Dear Senator Casey and Senator Toomey,
We are grateful for your efforts to help people in Pennsylvania and across the country who have been hit so hard by the coronavirus pandemic and resulting deep recession. The relief packages enacted to date include important measures that are helping millions of people, but far more is needed to help those facing serious hardship. Moreover, given the unprecedented fiscal crisis facing our state and the risks of massive layoffs and cuts in critical services, Congress needs to provide significantly more aid to states and localities to help them cope with plummeting revenues and rising costs.
Since many of the most important priorities for the next agreement are under the purview of the Finance Committee on which you sit, we are writing to share our recommendations and ask for your active support.
SUMMARY OF RECOMMENDATIONS
- Ensuring relief lasts until the job market recovers. Key unemployment assistance measures and fiscal relief for states and localities should remain in place automatically until unemployment returns to more normal levels. If enacting such an automatic mechanism is not possible, these provisions should last at least through 2021.
- Unemployment benefits. Given the underlying weakness in our unemployment insurance system, the next relief package needs to include three measures: (1) expanded eligibility for jobless benefits through the Pandemic Unemployment Assistance program; (2) more adequate benefits through a federally funded benefit increase; and (3) additional weeks of coverage to ensure that benefits do not run out while unemployment remains high.
- State and local fiscal relief. Relief is needed through two mechanisms:
a. Expanding the Families First Act’s federal Medicaid matching payment (FMAP) increase. An additional FMAP increase should be robust — no smaller than the increase proposed in the Heroes Act — and ideally should be tied to state unemployment rates, as the National Governors Association (NGA) has proposed, to target resources where they are needed most.
b. Providing $500 billion in direct grants just to states, as recommended by the NGA and included in the House-passed Heroes Act, along with additional grant aid for local governments.
- Health. The Families First Act’s critical Medicaid “maintenance of effort” requirement, which prevents states from accepting additional federal Medicaid funds from imposing new eligibility restrictions, should be preserved to protect coverage during the pandemic and economic downturn. For people not eligible for Medicaid, access to marketplace health coverage should be expanded and made more affordable.
- Emergency assistance grants. The next package should include Sen. Wyden’s Pandemic TANF Assistance Act, which builds off of the 2009 Recovery Act’s highly successful emergency assistance grants and would provide flexible funding to states to assist low-income households facing emergency situations and fund subsidized jobs. The proposal has a broader reach than traditional TANF programs, reaching individuals and households with incomes below 200 percent of the poverty line who have been hit hard by the pandemic and including set-asides for tribal governments.
- Temporary expansions of refundable tax credits. The next relief package should include the Heroes Act provision temporarily expanding the Child Tax Credit so it’s fully available to poor and low-income children. (Some 27 million low-income children, including 891,000 Pennsylvania children, now receive only a partial credit or none at all.) And it should temporarily expand the EITC for workers without children at home so that the federal tax code no longer taxes 5.8 million low-paid working people into, or deeper into, poverty.
- Stimulus payments. As proposed in the Heroes Act, the next bill should retroactively fill the two main holes in the first round of stimulus payments by authorizing payments to immigrant households where an adult does not have a Social Security number and to dependents over age 16. If Congress approves a second round of stimulus payments, it should also include these improvements. While the stimulus payments are providing badly needed help to millions of households, they must not squeeze out critically important unemployment assistance and other measures more targeted to those hardest hit in this crisis and fiscal relief.
- Child care. Substantial resources beyond those in the Heroes Act are needed to enable child care providers to remain in business, serve essential workers, and reopen when it is safe to do so.
We provide more detail on several of these issues below.
We appreciate your consideration of these issues as you formulate your policy priorities for bipartisan negotiations on further COVID relief. The recommendations we’ve shared would both help the millions of households in Pennsylvania facing severe hardship and deliver substantial state and local fiscal relief to help avert harmful budget cuts and further job losses.
Americans for Democratic Action, Southeastern Pennsylvania Chapter
Asian Pacific Islander Political Alliance
Bucks County Women’s Advocacy Coalition
Coalition for Labor Engagement and Accountable Revenues (CLEAR)
Coalition for Low-Income Pennsylvanians
Coalition for a National Infrastructure Bank
Community Advocates of Montgomery County
Education Voters of Pennsylvania
First Up: Champions for Early Education
Hunger-Free PA – PA Food Banks
Indivisible We Rise West Central PA
Indivisible: Narberth and Beyond
Lutheran Advocacy Ministry in PA
National Nurse-Led Care Consortium
Pennsylvania Budget & Policy Center
Pennsylvania Council of Churches
Pennsylvania Head Start Association
Pennsylvania Health Access Network
Pennsylvania Joint Board of Workers United
Philadelphia Neighborhood Networks
Philadelphia Unemployment Project
Planned Parenthood Pennsylvania Advocates
Public Citizens for Children and Youth – PCCY
Southwestern Pennsylvania CLUW
The Council of Southeast Pennsylvania/PRO-ACT
Unitarian Universalist PA Advocacy Network
MORE DETAILED RECOMMENDATIONS
Ensuring Relief Lasts Until the Job Market Recovers
First and foremost, given updated forecasts that this severe economic crisis will continue into 2022, it’s imperative that improvements in federal unemployment benefits and eligibility and state fiscal relief through an enhanced FMAP — among other provisions — remain in place until the economy and job market recover. The pandemic unemployment benefits and increased FMAP in the CARES Act and Families First Act end prematurely, long before the economic crisis is projected to end.
Enacting measures that automatically last as long as the economy is weak and provide more help — such as more fiscal relief or more weeks of unemployment benefits — in states facing greater challenges will be important to keeping aid to states, families, and the economy flowing as long as needed, without requiring further congressional action. If such automatic measures are not feasible, these policies should remain in effect at least through 2021.
The unemployment insurance system doesn’t cover a large number of workers who lose their jobs, and benefits are low, averaging just $409.61 per week in Pennsylvania. Even if a state qualifies for the permanent Extended Benefit program, too few weeks of benefits are available during deep downturns, when it can take workers a long time to find new jobs.
The CARES Act began addressing these issues by: expanding eligibility through the Pandemic Unemployment Assistance (PUA) program; providing a federally funded benefit increase of $600 per week; and providing 13 additional weeks of coverage. The CARES Act is a good first step, but far more will be needed to protect unemployed workers and their families over the full period that unemployment remains high. The benefit increase is due to expire in July, when the Congressional Budget Office expects unemployment to exceed 15 percent, and the PUA and additional weeks of benefits are set to expire at the end of December, when CBO expects unemployment to remain well above 11 percent, or higher than its peak in the Great Recession.
The next package should include key unemployment benefit expansions, including: extending and improving PUA so large numbers of workers aren’t left without help; providing a robust, federally funded benefit increase to better help households make ends meet; and providing additional weeks of benefits “tiered” to provide more weeks in higher-unemployment states.
Critically, the package should ensure that these expansions remain in effect until unemployment rates — both nationally and in the state — return to more normal levels. This will keep relief from ending prematurely and thereby increasing hardship and lengthening the downturn. If that isn’t feasible, these provisions should remain in place at least through 2021.
State Fiscal Relief
States including Pennsylvania are facing truly dire circumstances, with a calamitous drop in revenues amidst rising costs for health care and other pandemic-related needs. Pennsylvania’s Independent Fiscal Office is projecting that the commonwealth’s revenue will decline by nearly $5 billion over the next 13 months. While the Families First Act and CARES Act include some state assistance, Congress must do much more to help states and localities avert significant layoffs and deep cuts in critical public services. And lawmakers must act quickly: our state’s fiscal year begins on July 1.
The next bipartisan agreement needs to include two components that build on previously enacted measures: extending and expanding the temporary FMAP increase and increasing direct grants to states and localities. Direct grants alone will not be enough. We support the National Governors Association’s recommendations for increasing and extending the Families First temporary FMAP increase and for $500 billion in direct grants to states. We also encourage Congress to provide additional funding for localities.
Increasing the FMAP is the most effective and efficient way to deliver fiscal relief to states. It is timely and well-targeted to states facing significant increases in Medicaid enrollment and related costs. And, unlike the Coronavirus Relief Fund, it comes without burdensome restrictions on its use. The best approach would be to structure FMAP increases along NGA’s recommendations, with increases scaled based on state unemployment rates and lasting until the labor market recovers. But if that is not feasible, we hope the package will at least match the Heroes Act’s one-year, 14-percentage-point increase.
The next package also should expand the Coronavirus Relief Fund to provide $500 billion for states and provide additional relief for local governments. Moreover, the package should retroactively undo the restrictions in the CARES Act preventing state and local governments from using the funds to make up for revenue shortfalls and should not attach those restrictions to a new round of relief.
Increasing the FMAP not only provides general state fiscal relief but also helps protect health coverage and access to care by discouraging state Medicaid cuts. Already in Pennsylvania, an estimated 1.5 million people have lost employer-based coverage, nearly 75 percent of whom are Medicaid-eligible according to a Kaiser Family Fund report released last month. To cope with surging enrollment during an unprecedented budget crisis, Pennsylvania needs the federal government to cover a larger share of Medicaid costs.
Equally important is preserving the strong maintenance of effort (MOE) protections enacted as part of the Families First FMAP increase. By preventing states from introducing new eligibility restrictions or taking away people’s coverage while receiving the additional federal funds, the MOE is preserving coverage for hundreds of thousands of people during the public health and economic crises.
We also urge Congress to expand access to marketplace coverage and make it more affordable. The HEROES Act would create a two-month emergency special enrollment period during which anyone could enroll in a marketplace plan, an important step to allow people who lose a job or income but didn’t previously have employer coverage to enroll. Congress should also protect people experiencing sharp and unpredictable income changes this year from having to repay large amounts in premium tax credits if their forecast of their total annual income proves inaccurate.
Emergency Assistance Grants
While Congress has taken important steps to provide relief to households facing hardship during this crisis, a large number of people — including some of the most destitute — either will not be able to access it or will need more help to avoid serious hardship, such as eviction, homelessness, and hunger. For example, many people who were out of work before the pandemic are ineligible for unemployment benefits and now likely face much longer periods of joblessness. And the number of people who seriously need and qualify for rental assistance far exceeds the available resources.
To target resources to households at risk of falling through the cracks, Congress should establish an emergency assistance fund — similar to the 2009 Recovery Act’s highly successful TANF Emergency Fund — to help people missed by other relief mechanisms. The Pandemic TANF Assistance Act proposed by Sen. Wyden would achieve this goal by creating a $10 billion emergency aid program enabling states to provide short-term cash, non-cash, and in-kind assistance to help families and individuals meet basic needs and prevent household emergencies. States could also use the money for subsidized employment, as the TANF Emergency Fund did. The bill gives states considerable flexibility in administering the program and includes a set-aside for tribal governments and territories. The Heroes Act includes a similar proposal.
Temporary Expansions of Refundable Tax Credits
The Heroes Act includes temporary increases in the Child Tax Credit (CTC) and Earned Income Tax Credit (EITC) that would substantially help both families with children and workers without children early next year at tax time. For tax year 2020, it would make the CTC fully available to the 27 million children nationally — and the 891,000 children in Pennsylvania — who now get only a partial credit or none at all because their incomes are too low. No longer would many poor children be left out and lower-income children receive less than those in higher-income households. The Heroes Act would also expand the EITC for very low-wage workers not raising children to enable younger workers and some older workers to qualify and to boost the tiny credit so 5.8 million workers are no longer taxed into, or deeper into, poverty.
These CTC and EITC improvements would provide particularly well-timed help to workers and families — and well-timed stimulus for the economy overall — given CBO projections that unemployment will remain high throughout 2021. They would deliver high “bang-for-the-buck” stimulus because the money flows to lower-income people, who tend to spend rather than save what modest income they have.