Center for American Progress

The Senate Stimulus Proposal in Response to Coronavirus Fails to Meet the Moment
U.S. Senate Majority Leader Mitch McConnell (R-KY) arrives at the U.S. Capitol, March 2020. (Getty/Win McNamee)
U.S. Senate Majority Leader Mitch McConnell (R-KY) arrives at the U.S. Capitol, March 2020. (Getty/Win McNamee)

As they work to pass a bill to address the unprecedented challenges posed by COVID-19—and the efforts to contain it—Congress and the White House must achieve two urgent tasks. The first is to provide the tools necessary to get the public health crisis under control. The second is to offer economic relief to workers, families, small businesses, and others. Millions are facing a sudden and, in some cases, complete drop in their income as a result of the measures states, cities, and the country as a whole have taken in service of the public health response.

The Senate Republican bill fails to meet this moment. It is ambitious in providing bailouts to large corporations but does nothing to protect workers at the firms being rescued. It hands out corporate tax cuts from wish lists crafted long before this crisis began. In fact, the bill includes provisions that effectively deepen the corporate tax breaks that were provided in the 2017 law signed by President Trump—even providing some retroactive tax cuts that are essentially unrelated to the crisis at hand.

But the bill falls far short in addressing the immediate and acute pain that is being felt by many of the workers, families, and communities being hit hardest by the COVID-19 virus. It entirely ignores the means we have at the ready to directly support workers who have been laid off or seen their income drop to zero. It neglects families who are struggling to get food on the table in an uncertain time. And it fails communities that are being stretched to the brink to address health and economic crises simultaneously. Where it does provide relief to families and individuals in need, it provides too little, and cruelly leaves out or provides less to those who are likely to face the greatest strain.

Consider the following examples:

  • The laid-off server whose unemployment insurance may only cover a small percentage of their lost income
  • The ride-share driver who has lost almost all of their business and, classified as an independent contractor, can’t get any support for their lost pay
  • The family facing a sudden drop of income, and immediately struggling to pay for housing or to keep food on the table
This unprecedented challenge requires not only using the tools we have to get sufficient money to families, workers, and communities but also committing to provide that support as long as this crisis lasts.

The bill offers only one solution to the immediate, acute crisis these workers and families are facing—a necessary but insufficient direct payment program, which will take time to implement and either excludes or provides less money to many of those who are experiencing the greatest need. On top of that, the bill entirely ignores the financial strain that states are facing now, one that is only going to deepen, as they appropriately direct their full attention to this crisis. This strain, if unaddressed, will have the effect of both hampering the health response and forcing deep cuts in areas such as K-12 and higher education, housing, and other public services. By not ensuring that assistance is available for as long as is needed, the bill fails to take seriously the magnitude of the problem we face. This unprecedented challenge requires not only using the tools we have to get sufficient money to families, workers, and communities but also committing to provide that support as long as this crisis lasts. These measures must automatically extend based on health and economic conditions.

Congress and the White House must act fast. They must offer relief at the scale, the scope, and the speed needed to meet this challenge. They must ensure that those who are experiencing the most acute harm are provided sufficient help. To date, the Senate bill applies that spirit when it comes to aid to large corporations but falls far short otherwise.

Shutting out the most vulnerable from direct payments

The Senate Republican proposed structure for direct payments is upside down both morally and economically. It shuts out many of the most vulnerable people entirely and gives less to families with low and moderate incomes (including most seniors and many people with disabilities) than people who are relatively better off.

The McConnell plan bases the direct stimulus payments on income reported on 2018 tax returns. The plan includes both a phase in and a phase out, meaning that if your income was too high or too low in 2018, you may be shut out from the payments that will go out over the coming months. Only those with at least $2,500 of certain forms of income in 2018 (earnings, Social Security benefits, and veterans’ benefits) qualify at all, shutting out people without income, such as students or caregivers, or people with excluded forms of income, such as Supplemental Security Income (SSI). The legislation also renders people who were dependents of other taxpayers in 2018 ineligible for payments—and the additional, smaller benefit for children only goes to those 16 and under. That would exclude older dependents, including 17-year-olds, students, as well as seniors, people with disabilities, or other adults living with families that support them. People without sufficient tax liability in 2018 are not eligible for the full payment. That is especially likely to include low-income working families, seniors, and people with disabilities. (The IRS can opt to use 2019 tax returns to determine payments for people who did not file returns in 2018, but most people have not yet filed their 2019 returns.)

The result of this structure is that some of the hardest-pressed families will receive much less than people above them on the income scale. That is completely counterintuitive and counterproductive. People with lower incomes are less likely to have job or income security and less likely to have a financial cushion to support them but more likely to spend their direct payment in a way that creates income for others and boosts their local economy.

The direct payments are also gradually phased out by income beginning above $75,000 for singles and $150,000 for couples. Again, that is based on 2018 income, meaning that if a family had that level of earnings in 2018 but has since lost its source of income, it would be ineligible for the advanced payments. Taxpayers whose income was too high or too low in 2018 to receive payments or the full amount of the payments may be able to claim them as tax credits on their 2020 tax returns, but not until tax time next year.

This direct payment plan misses the mark, giving the people most desperately in need of cash nothing or much less than others who are relatively better off. The payments will also not arrive for a few weeks at best, underscoring the need for more immediate forms of aid.

On top of a poorly structured direct payment proposal, the Senate bill also tucked in several provisions giving tax cuts to corporations, coming on top of the tax cuts they received in 2017. Some of these provisions—including relaxed restrictions on deductions for net operating losses and interest payments—operate retroactively, essentially providing corporations refunds on their tax bills for 2018 and 2019. Corporations would receive these tax cuts whether or not they face any cash flow difficulties in the current crisis. The Senate bill also includes a “technical correction” to the 2017 tax law that restaurants and retailers have pushed for, but it does not fix the part of the law that deliberately left out many restaurant workers and other low-wage workers from the full benefit of increases in the Child Tax Credit.

Ignoring the urgent health care funding needs of states

The health care sections of the Republican proposal ignore the urgent needs of states, health care workers, and hospitals that are on the front lines the COVID-19 emergency. States need additional federal funding to bolster their Medicaid programs beyond the actions taken in the second response bill. These additional funds will allow states to address immediate public health needs and help support the economy. Without additional federal support, states will be forced to cut critical health care and other services.

To avoid this outcome, Congress should raise the matching rate for Medicaid for all states during the public health emergency by at a minimum the 12 percentage points asked for by the nation’s governors in order to provide fiscal relief to state and local governments. Congress should also apply this additional match to the Medicaid expansion population; Medicaid DSH and administrative costs; as well as CHIP. Legislation should also provide triggers for future automatic increases to the federal matching percentage beyond the duration of the immediate public health emergency. Not only does the proposal disregard the key role that the Medicaid program plays in responding to public health emergencies, it also offers no support for state and local public health agencies and labs or to otherwise build needed medical surge capacity. State aid through Medicaid should also be supplemented with other assistance to strapped states, whether to help struggling transit systems, help provide assistance to small businesses, or otherwise increase capacity to address the economic crisis that is accompanying the health care crisis.

This proposal also disregards the requests of doctors and other health care providers and consumer advocates to expand health care coverage to ensure that people can access needed care. Policies should expand access to Medicaid coverage by making it easier to enroll in and stay in the program and by expanding the definition of emergency Medicaid. There should also be a COVID-19 special enrollment period to allow people to enroll in plans offered in the marketplaces. Congress should also increase financial support for those enrolled in marketplace coverage. Instead of taking these common sense steps targeted at those most in need, the bill focuses relief on employers and the wealthy. It loosens restrictions on health savings accounts, which only helps those with income to put aside pretax dollars and does nothing to increase coverage. Lastly, the bill undermines employer coverage by adding new exceptions to the ACA’s employer mandate.

Overlooking the dramatic challenge facing newly unemployed Americans

The sudden closures of businesses across the country as a result of public health measures has led to many firms immediately laying off workers at a speed perhaps unprecedented in modern American history. Unemployment claims jumped 33 percent last week, and the jump from this week’s data are likely to be even more stark, with some private forecasters anticipating more than 2 million claims. The Families First Coronavirus Response Act passed this week enacted some important immediate steps to strengthen the Unemployment Insurance system (UI), but far more is needed—and can be done—to help the newly out of work through this channel.

As CAP has noted before this crisis, the UI system was already insufficiently robust to provide support for those out of work under normal circumstances. But as this crisis unfolds, we need—and must—take immediate action to help those who have experienced sudden layoffs.

  • First, those who are newly unemployed as a result of this crisis are not receiving sufficiently large benefits to cushion the shock to their income. Replacement rates, which largely remained constant throughout 2019, are approximately 45 percent (and are lower in some states). As a result, someone who makes $800 a week (about $42,000 a year) might be facing a weekly loss of income of more than $400. Rates must be increased in order to meet families’ economic needs.
  • Second, states’ job search requirements for applicants—including waiting at least a week to get benefits—should be waived immediately. In circumstances where searching for work is essentially impossible and many hiring processes are halted, these provisions are simply delaying access to needed aid.
  • Third, too many workers aren’t eligible for benefits. While workers who are laid off or given reduced hours may qualify, those who are quarantined, caring for a quarantined family member, or caring for a child do not. Individual states, such as Virginia, seek to expand benefits to these nontraditional groups. However, these benefits must be available to workers nationwide.
  • Finally, we must expand the number of weeks of benefits available, giving people the confidence that they will have sufficient time to look for work under these unprecedented economic circumstances.

Although additional administrative funding is needed to help state UI offices that are under strain, the virtue of these recommendations isn’t simply that they help those experiencing the most extreme economic hardship. They also can be implemented right now, through systems that are already in place. The absence of any of these measures in the Senate bill, each of which would help the millions likely facing layoffs, is a glaring omission that must be addressed.

See also

Neglecting the housing needs of renters and the most vulnerable

The Senate stimulus plan ignores assistance for housing, one of the basic necessities of working families and the largest expense in most families’ budgets. Earlier this week, HUD and the FHFA announced suspensions of foreclosures and evictions for mortgage borrowers affected by the COVID-19 outbreak. These initiatives will potentially give some temporary relief to homeowners unable to make their monthly mortgage payments and will help prevent another wave of foreclosures similar to, if not worse than, the one the nation experienced during the Great Recession.

Homeowners, however, are not the only families in need of assistance at this time of acute economic instability. What is of far greater urgency is assistance to the millions of renters across the nation already experiencing a housing cost burden due to the shortage of affordable housing and who, compared with many homeowners, lack a stable financial safety net. Nearly 50 percent of American renters spend more than 30 percent of their income to pay for housing costs, including 11 million renters who are severely burdened (that is, they spend more than 50 percent of their income for housing). The rental affordability problem is particularly acute for very low-income families, most of whom are low-wage workers, people of color, and seniors on fixed incomes—although the shortage of affordable housing has increasingly become a challenge for many families across the income spectrum. As many are forced to stay home from work due to the virus outbreak, missed paychecks will inevitably result in missed rental and mortgage payments and possibly evictions and foreclosures.

Policy responses must recognize that there can be no prioritization of public health without ensuring that everyone has a safe and supportive home to go to and shelter within. The population most at risk for this latest health crisis—and national emergencies in general—are the 500,000 children, seniors, and individuals who are homeless and unsheltered on any given night in the United States. To help prevent further spread and preventable loss of life, Congress must ensure that every coronavirus response package includes robust emergency funding and assistance to this priority population and to the housing-insecure individuals and families precariously teetering on the edge of homelessness. Congress should immediately pass legislation that enables state and local governments to provide direct financial assistance to struggling renters for as long as it is needed and to freeze evictions, particularly for those with the most limited financial means. Any housing assistance package must include provisions to suspend utility shutoffs and accrual of any associated nonpayment late fees for renters and homeowners at risk of either falling behind or losing their housing for the duration of the pandemic and its aftermath.

By failing to prioritize housing assistance to the most vulnerable, this latest Senate proposal will lead to the exacerbation of the already dire national housing crisis at a time when ensuring that every individual is safely and supportively housed serves as the bedrock of public health and economic stability.

Failing to prioritize food assistance for those in crisis

The Families First Coronavirus Act expanded eligibility for the Supplemental Nutrition Assistance Program (SNAP), which can be one of the fastest and most effective ways to get help to those facing economic crisis, and provides for increased state flexibility that will be critical to helping people and families keep food on the table while addressing other urgent needs. That is an important down payment for promoting food security for low-income households, communities at risk of hunger, and the millions now newly facing food insecurity. However, given the magnitude of this crisis, much more needs to be done to bolster incomes and ensure individuals, children, and families have access to food. The Senate stimulus proposal fails to take any steps to stem a growing hunger crisis. It does not even make mention of SNAP or other nutrition assistance programs.

However, action could be taken now that would immediately provide increased support to families who may be simultaneously facing an income shock and the need to purchase food for quarantine. Any stimulus bill should have measures that act immediately to raise maximum benefit levels in the SNAP program, and that ensure such assistance is automatically extended, now or in the future, in the face of economic stress.

Rejecting calls for paid leave for Americans who must provide care for themselves or others

Paid sick days and paid family and medical leave are critical protections for the health of workers, families, and communities. They will allow workers to miss work to recover from the coronavirus; care for a family member with the coronavirus; follow quarantine instructions; or care for a child whose school or place of care has closed without risking their economic security.

Congress took an important first step by passing the Families First Coronavirus Response Act with bipartisan support to provide as many as 87 million workers with up to two weeks of paid sick days and up to 10 weeks of emergency paid leave.

Unfortunately, Senate Republicans keep trying to water down emergency paid leave provisions. Instead of expanding paid leave to all workers and ensuring extended paid family and medical leave, the Senate proposal seeks to further limit paid sick leave protections to workers by expanding the small business exemption to avoid all coverage for family caregiving, allowing the federal Office of Management and Budget (OMB) to exclude some executive branch employees from paid leave protections, and suggesting that all leave must be taken off in one block and limited in type.

All workers need emergency paid sick leave, and the Senate Republican proposal could potentially limit the time an individual could both care for themselves if they got sick and also take care of a sick child or aging parent. Two weeks of paid sick days will likely not be sufficient time for individuals who become sick with the coronavirus and need to self-quarantine for 14 days and then later need to provide care for a sick loved one or a child home from school or child care. The limits to paid leave in the Senate proposal may lead to increased unemployment by pushing people who otherwise could have returned to a job out of the labor force and onto unemployment insurance.

Congress has the opportunity to include more workers under the critical protections of paid sick days and emergency paid family and medical leave in a third coronavirus bill by including the PAID Leave Act sponsored by Sens. Gillibrand and Murray as well as Rep. Rosa DeLauro (D-CT). This bill ensures that every worker in America has full paid sick time and paid leave, providing 14 paid sick days available immediately, and 3 months of COVID-19-related paid family and medical leave. It enables the government to reimburse all employers for 2020 and 2021 for emergency paid sick days and emergency paid leave and covers all private sector employees and independent contractors.

Providing bailouts to large corporations

In contrast to the families and workers left out from the oversights described above, the bill promises the opportunity for bailouts for large corporations. These bailouts could be provided without protections in place for the workers of these firms, and without oversight that could prevent cronyism and misdealing.

Indeed, there are no provisions in the draft to protect the workers in the firms that are being rescued. Without requirements that these firms maintain wage and benefit rates, honor collective bargaining agreements, preserve payroll or take other necessary steps, all financial benefits of the loans would accrue to owners or managers. Without provisions that workers must be represented on boards, the ability to protect the interests of employees is further limited.

Likewise, the proposed structure for these bailouts creates little confidence that they will be conducted in a way that is in the public interest. There are no limitations on share buybacks or dividends, or the use of aid for corporate lobbying or anti-union activity, and no consideration for the climate impacts of firms that are being bailed out. Eligibility for loans and loan guarantees is left entirely to the discretion of the Treasury Secretary. And the bill lacks sufficient oversight, such as a dedicated Oversight Panel of experts with the needed investigative authority, that could periodically and publicly report on the use of rescue funds and how they are aiding the public.   

Our most pressing challenge in the private sector is providing aid to small businesses that have been forced to close doors or cease operations. The Senate bill provides assistance to small businesses in the form of guaranteed loans—but the immediate question is whether this can help on the timeframe that is needed. Most small businesses have only a few weeks’ buffer, and it is unclear whether a program that works through the Small Business Administration’s limited infrastructure—through which only a small percentage of small businesses current borrow—can get loans to those who need them. And while we work to provide needed credit and liquidity to small businesses, it may be necessary to take steps that prevent evictions and foreclosures of small businesses who need forbearance on rent and mortgage payments.

[T]here are no provisions in the draft to protect the workers in the firms that are being rescued.

Neglecting the intersection of disability policy and economic policy

There are 61 million people with disabilities in this country. One-third of households include people with disabilities, and it is possible that that number will increase over time, with the long-term effects of COVID-19 still unknown. People with disabilities are disproportionately poor and unemployed. Yet, the Senate stimulus bill lacks any language to improve the lives of people with disabilities or the lives of their families.

As noted above, the Senate stimulus’ proposed cash benefit is constructed in a way that will likely exclude people receiving Supplemental Security Income as their only form of income and provide only a partial payment to those receiving Social Security Disability Insurance benefits. In addition, the federal government is the largest employer of people with disabilities. Allowing OMB to waive the Paid Family Medical Leave mandate for executive agencies will disproportionately harm workers with disabilities.

This response fails to include resources that would truly address the scale of the health and economic problems facing people with disabilities, such as the elimination of asset limits for SSI, Medicaid, and other programs that impact seniors and people with disabilities, as outlined in Sens. Brown (D-OH) and Chris Coons’s (D-DE) ASSET Act. This does not provide states with resources they need to ensure that people with disabilities have the supports they need to remain in the community and are not forced into institutional or other congregate settings in violation of their civil rights. The plan also does not protect against the weakening of the ADA for businesses or building of new facilities (such as hospitals) in Representatives Porter and DeLauro’s letter to the U.S. Chamber of Commerce.

Putting the civil rights of those with disabilities at risk

The bill includes “National Emergency Education Waivers,” which provide Department of Education Secretary DeVos with extraordinarily broad authority to waive key provisions of the Elementary and Secondary Education Act, the Carl D. Perkins Career and Technical Education Act, and the Higher Education Act. It also directs her to evaluate whether Congress should give her the authority to waive core civil rights protections under the Individuals with Disabilities Education Act and the Rehabilitation Act, which could be devastating for students with disabilities and other people with disabilities.

Overlooking the needs of those with student debt

For student loan borrowers, the Senate bill simply pauses payments and interest for up to six months, which is an important step, but may not be for long enough and does not actually reduce what borrowers owe. For current students, it provides flexibility from technical rules that could have hurt those who had their semesters disrupted—such as the need to return financial aid or having funds received count against their lifetime eligibility caps. But at a time where many low-income college students across the country are facing basic needs insecurity it fails to provide any new money for emergency grant aid or funding for states to shore up colleges’ budgets and avert massive tuition increases in the future.

Ignoring the child care and education crises

The Senate Republican plan includes no support for K-12 schools, which are struggling to provide meals, distance learning, and other essential services to students while physically closed. This is contrast to the Sen. Patty Murray (D-WA)-Rep. Bobby Scott (D-VA) bill, which provides $1.2 billion for K-12 schools to help them plan for closures and continuity of services, and to clean and sanitize buildings while closed. What’s more, as the economic impacts of this crisis continue, state budgets will be dramatically reduced, putting at risk critical funding for K-12 schools. The Great Recession had significant negative impacts on student learning due to dramatic decreases in funding, and Congress must act to prevent this from happening again.

The Senate plan also lacks any support for child care. Thousands of child care providers across the country are struggling with the difficult decision of whether to close down operations or remain open to serve families who must still go to work. Those that remain open must be provided with flexible funding to support critical operations. Child care providers already operating on very small margins are limited in their ability to cover the increased risks and costs of maintaining services. Congress should provide dedicated funding for Child Care Development Fund state administrators to support access to child care for essential personnel, and to build, establish, or maintain supply in areas impacted by the current crisis. Funding must include provisions to train staff on how to provide safe care during this pandemic and increased pay for the workforce, recognizing the critical work they are doing during this national emergency.

Leaving money on the table that could produce essential medical supplies

The Trump administration needs to implement the Defense Production Act (DPA) immediately in order to avoid the worst-case scenario of massive shortages of critical medical supplies across the country. Title III of the DPA establishes a Treasury account, the DPA Fund, which has $65 million in appropriated funds for FY 2020. This fund could be used to leverage domestic private industry to generate much-needed medical equipment and supplies that are essential to an effective national COVID-19 response. For projects that cumulatively cost less than $50 million to address the industrial base shortfall, the president can act alone, using the funds available in the DPA Fund. Projects that exceed the $50 million threshold must first be authorized by an act of Congress. However, these provisions can be waived in periods of national emergency or in situations where the president determines the industrial base shortfall would “severely impair” the national defense. Congress should consider additional funding to the DPA Fund as well as advance authorization for COVID-19 response projects over $50 million and waiving the 30-day notification period.


The Senate plan is clear on its commitment to providing aid to corporations through bailouts and tax cuts but falls woefully short when it comes to the aid that families, workers, and communities need to get through this immediate crisis and the longer-term challenge. Congress must act to ensure that help gets to those who need it quickly and at a scale that is commensurate to the awesome challenge our nation faces.

Members of the Disability Justice Initiative, Early Childhood Team, Economic Policy Team, Education (K-12) Team, Health Policy Team, National Security and International Policy Team, Postsecondary Education Team, Poverty to Prosperity Team, and Women’s Initiative contributed to this brief. Neera Tanden is the president and CEO of the Center for American Progress. Navin Nayak is the counselor at the Center. Mara Rudman is the executive vice president of policy at the Center. Winnie Stachelberg is the executive vice president of external affairs at the Center. Gordon Gray is the chief operating officer at the Center. Daniella Gibbs Léger is the executive vice president of communications and strategy at the Center. Jacob Leibenluft is a senior fellow at the Center.

To find the latest CAP resources on the coronavirus, visit our coronavirus resource page.

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