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The continued message of the Biden administration is this: the passage of the American Rescue Plan, their name for the $1.9 trillion spending bill, is vital for the country to make it through the pandemic: in addition to aid for the unemployed, health insurance purchase subsidies, food stamp boosts and the like, the bill promises faster vaccine production and distribution. And they have explicitly tied the reopening of still-shuttered schools to the Covid relief bill. As USA Today reported just yesterday,
“From the outset Biden has said the goal depends on funding, which he hopes to get through passage of his $1.9 trillion COVID-19 relief bill. It sets aside $130 billion for school reopenings.”
Even Dr. Anthony Fauci has added his support, saying, “That’s the reason why the national relief act that we’re talking about getting passed — we need that” to open schools.
But the Committee for a Responsible Federal Budget has now voiced strong criticism of the plan. However much supporters of multiemployer pension plan relief may take the “any port in a storm” perspective after so many years of attempting legislation through “regular order,” as they say, in a Republican/Democrat compromise, the CRFB finds this unacceptable.
“Only about 1 percent of the entire package goes toward COVID vaccines, and 5 percent is truly focused on public health needs surrounding the pandemic. Meanwhile, nearly half of the package will be spent on poorly targeted rebate checks and state and local government aid, including to households and governments that have experienced little or no financial loss during this crisis.”
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“More than 15 percent of the package – about $300 billion – is spent on long-standing policy priorities that are not directly related to the current crisis.”
And they call special attention to the multiemployer pension provisions:
“Perhaps most concerning, the House Ways & Means Committee appears to have made space for the pension bailout by only extending expanded unemployment benefits through August, cutting them off a month earlier than President Biden proposed, and many months earlier than they should be. These multiemployer pensions have been on shaky ground for some time and ought to be dealt with transparently, where lawmakers can appropriately finance and reform these plans. The financial status of these funds shouldn’t be addressed in a piece of crisis legislation, and certainly not at the cost of benefits for unemployed workers. Frankly, no member of Congress should be willing to defend this.”
Other areas of concern for the CRFB include the vast sums of money to be sent to state and local governments, well in excess of their budget deficits. In addition, Marc Goldwein, head of policy at the CRFB, observed via twitter that a startlingly low fraction of the funds budgeted for schools are anticipated to be spent during 2021; according to the Congressional Budget Office, “because most of [the CARES Act and December stimulus] funds remain to be spent, CBO anticipates that the bulk of spending of funds provided in the reconciliation recommendations would occur after 2021.” In fact, only 1/20th of the school funding would be spent in 2022.
What’s more, the Biden administration continues to insist that such massive spending is justified in order to restore the American economy. Treasury Secretary Janet Yellen described the spending plan as the difference between full employment in 2022, vs. continued unemployment as far out as 2025, though the CRFB lays out a list of skeptical voices including former Treasury Secretary Larry Summers, who worry that this spending is far too much and will trigger a bout of high inflation, and worry more that there is no longer any political will to take action to end inflation once it starts. As economist Allison Schrager writes, “We’ve come to expect the Fed to keep employment up at all costs, so do you really think that they’ll slow a recovery to fight inflation — something many people can’t even conceive of?”
That it is deemed necessary to place multiemployer relief in the so-called “covid relief” bill is a testimony to the brokenness of the system. That a bill is marketed as “covid relief” when its provisions extend far beyond what’s needed to directly alleviate financial suffering and implement needed remedies, is all the more so. I cannot offer any remedies, but can only ask, when will it end?
As always, you’re invited to comment at JaneTheActuary.com!