In a historic move on March 27, politicians across both the Democratic and Republican parties recognized the urgent need to combat the economic havoc wreaked by the coronavirus pandemic and subsequent lockdowns on the American public by passing the CARES Act — the largest economic stimulus package in history. Now, months after, when there is significant evidence that economic recovery is slowing down, the two parties have reached a standstill— both disagreeing on important points like how much more stimulus is required for the economy to recover and to whom the stimulus must go. The purpose of this article, however, isn’t to be over-critical of political actions, but to solidify the claim that the Democratic Party is correct on how to re-energize the American economy and help the American people.

On May 12, Democratic Representative of New York, Nita Lowey, introduced the HEROES Act in the House which proposed to sanction 3 trillion dollars in economic stimulus. The biggest features of the Act were a continuation of the weekly $600 unemployment benefits established by the CARES Act and direct financial assistance to state and local governments. These points, while contentious to the Republican Party (which is why it hasn’t even been taken up in the Senate), do make economic sense during the pandemic.

Consider the unemployment benefits the HEROES Act seeks to extend. This has been an insistent demand by the Left for quite some time, even after it became evident that the Act would not pass in the Senate. Dissenters of the proposal claim that the continued unemployment benefits would disincentivize people from working. 

Senate Finance Committee Chairman Charles E. Grassley (R-Iowa) claimed “Common sense tells you that if you want people to go back to work then government can’t be an unfair competitor by paying people not to work.” 

Unfortunately, recent research by Yale University disqualifies this claim. Economists at the University found no evidence that the $600 unemployment benefits, initially sanctioned as a bipartisan effort (with Republican support), had reduced employment. In fact, research conducted by the Economic Policy Institute found that cutting the benefits established by the CARES Act would be “cruel and bad economics.” Extensions of the $600 weekly unemployment insurance do make economic sense then.

Consider also providing financial assistance to state and local governments. State and local governments have been hit quite hard fiscally by the pandemic. The federal government thus providing financial support to these administrations is vital — a claim verified by a report published by the American Enterprise Institute. This report indicates that state and local governments are about to face a massive revenue shortfall by 2021 and require monetary assistance to protect their people and revive local economies. This requirement is so urgent that the US Conference of Mayors — a bipartisan organization — submitted a statement that cities are in dire need of federal assistance.

CEO of UCSM, Tom Cochran said, “… it is imperative that local governments have the resources to help keep our residents safe and restore economic activity … We urge all our leaders to come to an agreement on a relief package that contains emergency assistance to all local governments.” This, however, isn’t just a plea from mayors. Even non-partisan economists have suggested Congress extend its financial support to cities and states — a suggestion, that until now, that was heeded only by Democrat leaders.

Other criticisms of the solutions presented by the Democratic Party, especially in the HEROES Act, were pointed at the forgiveness of student loan debt for an even longer period of time and providing direct financial aid to immigrants. College students who work part-time jobs to supplement their income have been the first affected on the job-cutting floor. In fact, students who have taken up loans to assist with their college tuition have been affected so much that they may be unable to keep up with making interest payments on their debt. There were calls to suspend a large amount of student debt before the pandemic even hit—and the situation is much worse now. Canceling student debt is a viable economic solution that is supported by research. Additionally, there have been no calls by the Democratic Party to extend economic support to undocumented migrants. All that has been presented is an extension of the direct payment cheques to immigrants with ITINs, an identification indicating tax payments made by the person. Calls to provide economic support have also been backed by the International Monetary Fund, so this proposal should not be deemed illegitimate.

These solutions are even more important because of Senate Majority Leader Mitch McConnell’s promise-threat that the next stimulus bill will be the final bill Congress passes on the matter. Such a statement only creates a situation where the Democratic Party can not compromise on their demands to help the American people — a sentiment echoed by House Speaker and Democrat leader Nancy Pelosi. If this is the only chance politicians get to pass legislation that helps American citizens in the time of the pandemic, then the only way to do it is the right economic way.