The CBO has updated its economic projections through the end of 2021 to account for the 2020 coronavirus pandemic. The CBO estimates that the real (inflation-adjusted) GDP will contract by 11 percent in the second quarter of 2020, which is equivalent to a decline of 38 percent at an annual rate. Furthermore, the number of people employed in the second quarter of 2020 will be almost 26 million lower than the number in the fourth quarter of 2019. The CBO also considers the effects of recent legislation, noting that “greater federal spending and lower revenues will cause real GDP and employment to be higher over the next few years than they would be otherwise.” However, in CBO’s assessment, “as long as some degree of social distancing remains in place, the economic boost that might be expected from recent legislation will be smaller than it would be during a period of economic weakness without social distancing.”
On Wednesday May 13, 2020, the Wisconsin Supreme Court struck down Wisconsin’s COVID-19 stay-at-home order in a 4-3 decision (see page 31-32 of the court’s opinion). The stay-at-home order — Emergency Order 28 — had been issued Wisconsin Department of Health and Human Services Secretary Designee Andrea Palm on March 24, 2020.
Although the legislature had requested that the court delay any order by a week to provide time for new transition rules, the court declined saying:
‘We have declared rights under the law wherein we have concluded that Emergency Order 28 is invalid and therefore, unenforceable. Although a very unusual request, on April 21, 2020, the Legislature asked this court to issue a temporary injunction of Emergency Order 28 but then requested a stay of that injunction for at least six days. We perceive this request as being grounded in a concern for an orderly transition from Order 28 to a lawful rule.
However, more than two weeks have passed since we began our consideration of this case. Therefore, we trust that the Legislature and Palm have placed the interests of the people of Wisconsin first and have been working together in good faith to establish a lawful rule that addresses COVID-19 and its devastating effects on Wisconsin. People, businesses and other institutions need to know how to proceed and what is expected of them. Therefore, we place the responsibility for this future law-making with the Legislature and DHS where it belongs.” (At pages 30-31) (Emphasis added).
Without a delay period, the court’s decision immediately lifted the state-wide restrictions. Businesses, however, continue to face any local limits and stay-at-home orders, such as those imposed by Milwaukee. But some bars opened immediately on Wednesday after the court’s decision.
The next major round of COVID-19 legislation, H.R. 6800, The Health and Economic Recovery Omnibus Emergency Solutions Act (“HEROES Act), was introduced in the house today, May 12, 2020. The package includes approximately $3 trillion in relief for state and local governments, individuals, and the healthcare system.
According to the Democratic staff of the House Committee on Appropriations summary , the bill includes, just in its funding for governments and financial services:
State Fiscal Relief – $500 billion in funding to assist state governments with the fiscal impacts from the public health emergency caused by the coronavirus.
Local Fiscal Relief – $375 billion in funding to assist local governments with the fiscal impacts from the public health emergency caused by the coronavirus.
Tribal Fiscal Relief – $20 billion in funding to assist Tribal governments with the fiscal impacts from the public health emergency caused by the coronavirus.
Fiscal Relief for Territories – $20 billion in funding to assist governments of the Territories with the fiscal impacts from the public health emergency caused by the coronavirus.
CARES Act Coronavirus Relief Fund Repayment to DC – Provides an additional $755 million for the District of Columbia to assist with the fiscal impacts from the public health emergency caused by the coronavirus
Treasury Inspector Generals – $35 million for the Treasury Inspector General for oversight of Coronavirus Fiscal Relief Fund payments to state and local governments, and $2.5 million for the Treasury Inspector General for Tax Administration for oversight of IRS payments.
Community Development Financial Institutions (CDFI) – $1 billion for economic support and recovery in distressed communities by providing financial and technical assistance to CDFIs.
Tax Credit Implementation – $599 million for implementation of additional payments to individuals.
Assistance to Homeowners–$75 billion to states, territories, and tribes to address the ongoing needs of homeowners struggling to afford their housing due directly or indirectly to the impacts of the pandemic by providing direct assistance with mortgage payments, property taxes, property insurance, utilities, and other housing related costs.
Elections – $3.6 billion for grants to States for contingency planning, preparation, and resilience of elections for Federal office.
Broadband – $1.5 billion to close the homework gap by providing funding for Wi-Fi hotspots and connected devices for students and library patrons, and $4 billion for emergency home connectivity needs.
Assisting Small Businesses – $10 billion in grants to small businesses that have suffered financial losses as a result of the coronavirus outbreak. Office of Personnel Management Inspector General Office (OPM IG) – $1 million for the OPM IG to combat healthcare fraud associated with COVID-19.
General Services Administration Technology Modernization Fund – $1 billion in funding for technology-related modernization activities to prevent, prepare for, and respond to coronavirus.
Postal Service – $25 billion for revenue forgone due to the coronavirus pandemic, plus language providing additional protections to Postal workers. An additional $15 million is provided for the Postal Service Inspector General for oversight of this funding.
On Friday May 8, 2020, the Department of Labor Bureau of Labor Statistics released the unemployment rate for April 2020: 14.7%. During the Great Depression, the unemployment rate is believed to have reached 25%. During the Recession which began in December 2007, unemployment topped out at 10% in October 2008. One note about the current 14.7% rate — experts question whether it captures the full level of unemployment as the circumstances of the pandemic mean that many who are currently not working are not in a position to “actively” seek work. Additionally, unemployment is not borne equally across all populations, posing particular challenges in some industries, regions, socio-economic groups, and communities.
The Equal Employment Opportunity Commission pulled its Technical Assistance Q&A regarding “return to work” for employees whom the employer believes are at a higher risk for severe illness if they were to contract COVID-19. The original guidance posted on Tuesday May 5, 2020 indicated that an employer could exclude an employee from returning to work solely because the employee has an underlying condition placing that worker at higher risk for serious COVID-19 illness.
The revised guidance released on Thursday May 7, 2020, now provides that: “If the employer is concerned about the employee’s health being jeopardized upon returning to the workplace, the ADA does not allow the employer to exclude the employee – or take any other adverse action – solely because the employee has a disability that the CDC identifies as potentially placing him at “higher risk for severe illness” if he gets COVID-19.” (Response to Question G4) (emphasis added).
An employer can only bar such an employee from returning to work if “the employee’s disability poses a ‘direct threat’ to his health that cannot be eliminated or reduced by reasonable accommodation.” (Response to Question G4)
The Joint Committee on Taxation released its explanation of the CARES Act on Wednesday April 22, 2020, and includes an appendix with the estimated revenue effects originally prepared on March 26, 2020.
The OECD has released a report tracking and reviewing countries’ tax and fiscal responses to the COVID-19 crisis. In this April 15, 2020 report, the OECD makes a series of observations and recommendations for the future, noting that “some are already suggesting the need for a new kind of ‘Marshal Plan’ to support the poorest countries.”
An updated version of the Working Paper, Regulating in Pandemic: Evaluating Economic and Financial Policy Responses to the Coronavirus Crisis by Hiba Hafiz, Shu-Yi Oei, Diane M. Ring, and Natalya Shnitser has been posted. The Working Paper is revised and updated to incorporate the CARES Act (H.R. 748) as well as recent action by the Federal Reserve, the Department of Labor, and other agencies.
The Department of Labor just released statistics for Unemployment Claims for the week ending April 4, 2020 revealing 6,606,000 new claims. This number marks “a decrease of 261,000 from the previous week’s revised level [which had been revised] upward by 219,000 from 6,648,000 to 6,867,000. The 4-week moving average was 4,265,500, an increase of 1,598,750 from the previous week’s revised average.”
Over the past two weeks, the federal government has unleashed a series of new programs providing business loans, refundable tax credits, direct payments to Americans, and enhanced unemployment compensation — all in an effort to begin to manage the fallout from the COVID-19 crisis. In the midst of this flurry of legislative action and program rollouts, the GAO has issued a report detailing patterns of improper payments (estimated at almost $175 billion for fiscal year 2019) across 6 federal agencies. Although the report includes recommendations, some targeted and some more general, it seems unlikely that these agencies (or others looking on) can quickly learn from the analysis and modify systems as they race to distribute funds in an economic crisis. Moreover, in a time of constrained personnel resources due to COVID-19, stay-at-home orders, and overwhelming demand, agencies may find their ability to execute accurate delivery even more constrained than in the past.
On April 1, 2020, the Department of Labor’s Wage and Hour Division posted temporary rules regarding both the new Paid Sick Leave and the expanded and new paid FMLA provisions in H.R. 6201, the Families First Coronavirus Act. The rules offer guidance on a range of questions including clarifications regarding covered children for whose care paid leave is granted, definitions of telework, the calculation of pay, the exclusion of health care providers and first responders from coverage, and the criteria by which small businesses (fewer than 50 employees) can be exempt from the paid leave provisions.
President Trump issued a signing statement on Friday that suggests he see limits on the extent of oversight to be provided by the new Special Inspector General for Pandemic Response (SIGPR). Created in the legislation, the SIGPR is intended to “conduct, supervise, and coordinate audits and investigations of the making, purchase, management, and sale of loans, loan guarantees, and other investments made by the Secretary of the Treasury under any program” under the new Act. The SIGPR is directed under the legislation to provide quarterly reports to Congress — and to inform Congress if agencies unreasonably refuse to provide requested information. In critiquing the role of the SIGPR in the signed bill, the President stated, “I do not understand, and my Administration will not treat, this provision as permitting the SIGPR to issue reports to the Congress without the presidential supervision required by the Take Care Clause, Article II, section 3.”
The House passed H.R. 748 by voice vote this afternoon with a quorum present and over the objections of one representative. The legislation now heads to the President. Treasury Secretary Mnuchin stated Thursday (referencing portions of the legislation that call for payments to individuals) that Americans should expect to see money in their hands (typically via direct deposit) in three weeks.
The text of the relief bill currently being debated in the Senate has been released: S.3548 (The “Coronavirus Aid, Relief, and Economic Security Act” or the “CARES Act”).