Washington is in the thick of debating a sixth bill to address the health and economic consequences of COVID-19. Details of the $1.9 trillion American Rescue Plan Act of 2021 (ARP) are still in flux. The Senate parliamentarian ruled on Thursday that a $15 minimum wage violates procedural rules as written and can’t be included. The House Rules Committee met Friday morning to hammer out final details. So exactly how the bill plays out is not fully known, but a bill is coming. And it’s big.
We’ve been tracking all COVID-19 federal spending bills, and this one is no different. You can follow our real-time analysis here.
As we’ve said before, COVID-19 response and recovery spending needs to adhere to certain emergency spending principles. The country certainly has needs. But a year and $3+ trillion into the federal response, Congress needs to be more precise in its legislation, to ensure the latest round of assistance goes where it is needed most. The ARP needs to adhere to these principles we laid out last March as we supported efforts to tackle this generational challenge. Some parts of the bill clearly fall short. A few examples follow below:
Do What’s Necessary, Not What’s Advantageous
Emergency spending bills are tempting targets for excess. Being deficit financed, lawmakers feel no need to make tough decisions. While this can turn the bills into vehicles for partisan policy changes, more often they result in a bipartisan affliction of spending in excess of actual need. That appears to be the case with the $3.6 billion in subsidies for farming and ranching operations. With such extensive, um, details as “to purchase food and agricultural commodities” there is little guarantee these funds will go where needed most. USDA already distributed $30 billion in COVID aid and has $11 billion unspent from the December Omnibus. Congress should redirect that aid instead.
Emergency spending bills should be targeted at just that – emergency needs. Taxpayers should not be funding capital infrastructure expenditures or planning for larger transportation projects, especially when an infrastructure bill is likely to be introduced and debated soon. So spending
$1.25 billion $1.675 billion for Capital Investment Grants (CIGs)* for new and expanded rail, bus rapid transit, and ferry systems, in addition to smaller-scale projects seems a stretch. Transit systems have experienced significant revenue losses due to COVID-19. Some subsidy to bridge them to better times may be appropriate, but funding expansions for demand that may be very different, is not.
Deficits Still Matter in the Long Run
CBO projects that the GDP will be back to pre-pandemic levels by mid-year. At that point there should not be additional efforts to boost the economy, they will be inflationary which would actually harm working people and the unemployed. And pandemic spending isn’t all that the Biden Administration and Congressional leadership have in mind. There are also calls for an infrastructure package and funding to tackle climate change. Important issues indeed. That means this funding must be prioritized and there should triggers along the way for the COVID-19 funding as well as mechanisms to claw back or repurpose unnecessary funds.
Prioritize Response on Mechanisms with the Greatest Positive Effects
Much of the bill directs spending to programs clearly designed to combat the continued challenges of COVID-19. Extending through August enhanced unemployment benefits set to expire in a few weeks, refining the Paycheck Protection Program, improvements to numerous anti-poverty programs, all will have an immediate benefit to people in need. $25 billion for testing and contact tracing, $3 billion for a strategic national stockpile of vaccines, $20 billion on research, are all fine. Where lawmakers fall a bit short is in the “Prioritize” part. Or setting up mechanisms or triggers to adjust as needed.
Emergency Legislation Should Not Make Permanent Changes or Create Long-Term Liabilities
This principle is where the details of the bill matter. Lawmakers often draft emergency spending bills so that even extraordinary changes, like creation of the Paycheck Protection Program, or massive increases in spending are temporary. In certain parts of this bill the agencies must spend their dollars before the end of the fiscal year or by next year. But according to the official scorekeepers, the Congressional Budget Office, $325 billion is expected to still be in the Treasury after 2023.
Transparency and Accountability are Key
While President Biden’s plan for this bill has been out for months, the actual draft text has only been out a week. At 592 pages, it’s a quick read by Washington standards. But even if you got through the 138-page Manager’s Amendment, which typically includes technical changes and fixes typos, but can make major changes, you’d be out of luck. On Friday morning (today), a revised amendment, with another 54 pages (40 percent longer) was released, time-stamped at 10:33 pm on Thursday. There can’t be 54 pages of typos, so you have to dig for details. Furthermore typically the language amends the base bill, so you have to cross-reference to understand what you are reading. Not good.
The underlying bill would thankfully allocate $75 million to Inspector General offices at 11 Federal agencies and offices. However, oversight and transparency funding as a whole would drop as compared to the CARES Act that was passed just after the pandemic began last year. With trillions of taxpayer dollars going out the door so quickly, Congress must ensure taxpayer dollars are spent wisely.
Still in throes of a pandemic, with vaccines rolling out, but more contagious variants developing, there is still a need for government action. But unlike last spring when it was clear the action needed to be big and extensive, it is less clear now. To clarify, this is not a call for inaction, but cautious, deliberate, prioritized, and accountable action that can adjust as circumstances dictate.