Originally published in The Mercury News
By Dianne Feinstein:
Federal Reserve Chairman Jerome Powell late last month said the outlook for the U.S. economy is “extraordinarily uncertain and will depend in large part on our success in containing the virus.”
Employment data illustrates this uncertainty: While the economy added 4.8 million jobs in June, a record number, that progress is threatened by a renewed surge of coronavirus cases. And to make matters worse, many Americans laid off since March are finding their old jobs are no longer there for them to return to.
The success we have experienced can be attributed to the CARES Act. This law has helped nearly 5 million small businesses remain afloat and prevented millions of layoffs from becoming permanent.
In addition to helping businesses maintain their payroll, the CARES Act provided $1,200 to most Americans to help pay bills and stimulate spending. Expanded unemployment benefits — an additional $600 per week — helped tens of millions more. All told, approximately 12 million Americans remained above the poverty line because of this intervention.
But as promising as the economic recovery was, it has faltered since mid-June with the resurgence of coronavirus infections. As we wait for the July job numbers to be released, new unemployment claims stubbornly continue to rise by more than 1 million per week, now for 18 straight weeks
On top of that, many states and localities face massive budget deficits due to declining revenues from the economic shutdown and the costs of addressing the pandemic. The Center on Budget and Policy Priorities estimates that state governments alone will face a $555 billion shortfall through 2022. That doesn’t include hundreds of billions more in expected deficits for local and tribal governments.
What we can do:
As the Senate considers another stimulus package, there are a number of steps we should take to provide additional relief and bolster the nascent recovery.
• First, the Senate bill should provide federal aid to state and local governments to help them continue providing essential services. With experts predicting the pandemic will result in more than $1 trillion in state and local budget shortfalls, the federal government must step in to prevent massive cuts to critical services, including health and education.
• Second, it should extend income support for unemployed and vulnerable individuals, including continuing the expanded unemployment benefits beyond the end of this month. Republicans, many of whom previously refused to consider extending this support, are now suggesting they’re open to compromise.
• Third, it must continue to invest in programs that keep workers on the job. The CARES Act provided forgivable loans to small businesses so long as employers retained their employees on payroll. This will make it easier for those businesses to reopen once conditions warrant. But we know that some sectors — restaurants, travel and tourism and entertainment, to name three — will face a longer and more difficult return to normal. They will need additional aid.
• And fourth, it should provide additional stimulus to make up for lost demand due to the economic crisis. Economic experts say there are a number of ways to achieve this, including continued support to the unemployed. But however it’s accomplished, stimulus will be needed to ensure a speedy recovery.
This is a common sense approach to help American workers and businesses as we continue to battle the coronavirus. However, all of these steps are contingent on a national strategy to get the coronavirus under control.
We need to rapidly expand testing and contact tracing. We must expand vital research into the development of treatments and a vaccine. And all of us should be doing our part by maintaining physical distancing, avoiding large gatherings and wearing masks in public.
The House already passed a $3 trillion package that would implement many of the strategies outlined above. The Senate should either immediately vote on the House bill or pass its own legislation that fully addresses those needs.
Any further delay will only hurt American families. If we do nothing, the economic gains we’ve seen could easily wither on the vine. We can’t let that happen.
Dianne Feinstein represents California in the U.S. Senate.