House Set to Pass $3 Trillion Coronavirus Relief Bill

Plus: White House floats another corporate tax cut By Yuval Rosenberg House Set to Pass $3 Trillion Coronavirus Relief Bill Destined to Die in the Senate The Democratic-led House is set to pass a $3 trillion emergency coronavirus relief bill that is destined to be ignored by the Republican-controlled Senate. The package, which would be the largest emergency spending package in U.S. history, provides nearly $1 trillion in additional aid to state and local governments as well as another round of direct payments to individuals, a further extension of enhanced unemployment benefits, hazard pay for frontline workers and funding for increased coronavirus testing. But the 1,800-page legislation, titled the HEROES Act, also includes a number of other Democratic priorities, such as allowing voting by mail this November and a temporary repeal of the cap on state and local tax deductions. Senate Republicans have dismissed the legislation as a “left-wing wish list” and said the bill would be dead on arrival in their chamber. President Trump has also pledged to veto the legislation should it get to his desk. Some Democratic defections: The bill appears certain to pass despite some [objections]( from both progressives, who say the legislation doesn’t go far enough, and moderate Democrats, who worry about backing a partisan bill that stands no chance of becoming law. Rep. Pramila Jayapal of Washington, a leader of the progressive caucus, had pushed for a $600 billion “Paycheck Guarantee” program that would have providing federal funding to cover business payrolls, but Democratic leadership rejected the plan as too costly and complicated. Jayapal announced Friday she would oppose the HEROES Act, saying that in her view, it “ultimately fails to match the scale of this crisis.” Rep. Abigail Spanberger, a moderate Democrat from Virginia, also came out against the bill. “Unfortunately, many Members of Congress — including some in my own party — have decided to use this package as an opportunity to make political statements and propose a bill that goes far beyond pandemic relief and has no chance at becoming law, further delaying the help so many need. Therefore, I will respectfully vote against this bill,” she said in a statement. An opening offer: Despite those internal divisions and Republican opposition, House Speaker Nancy Pelosi pushed ahead with the package in order to lay down a marker for bipartisan talks. “We’re putting our offer on the table. We’re open to negotiation,” she told reporters on Thursday. No formal negotiations are happening, though, as Republicans and the White House say they want to assess how the trillions of dollars previously provided are working. The bottom line: Any bipartisan progress on the next round of coronavirus relief is likely still a long way away. Larry Kudlow, director of President Trump’s National Economic Council, on Friday dismissed the idea of another large spending package, and the White House is still pushing for new tax cuts (see more on that below). “The point here is another $3 trillion package just seems off target to me,” Kudlow [said]( Friday. “I don’t believe we can spend ourselves into prosperity over time, and instead I believe that President Trump’s original policies, which reduced taxes and regulations, are exactly the tonic that we should pursue going forward in a new round of negotiations.” Those ideas are unlikely to find much support among House Democrats. White House Floats Another Corporate Tax Cut The White House on Friday floated the idea of a massive corporate tax cut for U.S. companies that bring their operations back from other countries. “Why not provide a 50% discount for the corporate tax rate if you’re moving from outside the U.S. to the U.S.?” Kudlow [told]( reporters. “So, the rate is 21%. Why not try for a couple of years or longer, a 10.5% rate, which would make us extremely competitive and hospitable to new investments here?” White House officials have begun studying the idea, but have not yet circulated a formal proposal, The Washington Post [reports](. Kudlow reportedly also said that officials could explore suspending capital gains taxes on assets bought between now and the end of the year. The 2017 Republican tax law cut the corporate income tax rate from 35% to 21%, which led to a [steep decline]( in corporate tax receipts. House Democrats aren’t likely to go along with the idea of further cuts. Lawmakers have also largely dismissed President Trump’s repeated calls for a payroll tax holiday, and economists have questioned how effective tax cuts would be in addressing the pandemic. Kudlow’s suggestion is "like trying to graft supply-side Reaganism onto conservative populism,” Samuel Hammond, a policy expert at the center-right Niskanen Center think tank told the Post. “A lower corporate tax rate probably won’t suffice to build an entirely new factory within U.S. borders.” Millions of Americans Are Still Waiting to Get Their Unemployment Benefits Two months after the coronavirus pandemic first led to vast parts of the U.S. economy being shut down and an unprecedented loss of jobs, states are still struggling to handle the surge of new unemployment claims, leaving millions of Americans waiting on tens of billions of dollars in benefits. More than 36 million Americans have filed new unemployment claims over the last eight weeks, but Bloomberg News reports that shortcomings in the unemployment-insurance system are leaving millions facing a dire cash crunch, contributing to frustration and anger over the lockdowns that public health experts say are needed to curb the spread of the virus: “Bloomberg News contacted all 50 states this week and less than half provided figures on how many people had been paid the benefits they were owed. But in those states alone at least 5 million initial claims filed were yet to be paid. The gap between the initial claims reported March 15 to May 2 and continuing claims is now more than 10 million people. … “In April, the Treasury, which funds the payments made by states, paid out an unprecedented $48 billion in unemployment insurance, according to its own [data](. Economists at the Brookings Institution, however, [calculated]( that, based on the number of claims filed in April, the bill owed that month alone was at least $80 billion and mounting coming into May. “The Treasury and states also had to make up for a lag in payments in March. A separate [analysis]( by economists at the Century Foundation, a nonpartisan think-tank, found that just 14.2% of the 12 million new workers who filed for unemployment in the month received benefits.” Andrew Stettner, a senior fellow at the Century Foundation, estimates that just 60% of the 36.5 million people who have filed new claims over the last two months have gotten their benefits. “We have to be honest,” Stettner tells Bloomberg. “Even the strongest advocates of this program have to understand it has not been successful. It hasn’t been able to deliver what it needs to despite the heroic efforts of a lot of individual workers and state agencies.” [Read the full story at Bloomberg.]( How Coronavirus Is Crushing Hospitals Financially Sarah Kliff of The New York Times takes a deep dive into the financial challenges the coronavirus pandemic is creating for U.S. hospitals: “The American health care system for years has provided many hospitals with a clear playbook for turning a profit: Provide surgeries, scans and other well-reimbursed services to privately insured patients, whose plans pay higher prices than public programs like Medicare and Medicaid. “The Covid-19 outbreak has shown the vulnerabilities of this business model, with procedures canceled, tests postponed and millions of newly unemployed Americans expected to lose the health coverage they received at work. … “The disruption to hospital operations may ultimately leave Americans with less access to medical care, according to financial analysts, health economists and policy experts. Struggling hospitals may close or shut down unprofitable departments. Some may decide to merge with nearby competitors or sell to larger hospital chains.” The American Hospital Association says hospitals are now losing an estimated $50 billion a month, and Kliff writes that the plunge in revenue is expected to be particularly steep at hospitals that get paid high prices by private health insurers. The famed Mayo Clinic hospital system, based in Minnesota, generated $1 billion in net operating revenue last year but expects to lose $900 million this year. [Read the full story at The New York Times.]( Your Prize for Making It Through the Week Take a few minutes this weekend to read [this essay]( by Foo Fighters frontman Dave Grohl on why we need live concerts to come back. "It is the most life-affirming experience, to see your favorite performer onstage, in the flesh, rather than as a one-dimensional image glowing in your lap as you spiral down a midnight YouTube wormhole," Grohl writes. "Even our most beloved superheroes become human in person." Send your tips and feedback to yrosenberg@thefiscaltimes.com. And please tell your friends they can [sign up here]( for their own copy of this newsletter. News - [Unveiling Vaccine Effort, Trump Says Country Will Be Back With or Without One]( – CNN - [C.D.C. Issues Reopening Checklists for Schools and Businesses]( – New York Times - [U.S. Economy Adds to Grim Records, Signaling Yearslong Recovery]( – Bloomberg - [White House Would Likely Support a New Round of Stimulus Checks, Sources Say]( – CNBC - [Lots of Talk — but So Far No Action — About Second $1,200 Stimulus Check for U.S. Households]( – Washington Post - [White House Preparing Executive Order Requiring Certain Essential Drugs Be Made in U.S., Sources Say]( – CNBC - [DeVos Funnels Coronavirus Relief Funds to Favored Private and Religious Schools]( – New York Times - [‘Stealth Bailout’ Shovels Millions of Dollars to Oil Companies]( – Bloomberg - [As Congress Weighs COVID Liability Protections, States Shield Health Providers]( – Kaiser Health News - [Less Than a Movie Ticket or ‘Impossible to Overpay’? Experts Name Their Price for Remdesivir]( – STAT - [Senators Urge Fed to Buy Long-Term Debt From States, Localities]( – Bloomberg - [Senate Democrats Introduce Bill to Boost Nonprofit Workforce as Coronavirus Crushes Resources]( – CNBC - [Everything You Need to Know About a Second Round of Coronavirus Stimulus Checks]( – CNBC - [CEOs Are Cutting Millions of Jobs Yet Keep Their Lofty Bonuses]( – Bloomberg - [Insurance Premiums Expected to Rise 4% to 6%, Before Factoring in COVID-19]( – Yahoo Finance (video) - [Affordable Child Care Is Increasingly Difficult to Find in the U.S.—Coronavirus Could Make It Harder]( – CNBC - [The Tiny U.S. Agency Fighting Covid Conspiracy Theories Doesn’t Stand a Chance]( – Bloomberg Businessweek Views and Analysis - [US Needs Bipartisan Push for Scientific Research After Coronavirus]( – Sen. Chuck Schumer (D-NY), Sen. Todd Young (D-IN), Rep. Ro Khanna (D-CA) and Rep. Mike Gallagher (R-WI), USA Today - [States Have Taken the Lead in Fighting the Coronavirus. Now We Need Aid.]( – Gov. Gretchen Whitmer (D-MI), Washington Post - [Nancy Pelosi Is Playing a Partisan Game in the Middle of a Crisis]( – Henry Olsen, Washington Post - [Economists Want to Put Stimulus on Autopilot. Congress Has Other Ideas.]( – Neil Irwin, New York Times - [On Public Health and Private Incentives]( – James C. Capretta, RealClearPolicy - [FDR’s New Deal Worked. We Need Another One.]( – Noah Smith, Bloomberg - [Coronavirus Is Making Universal Basic Income Look Better]( – Tyler Cowen and Garry Kasparov, Bloomberg - [Investors Feel Good About Covid Bonds]( – Matt Levine, Bloomberg - [Why Mortgage Market Bailout Left Everyone Confused]( – Christopher Maloney and Olivia Rockeman, Bloomberg - [There Are Sensible Ways to Reopen a Country. Then There's America's Approach]( – Hayley Sweetland Edwards [Like Us on Facebook]( [Like Us on Facebook]( [Read Us On the Web]( [Read Us On the Web]( Copyright © 2020 The Fiscal Times, All rights reserved. You are receiving this newsletter because you subscribed at our website, thefiscaltimes.com, or through Facebook. Our mailing address is: The Fiscal Times 399 Park AvenueNew York, NY 10022 [Add us to your address book]( Want to change how you receive these emails? [Update your preferences]( or [unsubscribe](.