President Donald Trump’s administration is considering asking Congress for an $850 billion stimulus package to address the economic slowdown caused by the coronavirus pandemic. The package would include a payroll tax cut (read why this a bad idea) and a $50 billion bailout of the airline industry. The Wall Street Journal’s Andrew Duehren and Andrew Restuccia have more:
Among other proposals under consideration among lawmakers from both parties are direct cash payments to Americans, an idea endorsed in some form by Sens. Mitt Romney (R., Utah) and Sherrod Brown (D., Ohio). … Senate Minority Leader Chuck Schumer (D., N.Y.) is also set to propose his own broad stimulus package that will be worth at least $750 billion. Mr. Schumer will provide details of his proposal to Senate Democrats during a meeting on Tuesday, which will be conducted over the phone, according to a senior Democratic aide. Mr. Schumer’s plan will include expanded unemployment insurance and aid for small businesses, among other measures, according to his office.
Treasury Secretary Steve Mnuchin is also expected to push for the passage of a bill from the House of Representatives that aims to increase the availability for coronavirus testing and provide paid leave for some workers who are affected by the virus, along with making it much easier for states to provide emergency food aid during the pandemic. That bill has hit a roadblock because of opposition from Republicans.
Quality Jobs program under fire
A popular corporate tax break is coming under fire as a new report shows that most of the projects that received the benefit would have relocated to Louisiana without it. The Louisiana Legislative Auditor’s Office examined the Quality Jobs tax incentive program, which offers cash rebates for jobs created, state sales tax paid on equipment and money spent for capital investment. The auditors recommended that legislators cap rebates in the same way the state does for other tax incentives. The Advocate’s Mark Ballard reports:
“Certainly not all those jobs were created because those businesses received a rebate. Some of those jobs would have been created anyway,” (Legislative Auditor Daryl) Purpera said. “Businesses don’t make decisions on where to invest and do business based on a 4% rebate? It’s just isn’t an accurate way to look at it.” … In looking at what nine other states, including those that border Louisiana does, auditors recommended the Legislature revise wage and job creation criteria in the program to provide a greater incentive for companies to move into underserved parishes.
Louisiana Economic Development took umbrage with the findings, and commissioned its own analysis, at a cost of nearly $50,000, that showed the tax break to be beneficial.
Disclosure: LBP Executive Director Jan Moller is a member of the Board of Commerce & Industry, which oversees the QJ program.
Using EITC to boost the economy
The Earned Income Tax Credit would help boost the economy and provide income security to low-and-moderate income families during the economic recession caused by the coronavirus pandemic. The credit would be more effective than other measures, such as a payroll tax break, because low-income beneficiaries tend to spend additional money immediately to meet their needs, rather than save it. As Elaine Maag explains in Forbes, there are several options that policy makers can use to make the EITC a powerful economic stimulus, including making advance payments:
One possible way to use the EITC to jumpstart the economy is to advance payments. Under current law, families receive the EITC only once each year, when they file their tax returns—something many have just done for tax year 2019. Thus, eligible taxpayers are not scheduled to receive another EITC payment until early 2021. However, Congress could allow eligible taxpayers to estimate their EITC for the coming year and receive an early payment. This wouldn’t necessarily increase government spending long-term, but it could direct cash in a timelier way to people likely to feel pinched if the economy slows.
Helping disadvantaged students during the pandemic
With schools closed throughout Louisiana and much of the country, leaders need to come up with ways to lessen the hardship that children, especially low-income children, will face. Some of these include providing meals to students and allowing children who don’t have Internet access to do assignments on paper. But as the Washington Post’s editorial board explains, the help can’t stop there:
These are all good first steps. As closures widen and, quite possibly, extend in time, it will be important to come up with new and more systemic ways to ease the hardships many children will face. Those hardships also underscore the need for Congress to enact a second, generous aid package targeted at the most vulnerable.
Number of the Day
37.4 million – Number of public school students who are affected by the coronavirus, nationwide. These impacts aren’t limited to learning, but also affect the health and well-being of students and their families. (Source: Education Week)