Mar 13, 2020
As President Donald Trump declared a national emergency Friday to free up $50 billion in funding to address the coronavirus pandemic, a pair of Democratic congressmen proposed legislation that would provide a check of up to $6,000 to every American whose income last year was below $65,000.
The coronavirus disease (COVID-19) outbreak that began in Wuhan, China late last year has so far killed over 5,000 people and infected tens of thousands worldwide. As governments impose travel restrictions, the U.S. stock market continues to fluctuate, and businesses and schools increasingly shut down, lawmakers and the Trump administration have debated how to help out Americans who are struggling financially because of the public health crisis.
Reps. Ro Khanna (D-Calif.) and Tim Ryan (D-Ohio) on Friday called for creating an emergency Earned Income Tax Credit (EITC) to send checks of $1,000 and $6,000 to the more than three-quarters of American workers who would qualify. Within three weeks of the legislation's passage, 200 million Americans would receive checks, followed by monthly payments through the end of 2020. The proposal would especially serve independent contractors and hourly and gig workers.
"In order to alleviate the economic fallout of the coronavirus, we must ensure hard-working Americans have money in their pockets and are able to pay their bills," said Khanna. "We must soften the blow for workers as large gatherings and events are canceled and hours are cut. A payroll tax cut is not sufficient. This plan is about providing real, urgently needed relief to middle and working-class families. If we can afford to pump $1.5 trillion into lending markets, then we can afford this solution to help every American."
Trump in recent days has repeatedly advocated for cutting the payroll tax, the primary source of funding for Social Security; critics of such a cut warn that it would primarily benefit wealthier, high-salaried employees and have instead called for measures that aim to aid those most impacted by the crisis, such as providing cash payments to households, boosting investment in safety net programs, guaranteeing paid sick leave, and suspending student debt payments.
Ryan pointed out Friday that research has shown that "nearly half of working Americans don't have the cash to cover a $400 emergency."
"As more folks are staying in and taking necessary steps to avoid spread of the coronavirus, more Americans will struggle to cover basic needs like rent, groceries, and medicines," Ryan said. "We can't have Americans choosing between losing a paycheck or a job and taking the necessary precautions to keep their families safe. This measure will minimize the economic fallout for hard-working Americans so we can all focus on getting our country healthy again."
Economic Security Project co-chair Natalie Foster expressed support for the legislation from Ryan, a former 2020 Democratic presidential primary candidate, and Khanna, a national co-chair of Sen. Bernie Sanders' (I-Vt.) presidential campaign.
"We've been in a health crisis, and now we're also on the brink of an economic crisis," Foster said. "The Fed just responded swiftly to shore up the banks, and we now must respond as swiftly to shore up American families, especially the working poor. We've developed a plan to give emergency money to the people who need it, and who will spend it, using a proven tool in the tax code."
The proposal came after over a dozen progressive groups released a letter calling on Congress to prioritize legislation focusing on "the needs of those most deeply and immediately affected by the virus and its attendant disruptions to daily life." The letter, now backed by over 50 national groups, outlined some possible options, including cash payments:
Several economists have recently proposed ways for the federal government to make cash payments to households, which is likely to be more effective than tax cuts. This would ease the strain on family finances from coronavirus-related layoffs and cutbacks while cushioning the economy against a collapse of consumer demand. Former chair of the president's Council of Economic Advisers Jason Furman proposes immediate payments of $1,000 to every adult citizen and permanent resident and $500 for every child of such adults. Economist Josh Bivens of the Economic Policy Institute advises that targeting the payments at low- and middle-income families would be most efficient. Former Federal Reserve economist Claudia Sahm would begin with payments to those medically affected by the virus, then expand the program from there as the economy worsens and targets of needed assistance are identified.
The letter noted that Furman, Bivens, and Sahm all "also urge greater federal investment in safety net programs."
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