How Can Federal & State Policymakers Respond Now as the COVID-19 Pandemic & Recession is Pushing Californians Over the Cliff?
While Congressional leaders have allowed an expansion of federal unemployment benefits to expire and failed to extend a ban on evictions for most federally subsidized rental housing, millions of Californians and Americans struggled again to pay rent, buy food for their families, and avoid serious illness.
For many out-of-work Californians — particularly Black, Latinx, and other Californians of color — the situation grows worse by the day. Forced out of their homes and into crowded housing with family or friends, skipping car payments, running up credit card debt to cover basic expenses. And all while the risk of the coronavirus sickening them or family members looms overhead. This is the reality for Californians as the COVID-19 pandemic and recession churn.
US Senate Republicans’ failure to lead and help provide basic support for those harmed by the pandemic will push millions of Californians and our economy over a financial cliff.
This no way to lead our country or California forward in a pandemic and recession.
Good policy and economics show us what we do need in a federal relief plan: extended expansion of unemployment benefits and the federal eviction moratorium, aid to state and local governments that are primed to furlough employees and make significant cuts to vital public supports, and support for small businesses and affected industries with more resources to stem staff layoffs and prevent closures.
This is what our country, Californians, economy, and communities need now.
Californians also need immediate and targeted action by state leaders. State policymakers must make the hard but necessary strategic policy and fiscal decisions now while avoiding austerity measures that will only worsen health and financial conditions for Californians and harm our economy.
In addition to health and economic relief efforts, state leaders need to craft serious economic recovery and restructuring plans.
California policymakers should focus state relief efforts on filling gaps in federal relief to address what Californians and their families need most right now, including providing unemployment benefits in addition to those either eliminated or reduced at the federal level and enacting eviction protections to ensure that people who have lost work and income have shelter while the state is under shelter-in-place orders. State policymakers should also provide comprehensive health care to all Californians and additional work and family leave protections that support the health and economic security of California’s workers.
In addition to health and economic relief efforts, state leaders need to craft serious economic recovery and restructuring plans. This includes investments in child care and cradle-to-career education systems to support students and their working parents and addressing systemic racial and economic inequities that will only worsen under shelter-in-place orders.
To be clear: California can afford serious policy plans and significant investments through new tax revenues and responsible borrowing.
Providing public health care and economic relief to Californians harmed by the pandemic and recession while stimulating the state’s return to economic growth will require significant new revenues from a combination of taxes and borrowing. And state policymakers have options, including raising taxes on the highest-income Californians, instituting taxes on wealth in addition to income, and raising taxes on corporations. All of these options would raise significant revenues, make the state’s tax system more equitable, and provide opportunities to invest in Californians in their times of need.
Before wondering if California’s taxes on the wealthy and corporations are high, consider these facts:
- California’s state budget would have received $11.2 billion more revenue in 2017 had corporations paid the same share of their income in taxes that year as they did in 1981.
- State policymakers have enacted several corporate tax breaks since the 1980s — many without expiration dates — totaling $5.7 billion for corporations as of 2019.
- Corporations are also paying significantly less of their income in federal taxes due to the federal Tax Cuts and Jobs Act signed by President Trump in 2017.
- California’s 166 billionaires saw their net worth jump by $235 billion since the onset of the pandemic.
- Between 1987 and 2017, the richest 1% of Californians have seen their incomes increase by 134.4% on average, while the middle fifth of Californians saw their incomes decrease by 14.6% on average.
State leaders also have the ability to borrow and issue bonds to make investments in infrastructure and facilities and it makes sense to do so where there could be longer-term payoffs for the state’s economy. How could California apply this now? The pandemic shows us the great need for significant investments in public health facilities and equipment as well as demand to better equip child care and education systems to care for and educate the state’s future workforce under evolving physical conditions.
California can afford serious policy plans and significant investments through new tax revenues and responsible borrowing.
While the wealthy and corporations are financially secure and experiencing unprecedented growth in wealth, while federal leaders debate over the next federal relief package, and while California policymakers face self-imposed deadlines, it’s millions of low- and middle-income Californians — particularly Black, Latinx, immigrant, and undocumented Californians — who are left battling sickness and falling off the financial cliff of the COVID-19 pandemic and recession. Federal and state policymakers have the authority and fiscal means to prevent the plunge and to also pave a way forward so all Californians can thrive in our communities.