Economic Rescue: 21 ideas for 2021 (or better yet, NOW)

The to-do list when President-elect Joe Biden and Vice President-elect Kamala Harris get sworn in is voluminous. Top on that list? Rescuing this country and the American economy from COVID-19.

Since the last federal rescue effort, millions have gotten sick, hundreds of thousands have died, too many small businesses shuttered for good, and far too many people have lost jobs, pay, and health care. To recover from this, the United States clearly needs large-scale changes, from a massive infrastructure stimulus to structural reforms to our public health infrastructure. But if those items take time to develop, we can’t leave our economy flailing—we need emergency triage right away.

In this memo, we lay out 21 specific things policymakers must pass in 2021 as a down payment to our recovery. Better yet, Congress should pass them now before the virus worsens over the winter months. Specifically, we call on policymakers to:

1. Hold states accountable for testing everyone and create a nationwide early detection warning system.
2. Reduce COVID’s racial and ethnic disparities in health care.
3. Ensure early and effective COVID-19 treatments.
4. Establish equity watchdogs for a vaccination campaign.
5. Get and keep people covered.
6. Preserve Medicaid.
7. Make sure COVID-19 treatment is free.
8. Rescue child care.
9. Ensure everyone has broadband and a computer.
10. Extend temporary Unemployment Insurance supports.
11. Get more cash in people’s hands.
12. Secure housing for families.
13. Make sure everyone can afford food.
14. Make OSHA work again.
15. Help workers retrain.
16. Create a state and city fiscal stabilization fund.
17. Ensure state assistance reaches workers.
18. Build a new safety net for small businesses.
19. Throw a lifeline to our smallest businesses.
20. Unleash capital for entrepreneurs.
21. Help small businesses restructure finances for future growth.

1. Hold states accountable for testing everyone and create a nationwide early detection warning system.

After nearly a year since the pandemic’s start, many states don’t have their act together with testing and contact tracing. For example, during the recent surge, South Dakota saw half of their tests come back positive, which means the state is doing too few tests.¹ In contrast, Minnesota conducted many more tests despite their own surge and saw one-in-seven tests come back positive, leading to a lower hospitalizations and deaths.²

The Centers for Disease Control and Prevention (CDC) should issue alerts about states or regions where the public health response is falling short in order to prompt stronger action. Further, Congress should fund a national system of early detection using smart thermometers that provide warnings of outbreaks faster than testing.³ Lastly, Congress should dedicate more funds to ensure everyone gets access to testing with the latest rapid methods.

2. Reduce COVID’s racial and ethnic disparities in health care.

Bias against people of color among health professionals has proven to be widespread—with disastrous consequences.⁴ People of color receive a lower quality of care and less of it.⁵ More Black and brown children die at birth or shortly thereafter, along with their mothers. Bias also happens because of public policy. For example, clinical trials for vaccines and other new therapies often exclude people of color.⁶ 

Much needs to be done to address systemic racism in health care, and several actions can be taken quickly. Congress should fund training to eliminate implicit bias among health professionals.⁷ It should ensure that all data collected on health care quality include basic demographic data in order to combat disparities in the COVID-19 response and beyond.⁸ And clinical trials should be required to include minority representation.⁹

3. Ensure early and effective COVID-19 treatments.

Funding for research into the use of existing drugs and therapeutic treatments has been piecemeal. Success requires a systematic approach to uncover and implement effective treatments, which will be necessary even after a vaccine. If not for private sector philanthropy, medical professionals would not have known that fluvoxamine, which is normally used for mental health, can also significantly reduce the risk of hospitalization if given early to patients testing positive for COVID-19.¹⁰

Congress should publicly fund research into treatments and ensure that all possible approved medications are fully explored for potential benefits in treating COVID-19 patients. In doing this, it should direct the National Institutes of Health to adopt a portfolio strategy to funding research so that the drugs most likely to succeed—based on input from scientific experts—receive priority.

4. Establish equity watchdogs for a vaccination campaign.

Since the start of the COVID-19 pandemic, minorities have had higher rates of infection and death. Black Americans have contracted the virus three times more often as whites and have been hospitalized four times more often.¹¹ Hispanic and Asian Americans are also more likely to be infected and hospitalized than whites.¹² Indigenous peoples have been hit disproportionately as well: Native Hawaiians and Pacific Islanders represent 0.3% of California’s population, but 1% of all the cases in the state.¹³ The Navajo Nation has an infection rate five times that of the rest of the United States.¹⁴

To ensure that any COVID-19 vaccine reaches high priority groups, including minority populations, Congress should establish a federal watchdog system in every state.¹⁵ This watchdog system would report every week on the number of vaccines administered to prioritized population subgroups. It would also track vaccine administration for follow-up doses, which regions have hit their targets, and recommendations for remedial action for areas with below-par distribution. If states or areas don’t achieve distribution targets, then Congress should require the Federal Emergency Management Agency (FEMA) in conjunction with the National Guard to assist those communities with distribution.

5. Get and keep people covered.

An estimated 10 million Americans have lost their work-based coverage during the pandemic.¹⁶ That number could rise to 43 million before it’s over.¹⁷ Only 500,000 have taken up coverage through the Affordable Care Act’s exchanges, and Medicaid enrollment has increased by only 4.3 million.¹⁸

None of the COVID-19 relief bills enacted have provided temporary relief for workers who lost their health care coverage as Congress did during the Great Recession.¹⁹ But the latest version of the House-passed Heroes Act included a provision to qualify workers on unemployment for coverage through the exchanges automatically. Congress could make this provision even more effective by automatically enrolling them in coverage unless they have coverage elsewhere. Congress should also enact a provision in the original Heroes Act to offset the cost of COBRA coverage, which allows laid-off workers to continue their workplace coverage but requires them to pay the employer and employee share of premium. Those amounts are unaffordable for laid-off workers because they average $21,342 a year for family coverage and $7,470 for single coverage.²⁰

6. Preserve Medicaid.

Medicaid is an essential federal-state program that provides health insurance to low-income people, people with disabilities, families and children, seniors, and pregnant women. For every dollar a state pays, the federal government matches somewhere between 50% and 77% of those costs. Under the ACA, states could expand their Medicaid program to cover adults with incomes just over the poverty level with a federal government matching rate of 100% initially, which fell to 90% after a phase-in period. And yet, even with this federal support, Medicaid is a huge part of state budgets. With COVID-19 requiring huge investments from states, many state budgets will be completely sapped dry—putting lives at risk.

To keep state budgets afloat, Congress should increase the federal medical assistance percentages (FMAP) to state Medicaid programs, which have proven to be economically beneficial. Specifically, Congress should increase FMAP by an additional four percentage points for the regular Medicaid population for the next two years on top of the 6.2 percentage point increase, which was included in the second rescue package. (Ten percentage points is the increase Congress enacted during the Great Recession.) Congress should also increase FMAP to 100% for the expansion population of adults for the next two years.

7. Make sure COVID-19 treatment is free.

Congress has already stipulated that COVID-19 treatment is free so that all Americans have access to care and seek treatment instead of spreading the disease. But two problems have emerged: the funds for people without insurance is coming up short, and too few people know their costs will be covered.²¹

The House of Representatives has already approved funding for the uninsured as part of the revised Heroes Act, and this idea should be enacted. It includes $50 billion in funding for providers that are providing free and subsidized care.²² Once enacted, it will be critical for the Administration to ensure that providers can get reimbursed for the care of people who have COVID-19 as a compounding health condition, not just those patients who are suffering only from COVID-19.²³ Congress should also fund a public information campaign so everyone knows that the cost of treatment is free. Part of that effort should include the Administration working with hospitals to notify patients of the free treatment as part of hospital admission.

8. Rescue child care.

The pandemic has had a deep impact on the child care sector. Child care providers have seen declines in enrollment and revenue as they face added health and safety costs due to the pandemic. As a result, many child care providers across the country have closed or are on the brink of closing, and nearly 4.5 million child care slots—half the existing supply—could be permanently lost.²⁴ Child care providers that remain open are grappling with enormous challenges. The economy cannot fully recover from this pandemic if child care is unavailable for working parents.

The child care sector, which was already underfunded going into this pandemic, needs a massive infusion of federal funding to weather this crisis. The House-passed Heroes Act provided $50 billion in Child Care Stabilization Grants to child care providers, allowing them to cover costs like staff, cleaning procedures, personal protective equipment, rent, and utilities. The bill would also provide $7 billion in emergency funding for child care providers through the Child Care and Development Block Grant Program.

On top of this, policymakers should ensure essential workers have access to emergency child care. Currently, essential workers are struggling to find support that matches their working hours during the pandemic, and the child care providers serving essential workers are taking on increased costs than under normal circumstances. The Child Care for Economic Recovery Act (H.R. 7327) would help by providing $850 million in Social Services Block Grant funding to states to connect essential workers with child care and adult day care.

9. Ensure everyone has broadband and a computer.

With millions now being asked to work and learn from home, it has never been more urgent to ensure everyone has access to a solid broadband connection and a computer. Yet going into the pandemic, at least 18 million Americans lived in areas of the country that lack access to broadband, and another 18.5 million households don’t have broadband because they can’t afford it.²⁵

To address this, the Heroes Act would provide $3 billion so households in which a person has been laid off or furloughed can get a $50 emergency benefit to mitigate the monthly price of broadband during the pandemic. It would also increase the monthly Lifeline subsidy amount from $9.25 a month to $25 a month. And to ensure students and teachers have what they need to learn and teach from home, the bill would authorize $12 billion to connect them to broadband, laptops, Wi-Fi hot spots, and other needed devices.

10. Extend temporary Unemployment Insurance supports.

The pandemic triggered an unprecedented level of job loss, and 11.1 million Americans are still unemployed.²⁶ By late August, more than a quarter of adults lived in households in which someone had drawn down on savings or sold their belongings in the previous week in order to make ends meet. Blacks and Latinos, who have seen higher levels of unemployment, were more likely to have done so than whites.²⁷ Unemployment Insurance (UI) is critical income support for people out of work, but in many states those benefits aren’t enough to cover basic needs. As part of the CARES Act, Congress boosted UI benefits and expanded the program to additional categories of workers, like gig workers. But these supports are time limited. The expanded benefits expired in July, and programs for self-employed, gig workers, and the long-term unemployed will expire in mere weeks.

Extending UI assistance should be a top priority. The Heroes Act would extend the extra $600 per week in UI, Pandemic Unemployment Assistance for gig workers, and the additional 13 weeks of benefits for people who have exhausted regular benefits (otherwise known as Extended Pandemic Unemployment Compensation) all through January 2021. Policymakers can build on these proposals by tying UI extensions to economic indicators like the unemployment rate as well as vaccine rates, ensuring that assistance doesn’t arbitrarily run out before the economy has stabilized.

11. Get more cash in people’s hands.

Millions of Americans have lost their jobs in the pandemic, while millions of others have seen cuts in pay or hours.²⁸ As a result, families across the country are struggling to pay for basic needs. A quarter of adults have struggled to pay their bills since the pandemic began and a third have dipped into savings or retirement accounts.²⁹

The one-time direct payment of $1,200 included in the CARES Act provided relief for many workers and families, but it was not enough to help them fully weather this crisis. The Biden Administration should provide Americans with financial support for the duration of the pandemic. The Heroes Act includes another one-time payment of $1,200 per person, and Congress could provide additional rounds of monthly direct cash payments to low and middle-income families, with relief tied to economic indicators like the unemployment rate.

Future rounds of direct cash payments should also be $1,200 a month and should provide an additional $500 for all dependents. People with taxpayer identification numbers should also be included.

12. Secure housing for families.

Amid this crisis, too many people can’t pay for their housing, and the current CDC moratorium on evictions expires at the end of December. This moratorium temporarily halted evictions due to nonpayment of rent to prevent the spread of COVID-19, but interpretation and implementation of the moratorium have varied widely across the country. The moratorium must be renewed, and guidance is needed on how it should be implemented to avoid the confusion and inconsistent implementation that has plagued the current one.

Yet, even with the moratorium in place, renters still need help with rent. Because of how the moratorium has been interpreted and implemented differently from jurisdiction to jurisdiction, many renters are still being evicted due to nonpayment. And renters who are behind on rent could be evicted once the moratorium ends, since it may take time for people to recover their finances after the pandemic ends. By August, 24% of Black adults, 20% of Latino adults, and 19% of Asian adults lived in households that were behind on rent.³⁰

Policymakers should pass the renter assistance and protection provisions in the Heroes Act, which includes $50 billion in emergency rental assistance and a year-long moratorium covering a wider swath of renters. It also includes $5 billion for Emergency Solutions Grants to prevent and respond to coronavirus outbreaks among people experiencing homelessness, though homelessness service providers and advocates are calling for at least $11.5 billion to meet the current need.³¹

13. Make sure everyone can afford food.

Food insecurity has doubled in the United States since the pandemic began, and nearly 1-in-4 households have experienced food insecurity this year. Nearly 14 million children are experiencing food insecurity, and families of color are twice as likely to experience food insecurity as white families.³² Congress has already taken steps to expand and ease access to the Supplemental Nutrition Assistance Program, but more action is needed.

Policymakers can ensure families have enough to eat during this crisis by boosting SNAP benefits by 15% until the economy stabilizes, as included in the Heroes Act. Increasing SNAP benefit levels doesn’t just help lower-income families put food on the table and keep them out of poverty during economic downturns; it was also one of the most effective economic stimulus measures enacted during the Great Recession. Each dollar used to raise SNAP benefit levels generates more than a dollar of economic activity.³³

Policymakers should also expand SNAP eligibility to college students who are otherwise ineligible for it due to work requirements. Even before the pandemic, a third of college students—particularly students of color—were living in or near poverty and many experienced food insecurity. The pandemic has caused many to lose access to campus jobs and safety nets they typically rely on. Finally, policymakers should direct the USDA to grant states as much flexibility as possible in administering their SNAP programs for the duration of the pandemic.

14. Make OSHA work again.

While many workers can work from home during the pandemic, essential workers cannot. Yet, under the Trump Administration, the Department of Labor has chosen to create optional worker safety guidelines instead of establishing mandatory COVID-19 rules for companies to follow.

To protect workers during this pandemic and provide employers with clear expectations, the Occupational Safety and Health Administration (OSHA) must issue an enforceable emergency temporary standard requiring employers to develop and implement infection control plans. The Biden Administration could also take steps on its own to direct OSHA to immediately issue clear, enforceable rules for workplace safety (covering issues like personal protective equipment and social distancing protocols) and require OSHA to enforce them. The fines OSHA issues for violations should be substantial enough to serve as a deterrent against putting employees in harm’s way. OSHA should also be provided with the resources and staffing necessary to ensure the agency can carry out its mission, including hiring more inspectors and filling vacant roles in OSHA leadership, like the assistant secretary. The Heroes Act includes $70 million for OSHA inspectors and safety standards enforcement.

15. Help workers retrain.

More than 11 million Americans are unemployed, and the country has lost over 10 million jobs.³⁴ When the pandemic stabilizes, many of these people may be able to return to work, but many likely won’t be able to, as the pandemic could permanently alter certain industries. For instance, the pandemic has led companies to increase their use of technology, like automation and artificial intelligence. As these technologies become more prevalent, it raises the possibility that jobs will look far different than they did before the pandemic, requiring workers to have different skills and credentials.

While the main priority right now should be protecting public health and ensuring families can pay for basic needs, we should also think ahead to how we help people regain their footing in the job market. Policymakers should provide workers who’ve lost their jobs with vouchers they can use to train for available jobs or learn new skills. For example, Senators Klobuchar, Booker, Sasse, and Scott have introduced the Skills Renewal Act (S. 3779), which would provide people who lost their jobs as a result of the pandemic with a refundable tax credit of up to $4,000 for qualified training programs.

Policymakers should also work with Congress to shore up our nation’s public workforce development system, which had seen funding eroded by inflation for years leading up to the pandemic. Specifically, flexible funding should be provided immediately to state and local workforce systems. This funding would ideally be used to help American Job Centers pivot to delivering services virtually, including career counseling, and to create call centers so people who’ve lost their jobs but lack internet or digital skills can still access services they need. The Heroes Act provides $1.6 billion in Workforce Innovation and Opportunity Act grants to states for costs like individualized career services and connecting people to training services virtually through technology.

16. Create a state and city fiscal stabilization fund.

State and local governments employ 12% of job holders, and have shed over 1.5 million jobs due to revenue shortfalls and damaging budget cuts as a result of COVID-19.³⁵ Leaving state and local governments in a budget crunch is a sure way to deepen and prolong this recession. The budget crisis is not a short-term issue and could result in years of damaging austerity, destabilizing families and worsening economic hardship.

Policymakers should rescue state and local governments by creating a fiscal stabilization fund. We propose a $500 billion fund to address budget shortfalls based on a three-year average revenue loss for each state. A Brookings’ analysis estimates total state revenue shortfall through 2022 at $467 billion, excluding prospective losses to hospitals and higher education revenue streams.³⁶

More can be done to aid struggling state and local governments. First, Washington, D.C. should be classified as a state rather than a territory to expand assistance.³⁷ Congress can also forgive outstanding loans from the Federal Unemployment Account, potentially providing millions of dollars in fiscal relief for states. Larger states such as California and Texas owe $16 billion and $5.3 billion, respectively.³⁸ Forgiving outstanding debt held by state governments effectively frees up funds for alternate use, potentially preventing other harmful budget cuts.

17. Ensure state assistance reaches workers.

The initial surge in business closures and furloughs resulting from the COVID-19 lockdown caused an unprecedented deluge of 6.9 million unemployment insurance claims in a single week.³⁹ Needless to say, state agencies struggled to respond to the overwhelming demand and were historically ill-equipped to cope. At the height of the Great Recession, claims topped 665,000, a relatively small figure in comparison to this past spring and summer.⁴⁰

Almost every state had major problems responding in the wake of COVID-induced unemployment. Some states resorted to hiring call center staff or asked claimants to file on specific days of the week to attempt to cope with insufficient administrative capacity.⁴¹ Numerous states are infamously processing UI claims using decades-old COBOL-based software, making updates, and troubleshooting a difficult task.⁴² However, the failure to respond adequately to UI claims is a failure to invest in government capacity and can be avoided during the next recession.

We are long overdue for a massive unemployment insurance investment effort. The federal government has historically provided funds to ease states’ administrative burdens; however, more must be done to head off difficulties in the next recession. Struggling families and newly unemployed workers are entitled to financial support in times of crisis, and an inability to deliver benefits is unacceptable. We must prioritize investing in state capacity moving forward. We should also connect unemployment insurance benefit applications to the Affordable Care Act exchanges, connecting newly unemployed and likely uninsured individuals to government benefits where possible.

18. Build a new safety net for small businesses.

The pandemic laid painfully bare the dire straits small business owners face during hard times—unable to seek government assistance despite driving job growth during good times.⁴³ Small business owners, prior to the CARES Act, were mostly excluded from claiming unemployment insurance benefits and had no government program to cover fixed business costs in times of need. The Paycheck Protection Program (PPP) attempted to fill the latter void, but there was a litany of problems with the program, from its failure to reach minority business owners to its overly bureaucratic process.

Small business owners deserve a robust safety net. As part of that, Congress could provide direct grants of 30% of gross receipts, up to $120,000, to all adversely affected small businesses with fifty or fewer employees and under $1.5 million in gross receipts in 2019 or 2020. This is in line with Rep. Madeline Dean’s Restore America’s Main Street Act, which squarely focuses on small businesses struggling to access PPP loans. The bill aims to level the playing field between large corporations and small businesses struggling to keep their doors open during the pandemic.⁴⁴ In addition, the CARES Act UI expansion for small business owners and the self-employed should be extended.

19. Throw a lifeline to our smallest businesses.

Small businesses are generally struggling in response to COVID-19 closures, but the smallest businesses—those with less than 50 employees—are particularly affected. Initial federal support flowed via existing financial channels, meaning unbanked or underbanked small businesses struggled to access the first round of PPP loans administered by major financial institutions.⁴⁵ Additional economic crisis response must place specific focus on supporting America’s smallest businesses.

Fortunately, there are many options to improve the system moving forward. For example, Congress can set up government-backed microloans for new and remaining businesses in low-income areas using Community Development Financial Institutions (CDFIs). This will help combat initial problems with PPP loans concentrated among large financial institutions that are less likely to have ties in underserved low-income communities. Further, the Saving Our Street (SOS) Act introduced by then-Senator Harris and Congresswoman Pressley establishes a “Microbusiness Assistance Fund.”⁴⁶ This would be administered by the Treasury and Internal Revenue Service and would enable “microbusinesses” to apply for grants of up to $250,000 to cover costs and keep the doors open during prolonged closures.

20. Unleash capital for entrepreneurs.

While loans are an important source of capital for our nation’s small businesses, equity capital is also a key part of a new business’ ability to survive and thrive. Yet, even before the pandemic, equity capital was extremely concentrated geographically and demographically. Four metropolitan areas (Silicon Valley, Los Angeles, Boston, and New York City) got 80% of all venture capital dollars. And venture funding not only overlooks certain places, it also overlooks women and people of color. Just 15% of all businesses receiving venture funding were women-owned, 8% were Hispanic-owned, and 3% were black-owned.⁴⁷

To help more businesses across the country as well as diverse small business owners, Congress needs to step in to ensure equity capital helps more people in more places. Sen. Amy Klobuchar (D-MN) and Rep. Dean Phillips (D-MN) introduced the New Business Preservation Act which would allocate $2 billion in federal funds to states to finance public-private equity funds. These equity funds will stimulate private investment in young startups across the country. In a separate initiative, Sens. Gary Peters (D-MI), Debbie Stabenow (D-MI), Jeanne Shaheen (D-NH), and Maggie Hassan (D-NH) released the Small Business Access to Capital Act, a full reauthorization and funding increase of The State Small Business Credit Initiative.

21. Help small businesses restructure finances for future growth.

Acquiring capital is one of the largest barriers to starting and growing a business. As the pandemic ranges on, capital may be harder to get, especially for small businesses in many sectors such as hospitality and retail that have taken outsized hits due to the pandemic. Starting a small business often requires loans, and debt typically prevents entrepreneurs from seeking new loans. If we want to encourage new businesses to grow out of the ashes of the pandemic, we should make it easier and safer for entrepreneurs to get back to work after this crisis.

To help small businesses weather this storm, Congress should create a small business loan facility to acquire a limited amount of pre- or during-COVID debt. This would allow entrepreneurs to restructure debt and pay back the government at a lower cost over a fixed period. It would also help entrepreneurs better compete for new capital to restart or create new small businesses. Loans from this government-held facility could be considered secondary payable debt, and the amount that could be acquired and restructured should be subject to rules regarding the type of debt (debt held individually or by a business entity) and the costs of starting a business, such as rent and wages, in a given area.