(Bloomberg Opinion) -- After a months-long stalemate that has left workers, families, small businesses and state and local governments at the mercy of an escalating pandemic, congressional leaders may be about to finalize a $900 billion Covid-19 relief package. Aid of any sort is welcome, of course, but if the current deal holds, few will receive all the help they need — and some won’t get any at all.
The package reportedly will include one-time payments of $600 to $700 for individuals and supplemental unemployment insurance for laid-off workers of $300 a week until the end of March. It appears to leave out broad aid to state and local governments (which Democrats wanted), as well as a Covid-19 liability shield for companies (which Republicans wanted). Small businesses will get some support, but not nearly as much as they received last spring.
With some luck, a new relief package will be just enough to see ordinary Americans through the pandemic. The rollout of a long-awaited Covid-19 vaccine began this week and is expected to be widely distributed in coming months. Maybe then life can get back to normal, the economy can resume its normal functioning, 10 million workers who are still unemployed can get back on the job, and 54 million Americans facing food insecurity can regain their dignity.
But whatever happens, it will almost certainly not be enough to set the economy on a sure-footed path.
The problems that preceded this pandemic and contributed to the economy’s tepid growth in the years following the 2008 financial crisis — crumbling infrastructure, neglected public schools, unaffordable health care, widening wealth and income inequality — have been exacerbated by Covid-19. When this crisis is over, Congress will have spent roughly $4 trillion without attempting to address those fundamental problems. No one should be surprised if the road ahead resembles the slow-growth years before the pandemic.
What’s also clear is that Congress, when confronted with a crisis, cannot be relied on to use its full fiscal powers. There’s widespread agreement among economists that when occasional major shocks derail the economy, and workers and businesses are forced to cut back on spending, governments must intervene. Congress should be commended for moving quickly to buttress the economy in March with the $2.7 trillion CARES Act. But as we said in May, it wasn’t going to be enough if the pandemic dragged on for months rather than weeks. Tragically, that’s what happened.
Meanwhile, as evidence mounted that the temporary support provided by the CARES Act had run its course and the economy was weakening again, Congress dithered. Economic growth has slowed since rising sharply in May and June, for instance, and hiring, after partially recovering during those two months, has slowed for five consecutive months. All of that was before the virus recently reasserted itself, prompting some states to reimpose restrictions.
Now daily coronavirus infections and deaths are spiking, surpassing the first spring surge. Many Americans expect to be sheltering at home for a long, hard winter, heightening the pandemic’s threat even as vaccines are distributed. Congress had no choice but to act now. But is this the best it could do?
With Congress unwilling to play a more assertive and muscular role, the Federal Reserve has been forced to take the lead. The central bank is tasked with making sure that workers who need a job have one, and that the prices they pay for goods and services remain reasonably stable — both challenges that became bigger when Covid-19 gutted the economy, throwing millions of Americans out of work and forcing them to tighten their belts. The Fed did what it could to stabilize markets and support the economy by lowering interest rates and loaning trillions of dollars to teetering businesses, federal agencies and cash-strapped local governments.
If that sounds familiar, it’s because it’s largely a replay of the response to the 2008 financial crisis. Back then, the Fed stepped in quickly to restore the financial system and mitigate the impact on the broader economy. But for months, Congress either didn’t understand or didn’t care about the gravity of the problem. When it finally acted, Wall Street was rescued while ordinary Americans were abandoned.
Then as now, the Fed did what it could by lowering interest rates and lending money to government and business. That left out aid for workers and families, a lifeline that only Congress can extend. The 2008 rescue has rightly been criticized for looking after corporate interests and doing little for average Americans, and the U.S. is still grappling with the social, political and economic consequences of that decision. With the CARES Act and this latest round of relief, Congress has taken some steps to correct the mistakes, but it has also left lots of questions about whether it can be counted on in the future to respond in a sophisticated and aggressive fashion.
We should all be thankful for the talented scientific community that managed to develop a Covid-19 vaccine in record time, and a steely-eyed Fed at the ready to support a sagging economy. We should also be troubled by an absentee Congress that has left millions of workers, families and entrepreneurs in the lurch and may not be there to answer the next call.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Timothy L. O'Brien is a senior columnist for Bloomberg Opinion.
Nir Kaissar is a Bloomberg Opinion columnist covering the markets. He is the founder of Unison Advisors, an asset management firm. He has worked as a lawyer at Sullivan & Cromwell and a consultant at Ernst & Young.
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