Middle Class Health Benefits Tax Repeal Act of 2019

Floor Speech

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Ms. DeLAURO. Mr. Speaker, I rise in support of this historic bill.

This is the biggest economic and health crisis the country has ever faced. Nurses and doctors are in intensive care units trying to save our humanity against this awful pandemic. This is the biggest governmental response the country has ever seen to rescue people, the economy, and our healthcare system.

It is necessary. The United States is now the epicenter of a global pandemic. Cases of the coronavirus are rising exponentially.

To slow the spread of the contagion, serious measures of social distancing are underway. Schools are closing. Businesses are shuttering. Last week, more than 3 million filed for unemployment.

So, the hour is dark. But today, Congress is ready to help get families, workers, and the country to the dawn of recovery. For that, I commend Speaker Nancy Pelosi, Appropriations Chair Nita Lowey, and all the Appropriations subcommittee chairs. Their leadership has been crucial in the progress that we were able to make for the people.

Had we passed our House bill, things would be different, but we managed to shape this package in a fundamental way. We secured a large investment in hospitals, health systems, and State and local governments; a profound increase in unemployment insurance benefits; and a significant expansion in support for small businesses. We made rent, mortgage, and utility costs eligible for SBA loan forgiveness.

As chair of the Labor, Health and Human Services, Education, and Related Agencies Subcommittee, I am proud of the investments we have made for working people, for public health, and for our teachers and students.

For health, we secured $140 billion for the Department of Health and Human Services; $4.3 billion for the Centers for Disease Control and Prevention to respond to the pandemic; $945 million for the NIH to support research; $127 billion for our medical response effort; and important increases for seniors, those living with disabilities, and those struggling with mental health.

For education, we secured $30 billion for the Department of Education, billions for elementary and secondary education, and billions to help colleges and universities confront the immediate effects of the pandemic.

While this funding is crucial, let me be clear: It is a start.

For working people and families, we secured $3.5 billion for the Child Care and Development Block Grant and $360 million for programs at the Department of Labor.

I am proud of the increases that other Appropriations subcommittee chairs have secured: millions to ensure the Economic Injury Disaster Loans; millions to assist firefighters and our first responders to secure personal protective equipment; $25 billion for public transit to protect passengers and operators as they access essential services; $5 billion for the Community Development Block Grant program, to help communities respond to economic and housing impacts; emergency funding for child nutrition programs; $4 billion for homeless grants; and $45 billion for FEMA disaster relief, providing assistance to every single State that has declared an emergency. And we have provided relief to our Tribal organizations and to our territories.

So, I embrace this historic bill. I know the Speaker, Appropriations Chairwoman Lowey, and the committee chairs fought to include paid sick days, paid leave for all, increased food assistance, and a strengthened and fully refundable child tax credit and a young child tax credit. Soon, duty will call on us to take the next major bold steps in this crisis.

I call on the House of Representatives to support the relief that Americans need.

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Ms. DeLAURO. Mr. Speaker, with state revenues collapsing at the same time demand for services is skyrocketing, we have had broad agreement that something needs to be done to help the states. Although some might have preferred to increase the federal matching rate for Medicaid, this legislation goes a different route with a fiscal relief fund for state and local governments.

In any case, the key is to help states plug the enormous fiscal gaps they are currently facing. I am pleased that the final legislative language, unlike some earlier proposals that we rejected, gives states broad flexibility in how they spend the money they will receive. At this point, it has become impossible to separate the effects on state budgets of rising demands for services and shortfalls in revenues.

States cannot spend the money on new projects unrelated to the public health emergency and its economic fallout. I doubt any state would have done that anyway, but the legislation clearly says that they cannot.

Beyond that, we trust states' discretion about what expenditures are necessary in light of the current crisis. We also know that states planned many expenditures assuming revenues that they are no longer receiving. An activity without the revenue to support it is not accounted for in the state's budget.

States should understand that they can apply this money to prevent the cuts that would devastate their necessary functions that they can no longer cover from their general funds because of the loss of sales and income tax revenues. We are assured that the Treasury Department appreciates the importance of getting this money out to states quickly, flexibly and with a bare minimum of paperwork.

I include in the Record the following Washington Post article, ``States and Cities Should Brace Themselves for a Downward Spiral,'' written by Catherine Rampell and published yesterday, March 26, 2020.

States are facing huge shortages--and not just of ventilators, masks and health-care personnel. They're about to confront enormous budget shortages, too. This is the sleeper issue of the current economic crisis, and aiding states now could well be the difference between a brief recession and a prolonged depression.

Particularly in ailing regions of the United States that still haven't recovered from the last recession.

The bill the Senate passed Wednesday would give state and local governments $150 billion to help plug budget holes. It also includes $31 billion for local schools and colleges. That money is definitely welcome.

But it will be nowhere near sufficient to prevent cascading state and local government layoffs and cuts to critical public services that otherwise lie ahead. For context: States suffered a cumulative $600 billion revenue shortfall in the first five years after the Great Recession hit.

And there are ample reasons to believe the fiscal crunch could be worse this time around. Many states entered this dual public health and economic emergency in poor budgetary shape, with too little in their ``rainy day'' funds to handle this Noah-style deluge. As of late last year, only about half the states had the funds they need to weather even a moderate recession, according to Moody's Analytics.

Seemingly every state will take a huge hit, for different reasons. Those whose economies are especially dependent on tourism (Florida, Nevada), energy (Texas, Oklahoma) and other hard-hit sectors are in trouble. As are those dependent on capital gains revenue (New York, California), given stock market declines. High-fixed-cost public transit systems everywhere will suffer as they lose rider revenue. And so on.

Among the biggest problems are the expected declines in sales tax collections, which make up about a third of state revenue. With millions of retail stores, restaurants and other businesses shuttered, sales on which those taxes are based have stopped. Even the early-pandemic panic-buying is unlikely to help, because groceries, medications and other necessities are often exempt from sales taxes.

Taking a cue from the feds, many states have delayed their deadlines for filing 2019 income taxes, too, meaning they will not be able to count on an April bump.

Tax money that would normally be withheld from people's paychecks this year will also be depressed while people are out of work, suggesting revenue shortfalls will continue for a while.

Depending on how long layoffs last, they could eventually start to depress property values, too--and thus the property taxes that disproportionately pay for schools and local services. Which suggests there could be reverberating fiscal effects for years after this pandemic ends.

That's just one side of the ledger. Meanwhile, states' expenses are spiking, too.

This always happens during recessions, as people seek a safety net when their income falls. But the particular cause of this recession--a public health emergency--means there will be even more demand for public services than usual.

Already, unemployment insurance claims are off the charts, with initial claims filed last week reaching an all-time high of 3.3 million. (The past record was 695,000, in 1982.) That figure probably understates the severity of the need, because government unemployment websites have crashed.

The aid package passed the Senate Wednesday would top off what states will offer workers seeking unemployment benefits, and extend benefits to new categories of workers, but states will still be on the hook for huge obligations.

Medicaid enrollment also usually rises during a downturn, as jobless people lose their private insurance and reduced earnings make people newly eligible for benefits. But given that this downturn was caused by a pandemic, we should expect that more people than usual will seek public insurance, and that the spending per enrollee will be higher than normal.

In its ``phase two'' bill, Congress temporarily increased the share of Medicaid costs borne by the federal government-- but not by nearly as much as is needed, and not even by as much as it did in response to the Great Recession. Which is a shame, given that Medicaid is such a useful vehicle for distributing federal funds to states even when there isn't a public health emergency.

The fastest, most efficient way to get money out to the states is through Medicaid, because there's a whole mechanism already that allows for that all in place,'' said Scott Pattison, former executive director of both the National Governors Association and the National Association of State Budget Officers.

Unlike the federal government, most state and local governments are legally required to balance their budgets. Without more federal help, states and cities shouldn't expect a swift snapback from this crisis. Instead, they should brace for a downward spiral--of service cuts, deteriorating conditions for households and businesses, and depressed economic conditions for years to come.

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