The Good, The Bad, And the Ugly of the HEROES Act

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Earlier this month, the Patriotic Millionaires launched an exciting new direct legislative advocacy project in tandem with several key allies called Donors Advocating for Real Economic Solutions (DARES). This joint venture is focused on creating legislation to relieve the economic pressure from the COVID-19 crisis by drawing on the collective power of political donors to directly and effectively lobby on behalf of legislation that will help actual working people weather this crisis – not just the wealthy few.

DARES released a list of policy priorities (which you can read here) which laid out our vision for a comprehensive first step in the path to recovery for working Americans who have been battered by unprecedented unemployment. 

On May 15th, the House of Representatives released and passed the HEROES Act, which details the Democratic Party’s plan for economic recovery. While this bill is a good start towards a progressive economic rehabilitation plan, it ultimately falls short in critical areas by failing to protect the millions of Americans who are struggling to get by during these difficult times. Below, we go over how the latest legislative package compares to the priorities of the DARES project, and what should be added before the act becomes law. 

 

THE GOOD:

  • $3.6 billion secured to insure electoral protections by assisting states in expanding in-person voting to at least 20 days before the election and increasing vote-by-mail to all states that do not have it, as well as the reimbursement of all other costs borne by the state due to running an election during a global pandemic. 
  • Increased hazard pay for essential workers with up to $13 dollars an hour on top of normal wages that would sundown 60 days after the last day of the ‘COVID Public Health Emergency’.
  • $25 billion for the Post Office, to ensure one of the most essential and well liked government agencies maintains their funding and keeps their employees on the payroll
  • OSHA worker safety guidelines requirement updated to keep employees safe from COVID-19 in what are already dangerous working conditions.
  • 15% increase in SNAP benefits ($10 billion) to keep our safety net programs well funded and operational during a pandemic where they are most needed.
  • $1 trillion to fund states and localities that are currently facing massive shortfalls in their budgets due to a critical lack of tax revenue

 

THE BAD:

  • Monthly direct cash payments: While the bill does include an additional $1,200 per person and up to $6,000 per household (similar to the payout from the initial COVID relief bill) it’s a far cry from the $2,000 per month DARES requested. $1,200 just barely covers rent in most cities, let alone other necessities like groceries, clothing, or medicine. There’s no doubt that Americans need direct cash right now, but a one-time small chunk of money doesn’t provide lasting relief like a constant payout would. 
  • $600 weekly additional unemployment benefits through January: While this is a good part of the bill, it simply does not go far enough. We asked for a trigger instead of a date, because it seems highly unlikely that the economy will turn around by January and we do not want those who are in need to be thrown off their benefits because of an abstract date picked in the past. The benefits should sundown when they are no longer needed, period.  

 

THE UGLY:

  • Paycheck Guarantee: This was a provision that would have covered 100% of wages for workers who are currently out of work, as well as maintain their healthcare through their furloughs. As we now begin to face 20% unemployment (and rising), it’s important that we keep workers attached to the labor market to ensure a speedy reopening when it is deemed safe. However, this provision was scuttled by Ways and Means Chair Richie Neal (MA) as too expensive. The paycheck guarantee would have followed what many European countries have done in covering payrolls directly and would be far more effective than any tax credits proposed in the package in place of this provision.  
  • COBRA subsidies/Healthcare: In the United States, healthcare coverage is unfortunately tied to employment, and as our health crisis morphs into an employment crisis – our system is close to bursting at the seams. In response, we requested that all healthcare costs be sent to our Medicare program (the closest thing the United States has to nationalized healthcare). Instead, the bill funds COBRA, a convoluted program that subsidizes healthcare companies in order to maintain healthcare coverage for a series of months at an high cost. So, rather than fund an existing government program that would directly help those in need, this bill hands the insurance industry taxpayer dollars while they overcharge and undercover their customers. 
  • Foundation/DAF payout requirement: As it currently stands, wealthy individuals can pump millions into private foundations and Donor Advised Funds (DAF) for the purpose of philanthropy and of course, massive tax deductions. In these unprecedented times, we need as much spending as possible and we cannot rely on voluntary acts of philanthropy to save us. That’s why we asked for a three-year emergency mandate where private foundations would be required to double their payout from 5% to 10% and that the requirement also applies to DAFs as well (the current requirement for foundations is 5%, there is no requirement for donor-advised funds). If this was included in the bill it would push $200 billion into the economy by requiring wealthy foundations to put their hoards of money to productive uses. 

 

Thanks to the Senate’s “legislative graveyard” under the leadership of Mitch McConnell, this bill was largely expected to be a messaging bill that lays out the priorities of Democrats at the outset. On that point, at least, this bill was essentially a failure. As we consider how to move forward with this bill, it’s important that we evaluate the legacy of the 2008 financial crisis and what we should avoid in a recovery bill, rather than simply dusting off some old policy ideas from that time and throwing them together in a hodgepodge package. The bank bailouts from nearly a decade ago possibly avoided a depression by throwing billions of dollars at the wealthiest in our country, but millions of Americans were left with nothing as they lost their homes and jobs. Many people in this country never recovered from the 2008 crisis and are now yet again battered by the tides of another economic downturn. It’s time that we created a bailout that shows we can learn from the mistakes of the past. 

We need more oversight for funds handed to corporations and businesses, we need more cash directly in the hands of workers – no complicated tax credits or vouchers, we need programs like the paycheck guarantee that freezes our economy and mitigates losses – like our European counterparts, and we need to ensure that wealthy Americans pay their fair share and are apart of the recovery effort, rather than the profiteers of the afflicted. As it currently stands this bill is the first step in the wrong direction, but it is not unsalvageable. There is still time to alter our priorities, but we need your help.  

Unprecedented times deserve unprecedented responses. And If you are a donor who wants to use your influence to create a more equitable recovery, click here to join DARES and help us advocate for a widespread progressive bailout that helps all people – regardless of their wealth.

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