Covid Aid — A National Disgrace

1/3/21

I cringe whenever I hear people say of the pandemic that “we’re all in this together.” Nothing could be further from the truth. Unquestionably, Covid-19 has forced all of us to constrain our behaviors in some variety of ways, but pain has not been equally shared. Those who have managed to stay healthy and generally maintain their level of income fall in a completely different category than those who’ve not been so lucky.

From my perspective, an appropriately tailored federal assistance package should recognize this disparity of damages and restrict aid payments to those who have been most affected. Those hardest hit by the pandemic have lost income for as much as 10 months! Think of it… 10 months without income. And the federal response is a one-time $600 check and a $300 per month reduction of the unemployment insurance supplement. The fact that some members of Congress are applauding themselves for finally coming to the aid of struggling Americans is maddening. President Trump was correct. This legislation is a disgraceful response to the dire circumstances faced by those most affected by Covid-19. Even upping the one-time individual grants from $600 to $2,000, however, falls far short of providing what’s needed.

Families who’ve lost their incomes and have been unable to cover their rents have avoided homelessness thanks to moratoria on evictions but are nonetheless held responsible for any backlog of unpaid rents — often with additional fees. As a consequence, these households are being saddled with increasing amounts of debt, month by month. A reduction of supplemental unemployment benefits will cause our most vulnerable compatriots to fall farther behind, starting from an already desperate situation. For poor people, the latest aid package may serve to slow the rate of their demise, but it doesn’t come close to solving the problem. We’re not even stopping the bleeding, let alone actually helping these people.

As a guiding principle, aid relief should be directed to the most financially insecure households — not to individuals and families still able to earn annual incomes approaching $75,000, which is the income ceiling for those who will be receiving grants under the latest legislation. For someone in the upper end of the allowable income range, these amounts may very well allow for pre-covid lifestyles to be maintained or even exceeded; but for those at the other extreme, these amounts just don’t cut it. For this population, the problem is poverty. The current thinking about Covid relief fails to think about the issue in this way, but it should.

A one-shot injection of virtually any size is stop-gap at best. It ignores poverty altogether and forces congress into a Groundhog Day process where the issue will likely have to be revisited, unnecessarily. Those at the bottom of the economic ladder simply require ongoing assistance until the pandemic is more fully contained and the economy returns to a more normal state.

A properly constructed aid package should set the overall spending amount to be at the right level and assure that the spending reaches the appropriate targets. This latest bill fails on both counts. Let’s hope Congress does better on the next round.

Kawaller holds a Ph.D. in economics from Purdue University.