even if all restrictions were lifted. Absent signs that things are getting better, people will still be aware that there’s a pandemic that could be life-threatening, and so many people will still be hesitant to go back to restaurants, travel, or do any of the other things they’re not doing right now. And lots of people will be out sick, or taking care of family members who are sick. That’s why economic experts, including Federal Reserve Chair Jay Powell, have said the virus will drive the timetable of the economic recovery. Plus, national jobless claims last week came in at a staggering 3.3 million, nearly five times the previous weekly record. You can’t just snap your fingers and undo that.
Ryan: The U.S. is not one outbreak center, but that doesn’t mean it’s easy to reopen certain states and counties. It actually just means there are many, many fires burning at once. There’s at least a dozen states with 1500 or more cases. Cities like Detroit, New Orleans and Atlanta are going become and remain problems for a while. Knowing what you can restart and what has to stay shut down depends on good data, and that’s lacking. And it depends on federal coordination, which has also been lacking. And given there are so many asymptomatic carriers and no vaccine, it’s very optimistic to think based on current systems that we know how to control this. If the Administration does insist on a quick reopening of the economy, I would expect some states and counties will have to reverse course at some point, when it becomes apparent that the virus is not in fact under control in their area.
Source: politico.com
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