718,239 views | May 16, 2020, 08:20am EDTShahar Ziv Contributor Opinions expressed by Forbes Contributors are their own.
I teach students and employees how to ace their personal finances.
to secure passage of the HEROES Act last night
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Last night, the House of Representatives passed the Health and Economic Recovery Omnibus Emergency Solutions Act, or the HEROES Act, by a vote of 208-199. The sweeping $3 trillion legislation was dismissed by Senate Republicans with Majority Leader, Mitch McConnell, deriding it as a “big laundry list of pet priorities.” The “grab bag” bill included many provisions seemingly disconnected from stabilizing the economic effects of the coronavirus pandemic, such as ones related to cannabis banking. For a messaging bill meant to outline Democratic priorities, the HEROES Act is as notable for what it omits as for what it includes.
Spearheaded by Representative Pramila Jayapal and the Congressional Progressive Caucus, the Paycheck Guarantee Act would have guaranteed 100 percent coverage of workers’ wages up to $90,000 a year. The sponsors argued that given the economic carnage inflicted by coronavirus, Congress needed to “think bigger” and offer “workers as well as businesses, nonprofits and local governments of all sizes a better path forward in this uncertain environment.”
Interestingly, an analysis by Moody’s chief economist, Mark Zandi, estimated that the net costs of the program would be $654 billion over six months, which is actually less than the two rounds of small business loans approved by Congress as part of the Paycheck Protection Program. Another interesting feature of the proposal would have taken out banks as the intermediary to disburse payments, instead facilitating payments straight from the IRS to employers.
Exclusion of the Paycheck Guarantee Act led to a mini-rebellion with progressives initially threatening to vote against the HEROES Act. Most members eventually fell in line with Speaker Nancy Pelosi and voted in favor of the HEROES bill.
The HEROES Act included a proposal for a second round of direct payments to Americans – $1,200 for an individual, $2,400 for joint filers, and $1,200 for up to three dependents. This one-time infusion of cash would provide relief to many Americans who exhausted their funds from the first round of stimulus payments, received a lower amount than anticipated, or are still waiting to receive it.
Pelosi and Democrats chose the single-payment route instead of a recurring stimulus payment that would have provided ongoing relief for up to 12 months. Representatives Ro Khanna and Tim Ryan had introduced The Emergency Money for the People Act, which had attracted increasing support from other House Democrats. Other similar proposals were introduced by Pramila Jayapal and Rashida Tlaib in the House as well as by counterparts in the Senate, including a proposal by Ed Markey, Kamala Harris, and Bernie Sanders that would provide a monthly $2,000 check to those struggling to make ends meet during the COVID-19 pandemic. “A single check is not sufficient for households that are struggling during this health and economic crisis.” said Senator Markey. “Americans need more than just one payment.”
As argued in a previous column, “there is a looming disconnect between the sluggish speed of recovery and the duration of unemployment benefits that were included in the $2 trillion CARES Act passed by Congress.” This problem could have been solved through the use of automatic stabilizers, which would have tied federal aid to economic conditions. Use of stabilizers would have removed the need to continuously pass additional legislation for more aid, instead, automatically extending aid, such as enhanced unemployment insurance, until the economy recovers.MORE FROM FORBES New Proposal Would Extend $600 Unemployment Benefit Indefinitely Until Coronavirus Crisis Ends By Shahar Ziv
The Worker Relief and Security Act, introduced by Senators Michael Bennet and Jack Reed, along with Representative Don Beyer, aimed to align relief with the span of the COVID-19 pandemic as opposed to allowing benefits to lapse after a fixed period of time. However, this proposal, along with automatic stabilizers of any kind, were left out of the HEROES Act passed by the House. Instead, the bill would simply extend the enhanced unemployment benefits through January, 2021.
Problems with the CARES Act weren’t limited to eligibility or duration of funding, they also involved executional mistakes. The process of delivering funds to individuals and small businesses was riddled with friction and complexity. Many individuals have still not received their stimulus checks from the CARES Act. Others received checks, but for a lower amount than expected and are being told by the IRS that they won’t be able to receive the difference until 2021 when they file their taxes. Instead of spending over 1,800 pages on futile proposals, many not germane to the coronavirus pandemic, it would have behooved Democrats to develop proposals to deliver funds more quickly and more accurately to Americans.
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Shahar is the founder of Acing Your Finances (www.acingyourfinances.com), where he helps students and employees develop healthy financial habits. He co-founded a popular… Read More
Shahar is the founder of Acing Your Finances (www.acingyourfinances.com), where he helps students and employees develop healthy financial habits. He co-founded a popular personal financial management course at Harvard University and has worked with students at Wharton, Columbia, and NYU as well as lawyers at Skadden and Debevoise, resident physicians at Mount Sinai Hospital, and employees at DoorDash.
All opinions expressed are my ownRead Less