Federal Relief Update

Quick Take on the CARES Act – What’s In, What’s Not

On Friday, the President signed into law The Coronavirus Aid, Relief, and Economic Security (CARES) Act. The $2.1 trillion CARES Act provides significant support for people, states, the health care system, small businesses, and yes, even big businesses.

The historic legislation is the third in a series of swift and appropriately proportionate responses by Congress to ameliorate the immediate and unparalleled toll of the COVID-19 global pandemic. The first phase being the $8.3 billion spending package that focused on tests, treatment, vaccines, and telehealth provisions, and the second was the $104 billion Families First Coronavirus Response Act.

But many of these provisions fall short. As COVID-19 spreads – with peak infection possibly weeks away – Congress must quickly address legislative gaps, such as a few we’ve summarized below, in addition to a growing list of needs in child care, education, front line worker safety, testing, treatment, and prevention, income supports, and more.

UNEMPLOYMENT INSURANCE (IU)

There’s a lot to like in the UI provisions, including: 1) $1 billion in emergency grants to states and 100 percent federal funding for extended benefits in states with an unemployment rate above 10 percent; 2) Pandemic Unemployment Assistance (PUA) allows for a significant eligibility expansion to include part-time workers, independent contractors, the self-employed, and so-called gig economy workers such as drivers for taxis, Uber, and Lyft 3) Pandemic Unemployment Compensation (PUC) provides a $600 per week increase in unemployment insurance benefits for up to 4 months 4) Pandemic Emergency Unemployment Compensation (PEUC) allows for an additional 13 weeks of UI (beyond the number of weeks each state provides); and 5) Fully funds states with existing work-sharing programs, such as New York.

There is some concern that base UI benefits (not PUC) will not be “disregarded” when determining eligibility for means-tested programs, such as SNAP and SSI, and the House alternative proposal for Congress’s third relief package – The Take Responsibility For Workers & Families Act – included significantly more funding for state and local workforce development.

CASH PAYMENTS

Eligible adults will receive a one-time payment of $1,200 and eligible minors under the age of 18 will receive an additional $500. Amounts will be phased down – by $5 for each $100 filing unit’s income – above a threshold of $75,000 for individuals, $112,500 for head of households, and $150,000 for joint filers. Eligibility for the stimulus check is based on 2019 tax returns, and if an individual has not filed, their 2018 tax return. (See the Washington Post’s calculator to estimate the amount of your check)

It is deeply unfortunate that Congress excluded millions of immigrants and their families across the country, many of whom pay taxes and are on the front lines caring for the ill and putting food on our tables. By excluding workers who pay federal income taxes with an Individual Taxpayer Identification Number (ITIN) from receiving stimulus payments, Congress has left out more than 5 million children – most of whom are U.S. citizens.

Additionally, vulnerable populations – such as those who receive the bulk of their income from untaxed sources such as Social Security, veterans benefits, or disability benefits and those whose incomes are so low they don’t have to file a return – will have to file a tax return. The Treasury can and should use its discretion to prioritize getting checks out as quickly as possible and ensure Volunteer Income Tax Assistance (VITA) programs are sufficiently funded to reach those who do need to file a return.

Finally, these payments do not take into account geographical differences in the cost-of-living. In New York City, for example, the full $1,200 for a qualifying individual doesn’t even cover one month of median rent.

STATE FISCAL RELIEF

The Center on Budget estimates that New York State will receive $7.543 billion through the Coronavirus Relief Fund. The Fund – available until December 21st – helps states mitigate massive budget shortfalls due to widespread joblessness, plummeting tax revenue, and an increase in human needs.

However, New York’s share is just five percent of the $150 billion available for all states, even as New York is reporting nearly half of all confirmed COVID-19 cases in the U.S. Already, New York State is forecasting $10 to $15 billion less in tax revenue as a result of COVID-19 measures, and Citizens Budget Commission predicts up to a $20 billion shortfall in City revenue over the next three fiscal years. In other words, state fiscal relief is likely to be significantly insufficient. (It’s worth noting that Senator Schumer requested a much larger sum of $750 billion.)

NUTRITION

Congress approved $15.5 billion to support increased participation in the Supplemental Nutrition Assistance Program (SNAP), $450 million for food banks through The Emergency Food Assistance Program (TEFAP), and provided temporary flexibility for states to expand SNAP. However, Congress missed the opportunity to modestly increase maximum SNAP allotment by 15 percent and minimum SNAP benefit from $18 to $30.

Food pantries are being devastated as joblessness among low-paid and vulnerable workers is skyrocketing (as many as a half-million may have lost their jobs in March alone). At the time of this writing, according to reporting done by Politico, “nearly one-third of food pantries in the five boroughs have already shut down.”

Increasing benefits for the SNAP program would ease pressure on food banks. Furthermore, every $1 in SNAP spending resulted in $1.74 of economic activity during the depths of the Great Recession.

HOUSING

The CARES Act provides $4 billion for Emergency Solutions Grants to help people escape from or avoid homelessness, $3 billion for public housing operating funds and rental assistance, boosts energy assistance programs, and places a 120-day moratorium on all evictions from federally assisted housing.

However, housing funding still falls short of existing unmet needs, let alone anticipated increases in costs from the COVID-19 crisis. Congress should follow the House’s lead by meaningfully boosting investments in rental assistance, operating support, and homelessness prevention, and by including mechanisms that take into account the impossibility of catching up on suspended rent payments that will accrue during this crisis.

From the CARES Act, NY is Estimated to Receive $15.1 Billion for Relief