A Bipartisan Deal on Economic Recovery is Possible. Here's How.

After a spring spate of bipartisanship in responding to the COVID-19 crisis, Congress has once again fallen into partisan deadlock. This time, over the expiration of expanded unemployment benefits and what additional relief is needed for the still-struggling economy.

 

Accusations are flying across Capitol Hill and down Pennsylvania Avenue. President Trump has now issued executive orders seeking to instigate immediate action and break the congressional stalemate.

 

A bipartisan deal is possible — but it has to be based on prioritizing support for Americans to get back to work, balanced with additional relief. That means a temporary extension of enhanced unemployment insurance at a level that more closely tracks wage replacement, funding for child care providers, and an expansion of temporary paid leave provisions.

 

Democrats are correct that failure to extend Federal Pandemic Unemployment Compensation, which provided an additional $600 per week for those on unemployment insurance, would prematurely pull the rug out from under many households struggling to get their financial footing. It would also further depress consumption and hamper any nascent economic rebound. Republicans, on the other hand, are correct that with the $600 weekly supplement, millions of Americans were being paid far more to stay home than to work. That is unfair to those “essential” workers who remain on the front lines and, if continued, will increasingly serve to distort labor market incentives.

 

For both sides, supporting work is and should be the priority. Americans need to work — they want to work. Yet they also face additional barriers as they attempt to return to work or find new jobs and balance caregiving demands. Over 40 million U.S. workers have children under the age of 18 in their household — yet school in many places will be done virtually at home. And, nearly two-thirds of child care providers have closed during the crisis. Parents are struggling to balance work, family, and care.

 

Congress and the Trump administration must reach an agreement that addresses these challenges as part of broader legislation that supports the public health and economic response. Here’s our proposal for a bipartisan deal.

 

-       Authorize $26.5 billion in funding for child care providers.

 

Capacity restrictions in many states, imposed as part of phased reopenings, mean that those providers still operating can’t take as many children as before. They’re struggling to stay afloat and meet the critical needs of working parents. Additional funding will bolster this essential sector.

 

-       Extend the emergency paid leave provisions through next summer, expand coverage to new parents, and raise the 500-employee cap.

 

Employers need workers and workers need flexibility to do their jobs and take time to care for themselves and their families through the crisis. The temporary paid leave provisions that were enacted earlier this year, with support through tax credits, allow many businesses to provide that flexibility. But the new policy also left many workers, especially those earning low wages, uncovered.

 

-       Temporarily extend the FPUC benefit at a level of $400 per week and combine with another round of direct checks.

 

The $600 weekly benefit helped buoy consumer spending and support a high savings rate among Americans. Yet continuation at that level exceeds full wage replacement for most of those on UI and will further distort the labor market, impeding economic recovery. The economy does need additional stabilization, though. A modified benefit together with another round of checks will provide a smoother glide path for struggling households.

 

Perhaps our optimism is misplaced — perhaps the rapid bipartisan response in March and April was an anomaly. Maybe all we will end up with are court challenges to the president’s executive orders and continued partisan bickering.

 

We believe, however, that this Congress has at least one more round of bipartisan agreement in it to help Americans navigate through the crisis. Premised on a shared commitment to supporting work, that agreement can re-align labor market incentives, provide flexibility in managing the crisis, and support the essential businesses that allow other sectors of the economy to function.

 

Julie Anderson is Senior Vice President and Shai Akabas is Director of Economic Policy at the Bipartisan Policy Center.