What should be in the next CARES Act?

Some bars and restaurants have remained takeout-only,
despite the Iowa government's laissez-faire attitude towards the pandemic

None too soon, the U.S. Senate is taking up renewal of the CARES Act this week. Emergency relief for individuals, businesses, state and local governments, and hospitals was passed in March as the reality of the coronavirus pandemic hit America. (See highlights and details here and here.) It's hard to remember March, but it seemed then that the pandemic's unusual virulence required a drastic social shutdown, and that to keep the economy from tanking during the emergency. Paul Krugman compared the response to a "medically-induced coma" to create space for dealing with the virus. To get the patient (all of us!) through, the CARES Act pumped $2 trillion into the economy, and additional legislation added about another half trillion (Amadeo 2020). That's a lot of money... I can remember when one of President Jimmy Carter's budgets in the late 1970s was the first to pass the half trillion mark for the entire year!

Now we're heading into late July. Partial reopenings in May and June brought some flickers of economic life, but only somewhat, and the pandemic continues. Retail sales are back to pre-pandemic levels, but not across the board and unemployment remains high (Maheshwari, Corkery and Schwartz 2020; Rosenberg 2020). "I'm less optimistic today than I was 30 days ago," Marriott chief executive Arne Sorenson told The New York Times. "The virus is in so many different markets of the United States" (Gelles 2020). So, now what do we do?

The coffeehouse across the street from my campus closed March 20,
and now folks are carrying off the pieces.
(It might have gone out of business anyway.)

House Democrats passed a $3 trillion extension to the CARES Act in May called the Heroes Act, extending unemployment benefits at current levels, issuing another round of stimulus checks, providing much more aid (about $1 trillion) to states and cities, and including money for hazard pay for essential worker, testing and tracing, student loan forgiveness, food stamps, housing support, the U.S. Postal Service, and an employee retention tax credit (Werner 2020). Senate Republicans are negotiating this week with President Trump on a roughly $1 trillion alternative likely to include, liability protections for businesses, another round of stimulus checks, school aid conditioned on opening in person, much less aid to states and cities, extended unemployment benefits at a lower level, tax credits to businesses for adaptive measures as well as employee retention, and quite possibly no money at all for additional testing. Trump's desire for a payroll tax cut now seems unlikely to be included (Werner, Kim and Stein 2020; Carney 2020; Pethokoukis 2020). Among other proposals, Democratic Senator and former presidential candidate Elizabeth Warren has suggested support for child care providers, and Black and Latino neighborhoods, along with a national eviction moratorium and anti-corruption provisions (Warren 2020).

What happens to rental housing if renters can't pay?

Back in the day, I worked with Paul J. Quirk of the University of British Columbia on research on the Presidency and Congress using theories of conflict resolution. Paul argued that policy makers ought to maximize joint gains by identifying complementary interests--goals shared by parties to the conflict--and negotiating the remaining conflicting interests. Joint gains solutions are superior to split-the-difference styles of compromise, or to stalemate (Quirk 1989, Pruitt and Warr 2013, Fisher Ury and Patton 2011, Lewicki Barry and Saunders 2020).

Off the top of my head I'd say there are four complementary interests involved in negotiating CARES bills, pretty much the same now as in March:

1. sustain the economy. The economic health of the country is risked by any shutdown, or even specific restrictions or regulations. Production and sales should be preserved as close to ready-to-go until it's safe actually to go. And, while emergencies call for bold measures, government finances should not be so extended by borrowing that normal operations are impossible once the emergency ends.
2. protect public health. It should be clear to all by now that this virus is serious business, and neither wishing it away or yelling at people is going to work. Social activities need to be restricted until some modicum of safety is achieved, even at some (a lot of?) economic cost.
3. enable essential work and schools. Any vital work should be facilitated and, where necessary, protected. This particularly includes, but is not restricted to, those who provide health care, food, and public safety.
4. protect/sustain the most vulnerable. Not everyone can work from home, or have a reservoir of savings to see them through the emergency. If people's work is essential, they need the rest of us not to endanger their health; and if people are laid off, their jobs should be there when it's safe to return, and they should be sustained until then.

There are also conflicting interests. These include ideological conflicts (does aid create a disincentive to work, and is that bad? should we use aid to shape a more climate-friendly future?), economic interest conflicts (do hog farms, airline companies, e.g. qualify for aid under one or more of the criteria above?), and political conflicts (how will these measures affect candidates' political prospects in November?). Generally, the group that wants a solution more has to give more on conflicting interests. For example, in 1991-92 President George H.W. Bush stood to suffer politically from a poor economy (and he did), so had to accommodate congressional Democratic demands for tax increases. It's more difficult to assess the current situation: President Trump's political standing has suffered since March, but even so Democrats may be more concerned than Republicans about who might get cut off from assistance.

These lists of complementary and conflicting interests are pretty much the same now as they were in March. But the context has dramatically changed. Unlike March when a lot of us were thinking in terms of 3-6 weeks of shutdown, it is now four months on and obvious that the pandemic is going to be with us for quite awhile yet. Policies that were successful in other countries--contract tracing, widespread timely testing, and plenteous personal protective equipment (PPE)--are nearly impossible to implement effectively with the disease so widespread. There have been hopeful noises about vaccine(s) in production, but even under a best-case scenario that remains months away. Demagoguery by a frustrated President and his allies in the media have led many people to reject even the most minimal precautions.

Swiped from diazhub.com. Used without permission.

So it's not now practicable to resume normal economic and social activity, nor is it now practicable to shut the economy and society down for the duration of the pandemic. We've had a half-assed shutdown that's made people poor and still potentially contagious.

America, I am... really disappointed in you.

To the content of the bill! Setting priorities involves making choices, deciding who in these desperate times gets benefits, and who doesn't in spite of hardship. It amounts to "picking winners," about which there is justifiable cultural ambivalence. And yet choose we must, in a world where the invisible hand is infected with coronavirus, and government has resources that are substantial (so it has responsibility to act) but not limitless (so it can't fix everything).

In the immediate crisis in which we found ourselves in March, it probably made sense to think only of getting through it, and to shovel money out the door while making as few choices as possible. It probably had some good effects, but clearly was marred by lack of oversight, and the greater ability of those with power to access the resources, leaving the most vulnerable citizens and businesses in the lurch. 

Now we seem to be in it--the pandemic crisis, I mean--for the long haul, so it behooves us to think more carefully about the choices involved in the next round of aid. Who should receive assistance? There are many people who could claim economic losses from the pandemic and the shutdown. We could put them into three categories:

• those who, if they were to lose their job, might bring down the whole society (health care workers, teachers, child care, firefighters, public transit at least in major cities e.g.)
• those who, if they were to lose their job, would have difficulty replacing that income (blue collar and service workers, locally-owned small businesses)
• those who, if they were to lose their job, could hold out until they find another (white collar workers, corporate CEOs)

These are just examples, but my point is the decision-making should resist putting people, however well-connected or sympathetic, into higher categories than where they truly belong. It may be that we can afford to compensate everyone for lost income, but we probably can't, so we should prioritize by need.

Besides assistance to affected individuals, businesses, and governments, there needs to be considerable investment in pandemic mitigation like testing and contact tracing. I don't know how much, but it needs to be enough to change the situation on the ground and move us towards the end of this.

What's the future of the Postal Service?

Finally and most uncomfortably, we're now operating in a time frame where we need to think about the long-term impacts of COVID assistance. Can we still imagine that we are going to put things back the way they were, or are we thinking about what society will look like after the emergency? For one example, Joseph W. Kane of the Brookings Institution argues that resources need to be directed towards making America more resilient to climate change, because state and local governments will be facing increasing incidence of disasters with depleted financial cupboards. He calls, among other things, for small-scale green infrastructure projects, attention to income- and race-based equity, and greater community engagement in planning (Kane 2020; see also Bliss 2020). At the same time, President Trump seems to see the crisis as an opportunity to reshape Social Security and the Postal Service. Should emergency assistance during the pandemic aid be constructed to reform the public welfare system (Rachidi 2020)? As Holy Mountain is all about working towards inclusive, sustainable, prosperous communities, thoughts about the CARES Act inevitably turn to the sorts of outcomes that would help bring them about.

I've avoided specifics on provisions and amounts; what I'm finding, which should make us somewhat sympathetic towards the politicians who must make these decisions, is there's not a firm standard by which to evaluate the competing claims. But these are some principles that can be used to evaluate whatever comes out of the Senate this week, and the Congress as soon as possible after that. Maybe each party could take a billion, with a third billion devoted to pandemic mitigation? Negotiations being what they are, we should expect some flaws and some unhappiness, but I hope there will be some progress towards a common future.

PRINT SOURCES

Fisher, Roger; William Ury; and Bruce Patton. 2011. Getting to Yes: Negotiating Agreement Without Giving In. New York: Penguin, 3rd ed.

Lewicki, Roy J.; Bruce Barry; and David M. Saunders.  2020. Negotiation. Boston: McGraw-Hill Education, 8th ed.

Pruitt, Dean G., and Peter Warr. 2013. Negotiation Behavior. Burlington: Elsevier Science.

Quirk, Paul J.  1989. “The Cooperative Resolution of Policy Conflict.” American Political Science Review 83:3 (September 1989):  905-921.

Visualization by Gabriel Heller: