$4,000? $1,000? Tax Breaks? Lawmakers, Economists Weigh In With Solutions to Help Americans Amid Economic Fallout from Coronavirus

As the long term fallout of the coronavirus (COVID-19) begins to sink in across the country, lawmakers, economists and the White House have put forward various proposals to address the economic problems millions of Americans will face in the coming days and months.

According to the Dow Industrial Average, the stock market has wiped out all the gains it made since President Donald Trump took office. Treasury Secretary Steve Mnuchin reportedly warned Republicans on Tuesday that unemployment could skyrocket to 20 percent. Even Trump, who was long dismissive of the threat posed by the novel coronavirus and suggested that it was less severe than the common flu as recently as last week, on Monday admitted that the U.S. economy "may be" sliding into a recession as a result of the pandemic.

Democratic Senate Minority Leader Chuck Schumer voiced the same concern in Wednesday remarks from the Senate floor. "We're almost certainly anticipating recession," the senator from New York warned. "You go to the streets of many cities, towns and villages, they're empty."

Many cities and states have shuttered all restaurants, bars, cinemas, gyms and schools in an effort to stop the spread of coronavirus, leaving millions of workers across the country without paychecks for the foreseeable future. Congress has already taken some steps to address the widespread financial concerns, and the Senate voted Wednesday on economic stimulus legislation already approved by the House and supported by the president.

Andrew Yang
Former Democratic presidential candidate Andrew Yang greets supporters before taking the stage during a rally in Washington Square Park on May 14 in New York City. Yang popularized the idea of universal basic income (UBI) during his campaign. Drew Angerer/Getty

Both Republican and Democrat lawmakers, as well as economists have weighed in with various additional ways to address the concerns of Americans. From sending out checks to individuals and families, to tax cuts and low-interest loans, there are many ideas and options being discussed.

Former Democratic presidential contender Andrew Yang had popularized the idea of a universal basic income, warning of the impact of automation will have on the national workforce. But with the threat of coronavirus, his previously fringe idea has entered the mainstream. Even the White House on Wednesday released a modest and temporary version of the plan, which would give at least two monthly direct payments to Americans in April and May.

"Obviously, no one would ever want it to be under these circumstances," Yang told Politico on Tuesday. "But it does feel very much like we championed a new and different approach to improve Americans' lives right as the coronavirus started to shut down the economy."

Here's a closer look at some of the ideas being put forward by lawmakers and economists.

$4,000 payments

One of the most ambitious proposals has been put forward by Democratic Representative Joe Kennedy III of Massachusetts. Kennedy has proposed giving every adult making less than $100,000 per year an immediate payment of $4,000. Those making more than $100,000 would receive $2,000, and parents would also receive $1,000 for every child under the age of 18.

"We need to provide our families with support right now. We have no time to waste," Kennedy wrote in a Wednesday tweet.

"I strongly support direct cash assistance as an emergency response to this crisis," Josh Bivens, director of research at the Economic Policy Institute (EPI), told Newsweek. He also noted that he believed a one-time payment of $1,000, like Republican Senator Mitt Romney of Utah has suggested, would be too little to adequately support workers.

Brian Phillips Jr., Kennedy's press secretary, told Newsweek that the congressman "believes $1,000 is not enough and will push hard for more. But he is heartened to see Republican support for even the idea of cash assistance."

"Direct cash assistance is the most powerful tool we have for immediate economic stimulus–and survival," he added.

$2,000 per month

Another, perhaps equally or more ambitious proposal, has come from Democratic presidential candidate Senator Bernie Sanders of Vermont. In Tuesday remarks, Sanders advocated providing every American with a $2,000 payment each month as long as the national emergency continues.

"We must begin thinking on a scale comparable to the threat, and make sure that we are protecting working people, low-income people, and the most vulnerable communities, not just giant corporations and Wall Street," the senator said.

Bivens noted that regular payments would be important to the economy and workers as long as the crisis continues. "There need to be triggers that allow payments to continue so long as economic activity is depressed due to the virus and containment measures," he said.

Richard Smith, an economic analyst and author Understanding National Wealth: The Triumph of the Most Successful Political Economy in History, told Newsweek that Sanders' proposal appeared to be the "right scale" but needed "two parameters." He suggested that "anyone with greater than $250,000 of adjusted gross income [should be] excluded" and the program should expire "after one month and, if the crisis continues, must be approved each month thereafter by Congress and the president."

Democratic Senators Michael Bennet of Colorado, Cory Booker of New Jersey, and Sherrod Brown of Ohio have put forward a proposal somewhat similar – albeit more modest – to what Sanders suggested. Under their plan, individuals making less than $90,000 would get immediate payments of $2,000. If the crisis is still ongoing in July, everyone would get another check for $1,500. And then again in October, people would get $1,000.

$1,000 per month

Similar to what Yang proposed on the campaign trail, Representative Tulsi Gabbard of Hawaii, who is also a Democratic presidential candidate, put forward legislation last week to pay Americans $1,000 per month as long as the coronavirus pandemic continues.

"The coronavirus pandemic has created a threat to the health and well-being of the American people, as well as to our country's economic stability. While some in Washington are focused on taking care of Wall Street, everyday Americans get left behind. That's wrong," Gabbard said in a Friday statement.

"I've introduced a resolution that prioritizes people so our economic relief is placed directly into the hands of every American, rather than getting stuck in bureaucracy or ending up in the pockets of big corporations," she added.

Romney, on Monday, expressed support for at least a one-time payment of $1,000 to every American. "Every American adult should immediately receive $1,000 to help ensure families and workers can meet their short-term obligations and increase spending in the economy," the senator from Utah said.

On Wednesday, Mnuchin proposed giving Americans two cash payments, the first in early April and the second in early May. The proposal said the amounts paid out would be "fixed and tiered" based on income and family size. According to reporting by The Washington Post, many Americans would receive two payments of $1,000.

Payroll tax cut

Trump had initially been pushing lawmakers to move forward with a payroll tax cut, arguing it would benefit workers and businesses. Such a cut would have given workers more money in their paychecks, as they would temporarily not be required to pay the 6.2 percent Social Security tax and 1.45 percent Medicare tax. Employers also pay an equal amount to the government for each employee, meaning businesses would have more money as well as workers.

But many Democrats and Republicans were dismissive of the president's suggestion. Some lawmakers argued that it would not be a quick enough stimulus, as others noted that it would only benefit Americans who are still able to work, while not benefiting those who have been unemployed due to the crisis.

"Only good part of this idea is that it's big – around $800 billion," Bivens said. "Good starting point for scale. But it's very poorly targeted – would give much more money to people like me – relatively high-wage and able to keep working throughout this crisis – than to people who are lower-wage, and gives zero to people who lose their jobs."

Smith argued that the payroll tax cut was "not immediate enough," saying it was was "too small in the short run."

"We have a very large short-term liquidity need that can be better met through direct cash payments," the economic analyst noted.

What about the Family First Coronavirus Response Act?

The House of Representatives passed the Family First Coronavirus Response Act with bipartisan support last week, and the Senate voted to approve the legislation on Wednesday. It is estimated to cost at least $183.8 billion. Trump has already expressed his backing of the bill.

While many economists, as well as lawmakers from both parties, view the package as a positive first step to address the crisis, most also believe further steps will be necessary as the economic fall-out from coronavirus continues. Although the legislation expands sick leave and unemployment benefits, millions of workers will slip through the cracks, according to a report by EPI.

"The bill has some glaring exclusions. Perhaps the most problematic is the carve-out for large businesses; the bill exempts employers with more than 500 workers from its paid leave mandate," the analysis by EPI's senior economists Elise Gould and Heidi Shierholz explained.

The economists pointed out that the legislation "also makes it possible for the Secretary of Labor to exempt certain health care providers and emergency responders from its paid leave provisions, and to exempt businesses with less than 50 people." They estimated that between these combined loopholes "somewhere between 6.8 million and 19.6 million private-sector workers will be left without paid sick days as a result of the firm-size exemptions in the bill. "

Bivens told Newsweek that the legislation was "distressingly watered-down" but should move forward with some adjustments. "Then we move on to the phase 3 macroeconomic stabilization package," he said.

This article has been updated with comments from Kennedy's press secretary.

$4,000? $1,000? Tax Breaks? Lawmakers, Economists Weigh In With Solutions to Help Americans Amid Economic Fallout from Coronavirus | U.S.