When Covid-19 shut down large sectors of the U.S. economy, forecasters predicted a sharp increase in poverty and economic hardship. But two new studies say those fears were premature, thanks to the unprecedented amount of federal aid delivered through the CARES Act. The New York Times’ Jason DeParle reports that the $600 per week boost in unemployment benefits—set to expire on July 31st—have allowed millions of families to make ends meet.

The (Columbia University) researchers estimate the CARES Act will increase safety net spending this year by $460 billion, more than what the government spent all last year to support the incomes of families that are not elderly. … In a separate study, Bruce D. Meyer and Jeehoon Han of the University of Chicago and James X. Sullivan of Notre Dame, analyzing Census Bureau survey data, found that incomes rose among needy Americans in April, despite cresting unemployment, as government payments began.

Reality check: Millions of struggling families were left out of the CARES Act, including immigrant families. Still, the data shows the critical importance of a strong safety net, and the importance of Congress acting quickly to pass another stimulus bill before the enhanced unemployment aid expires. 

Putting the brakes on new tax breaks
Leading House Republicans in the state Legislature are using long-discredited arguments to promote a series of business tax breaks as a way to boost Louisiana’s economy. But the plans are meeting resistance in the Senate, where members are worried about the revenue shortfalls that would result. Nola.com | The Advocate’s Tyler Bridges points out that irresponsible tax policies are what helped create the structural deficits that took a full decade to resolve. 

“We’re not like the federal government,” (Senate Revenue & Fiscal Affairs Committee Chairman Brett) Allain said in an interview afterward. “We can’t print money. We have to balance the budget at the end of the day.” … Legislators have been handing out more and more tax breaks for years, always in the name of creating jobs and investment. The giveaways have not generated enough economic activity to solve the state’s ongoing budget problems, however.

“Yes, Black Lives Matter”
The killing of George Floyd by Minneapolis police last month has reinvigorated the Black Lives Matter movement and sparked a long-overdue national conversation about structural racism. Thousands of organizations, large and small, have weighed in to show solidarity with the protesters and call for reform. Those voices now include Louisiana’s largest print media outlet, as the Times-Picayune | Baton Rouge Advocate editorial board had this to say:

Yes, Black Lives Matter. This isn’t a question. This isn’t up for debate. The facts are clear. Every citizen in this nation matters, but it’s clear that, despite several good efforts and some important progress across decades, Black lives are not yet close to achieving the equality and justice they deserve. … It’s time for us to do more, much more, to address these inequities. For too long, we have given limited attention to what we must recognize as foundational, institutional and structural racism.

Rich consumer, poor consumer
As America’s economy has shifted in recent decades to become more reliant on service industry jobs, the economic fortunes of low-wage workers have become much more reliant on the spending habits of the rich. When wealthy households stopped their spending during the Covid-19 shutdown, it had a devastating effect on workers. Emily Badger and Alicia Parlapiano report for The New York Times’ Upshot blog: 

For the highest-income quarter, spending has recovered much more slowly, after falling by 36 percent at the lowest point. “It’s not just that it’s somewhat bigger in percentage terms,” Mr. (Raj) Chetty said of shifts by the rich. “In absolute dollars, that’s like half of the game.” The researchers point to several curious patterns tied to that fact: Unemployment claims have been high in rich counties that were largely immune to the last recession. And lower-income Americans living in those richer counties have been hit particularly hard. Their spending fell further than the spending of lower-income workers in poorer counties.

Number of the Day
15.4 million – Number of people in America excluded from CARES Act stimulus payments because of their immigration status. This includes about 10 million undocumented immigrants, and more than 5 million children and spouses who are citizens or legal residents. (Source: Migration Policy Institute via New York Times)