The $2.2 trillion CARES Act was enacted to help the nation stave off the economic crash threatened by the coronavirus, and its huge price tag and the help it provided for the nation’s households and small businesses got most of the attention. Checks of $1,200 for most Americans, forgivable loans to small employers and an expansion and increase of unemployment benefits and food stamps stole the spotlight.
But huge and expensive changes in the tax code prioritized by the GOP that almost exclusively benefit the very wealthy were also a part of the law. The CARES Act removed a cap on deducting certain losses for families making more than $500,000 a year that will reward 43,000 taxpayers nationally with an average of $1.7 million each. Yet one provision critical to Long Island’s middle class and the affordability of our region, removing the $10,000 cap on federal deductions for state and local taxes, fell out.
The next coronavirus relief plan, a $3 trillion, 1,815-page bill introduced by House Speaker Nancy Pelosi Tuesday, is likely set for a vote Friday. It’s an aggressive starting point for negotiation with the Republican-controlled Senate and importantly, it eliminates the deduction cap, known as SALT, for two years. New York’s congressional delegation must insist that provision remain in the legislation.
It’s desperately clear another round of help is needed, even as Senate Majority Leader Mitch McConnell blusters about waiting. Federal Reserve Chair Jerome Powell refuted on Wednesday the idea that further federal dollars to stimulate the economy could create too much debt: “Now, when we are facing the biggest shock that the economy has had in modern times, is, for me, not the time to prioritize considerations like that.” And Powell’s fears that the federal government would do too little drove stock prices down sharply.
State and local governments face a paralyzing combination of unexpected spending and unimaginable revenue declines. Gov. Andrew M. Cuomo says New York needs $61 billion. Rep. Thomas Suozzi smartly included a provision that $49 billion in relief be awarded to states based on the number of COVID-19 cases, which could net the state $12 billion from that pot alone.
Pelosi’s plan includes $875 billion for state and local governments, $75 billion for testing and contact tracing, $75 billion for mortgage relief and $100 billion for renter relief. The bill is not perfect, however. It includes spending on items not related to the immediate and long-term economic pain of Americans, and expensive measures that could be more effectively targeted. A proposed additional $1,200 check for nearly every American, for example, puts cash in the pockets of many who have suffered no economic loss. Those resources might be better used on those who are struggling.
Democrats are often outmaneuvered by Republicans who play a harder brand of ball, but this time Americans know the additional help is needed and Democrats must fight, harder than ever, for those communities and individuals especially damaged by this pandemic.
— The editorial board