A Look at the Federal Response to COVID-19

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The COVID-19 pandemic provides a unique challenge for governments. Not only is it a public health crisis of historic proportions, but also the subsequent economic recession will necessitate genuinely massive investments across the economy. It’s too early to tell what the ultimate impact will be in terms of lives lost and livelihoods ruined, but the effects of this pandemic will be with us for years to come. 

Free Testing, Vaccine Research, and Paid Sick and Family Leave

In response, the federal government has passed two major bills to combat the COVID-19 pandemic, with a third bill currently being developed. The first bill included $8.3 billion focused on critical prevention and treatment, like vaccine research and state and local public health department efforts. These measures injected the sprawling U.S. public health apparatus with enough funding to get some of the most urgent actions underway.

The first bill included $8.3 billion focused on critical prevention and treatment. 

The second bill, called the Families First Coronavirus Response Act (FFCRA) mandates free Coronavirus testing, allocated over a billion dollars across an array of food programs, and created temporary paid sick and family leave policies for a swath of the American workforce through the end of 2020. Notably, the version which was signed into law provides exemptions for healthcare providers, employers with more than 500 employees and employers with less than 50 employees. About 89% of employees at these large companies already have some form of paid sick leave, but that still leaves roughly 6.7 million employees at large companies without paid sick leave. For the millions of workers that work for companies with less than 50 people and healthcare and emergency responders, their employer can apply to have the leave requirement waived. In an effort to remove the burden from employers in providing this benefit, the federal government is funding these paid and family leave policies through a refundable employer payroll tax deduction. Meaning 100% of the costs will be reimbursed by the federal government. 

That leaves roughly 6.7 million employees at large companies without paid sick leave.

The FFCRA  expands the social safety net for employees who get sick from COVID-19 in the hopes that sick workers will stay home to reduce the spread of the virus. This is the most important thing public health experts and economists both stress: reducing exposure and infection is the most critical thing American’s can do right now. The economy can only begin to recover when the pandemic is under control, and the only way to do that is to slow the spread of the disease. This is why a part of the government’s response is to incentivize sick people to stay home so that they do not infect more people. Unfortunately, many American workers can’t afford to not work when they’re sick. Prior to the passage of FFCRA, over 36 million workers in the U.S. lacked any sort of paid sick leave. Considering about 40% of adults can’t cover a $400 emergency expense with cash, savings, or a credit card bill that they could easily manage, many workers have to work while they are sick just to cover basic necessities like rent and food. Providing an income replacement for workers sick with COVID-19 not only keeps them from spreading the disease to more people, but allows them to recover knowing that they won’t lose their ability to pay for basic necessities. 

Economic Stimulus: Cash Rules

In terms of spending, the third piece of legislation is expected to dwarf the first two. Officials have discussed an economic stimulus package anywhere in the range of $750 billion to $1 trillion to provide direct cash to Americans and loans to businesses. 

Officials have discussed an economic stimulus package anywhere in the range of $750 billion to $1 trillion.

The discussions around this third bill highlight how critical basic income replacement will be during this time. A poll conducted at the end of last week found that 18% of households had someone who is already experiencing reduced hours or has been fired due to COVID-19. That number will likely increase in the coming weeks, which could lead to serious economic instability for a large segment of the population. Providing the flexibility of cash is going to be important during this time of uncertainty so Americans can best prepare themselves and their families for what may be a prolonged battle against the COVID-19 pandemic. 

18% of households had someone experiencing lost wages due to COVID-19.

 

Looking Forward

All three of these initiatives add up to a massive investment in the COVID-19 pandemic response and recovery. However, there are still a number of lingering questions. We simply do not know when it will be safe to return to our normal lives. Until that happens, whole segments of the economy will be running on fumes. Now that the government is considering sending checks directly to Americans, will this be a one-time dispersal or will it continue as long as we are told to remain in “social isolation”? Whether it’s a check for $1,000 or more, a one-time payment will only help so much if previously employed workers are unable to earn a living. If this continues, considering how difficult it is to reenter the workforce, how will the federal government incentivize struggling businesses to keep employees on the payroll? For now, it is hard to believe any investment is too much. Let’s hope the federal government is up to the task of making big, bold investments now to blunt the worst of the impact.

To learn more about how Aunt Bertha is responding, click here to read our recent blog post.