After PPP: Fix Unemployment Insurance Instead of Bailing out States

Press Releases · Apr 23, 2020

Washington—Heritage Action issued the following statement in response to today’s vote in the House to add additional funds to the Paycheck Protection Program (PPP):

Today’s vote to add more funds to the PPP is good news for workers across America. After Democrats held funding hostage for weeks to get their liberal spending demands met, Congress did the right thing and passed a narrow bill to fix the program without including unrelated policies. The bill will now go to the President and we urge him to sign quickly.

As Congress considers any future package, it should be targeted and temporary, only focused on the impact of COVID-19. Furthermore, Congress should address and fix the unemployment provisions in the CARES Act. As we warned last month, the uniform $600 per week unemployment insurance addition gives most workers a raise for staying unemployed. Now employers across the nation are unable to hire employees back using PPP loans — they can’t compete with the government paying people more for a zero-hour work week. Congress should also work to prevent PPP fraud. The high volume of applications and loose rules for loan applications makes it easy for businesses who have not been dramatically impacted by COVID-19 to receive loans vital to keeping other businesses open.

After fixing these two issues, Congress should let the trillions of dollars allocated for coronavirus relief work instead of piling on additional spending like state bailouts. Governors have requested a staggering $500 billion in unrestricted funds. Much of that will go to old debt, unfunded pensions, and vanity projects — New York’s current budget already plans to use bailout money to fund high-speed rail and a renovation of downtown Buffalo. Federal taxpayers shouldn’t be on the hook for irresponsible states.

Future coronavirus relief bills should follow today’s bill: narrow policies and fixes targeted to help workers through the pandemic. Congress should not be passing enormous “Christmas tree” bills filled with unrelated spending, hastily drafted language, and wasteful state bailouts.