The voices of Tax Policy Center's researchers and staff
![](https://www.taxpolicycenter.org/sites/default/files/styles/manual_crop_1500w/public/blog/ap_20087673049379.jpg?itok=TkTEEHXZ&c=af02967c33d252063d0038a4754adb44)
The CARES Act Provided Important Relief For The Coronavirus Economy, But What Should Phase 4 Look Like?
Last week, Congress and President Trump enacted the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, the largest aid package in American history. The CARES Act and the two preceding congressional measures provide three phases of essential relief to an economy facing the potential of devastation by the coronavirus.
But more assistance will likely be needed. There are at least four steps Congress needs to take as it designs the inevitable phase 4 coronavirus package. They include: continued fiscal support to allow people to continue to comply with public health mandates; additional specific support for renters and mortgage payers; an expanded social safety net; and more fiscal assistance for state and local governments, which are bearing much of the burden of managing the current pandemic.
This is not to suggest that the bipartisan bill agreed to last week was a mistake. It includes significant resources for combatting the virus directly, including aid to hospitals and public health agencies, as well as grants to augment state emergency funding. It temporarily boosts safety net spending by providing direct payments to people and expanding unemployment insurance. And it offers loans to keep small businesses and non-profits afloat, allows businesses to offset current losses against past income (generating an income tax refund), and creates an enormous loan fund to provide liquidity to big businesses.
So, what should be next?
Continue providing economic relief until the disease is under control. The three bills passed over the last month do not address the challenges of a long-lasting recession. During the Great Recession, political support for additional economic stimulus evaporated after passage of the American Recovery and Reinvestment Act, even though many economists thought additional fiscal stimulus would have been beneficial to the US economy. Congress should avoid repeating the mistake of inaction if additional stimulus and more direct payments turn out to be necessary.
Assist homeowners and renters. The recent legislation provided homeowners limited protection against foreclosure, granted forbearance on federally-backed mortgages, and protected tenants in federally-subsidized rental properties from eviction. But the CARES Act offered no additional forbearance for private mortgages and for rental payments on privately-held properties, two ideas suggested by Urban Institute President Sarah Wartell in a recent presentation. Additional action can protect the housing security of homeowners and renters who have lost income due to public health measures.
Strengthen the social safety net. The 14 states that have not yet expanded Medicaid coverage, as permitted by the Affordable Care Act, should do so immediately. Further steps to move the nation toward universal health care coverage should be taken now. The Families First Coronavirus Act (phase 2 of recent relief efforts) waived work requirements for the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps), and a federal court recently issued a national injunction against recent cuts to the program. Still, Congress could follow the prior policy playbook and increase benefits in the current economic downturn. In the Great Recession SNAP benefits were increased, which helped in reducing poverty, reducing food insecurity, and boosting the economy through higher consumer spending.
Assist state and local governments. The next round of funding should provide additional cash infusions to help state and local governments address their impending massive revenue loss—the CARES Act provides support for COVID-related payments only. During the Great Recession, federal payments to state and local governments helped preserve many services that residents throughout the country relied upon.
Make contingency plans. Policy makers should make contingency plans for the uncertainty that marks the future path of COVID-19 and the economy. It is currently unclear what the worst-case scenario is and there are a number of potentially high-impact options to mitigate potential catastrophe. For example, policy makers could offer large cash prizes for the creation of a COVID vaccine. Or the President could invoke the Defense Production Act to provide protective equipment to essential workers and to expand testing capabilities. Crucially, Congress needs to be able to vote remotely to pass legislation in the case that members are unable to convene in the Capitol.
The CARES Act is a much-needed relief package, but policy makers will need to act again, responding quickly to changes in the economy precipitated by the evolving coronavirus crisis.
Posts and comments are solely the opinion of the author and not that of the Tax Policy Center, Urban Institute, or Brookings Institution.
Share this page
Andrew Harnik/AP Photo