More federal help is critical in building a bridge to economic recovery

Protesters take part in the AFL-CIO Workers First Caravan for Racial and Economic Justice near the U.S. Capitol on June 17, 2020 in Washington DC. The caravan circled the U.S. Capitol and national mall while honking their car horns to bring attention to their cause. | Drew Angerer/Getty Images.

Many Ohioans have responded with great compassion during the pandemic and recession — donating to the local food bank, helping sick neighbors run errands and showing up to their essential frontline jobs, despite the risk. Our individual efforts — as heroic as they may have been — are not big enough to build a bridge to recovery. Only the federal government is big enough to do that. Ohioans deserve a federal response that meets the moment.

We are dealing with so much all at once. We’re gearing up for a heated Supreme Court confirmation battle and a contentious presidential election. Authorities failed to hold law enforcement accountable for killing Breonna Taylor, another traumatic miscarriage of justice for Black Americans. Meanwhile, the pandemic and recession keeps taking a toll on Ohioans — particularly people of color, disproportionately employed as essential workers who were over-exposed to the deadly virus. Ohio has 495,000 jobs less in July 2020 than a year earlier. About a half million Ohioans struggled to pay rent this summer.

Washington’s response has been full of half measures. Congress passed the massive CARES Act in March, but much of that aid has expired, was poorly targeted or insufficient for the staggering need. In May, the House passed the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act — to adjust and expand aid for the long, difficult season ahead. The Senate responded by floating a woefully inadequate bill that cut unemployment aid in half and excluded stimulus checks.

It was doomed to fail, and Ohioans still wait for relief. Trump’s moratorium delayed the eviction crisis until Christmas, but didn’t fix it. Hundreds of thousands of Ohio families could become homeless in the dead of winter. New unemployment aid provided through Trump’s executive order is ending in Ohio not long after it begins; checks are only being paid retroactively because the disaster relief money used to fund them has run dry.

Other proposals have emerged but like the Senate bill, they remain insufficient to meet the needs of an unrelenting illness and a recession that grinds on. Those who have been laid off are depending on federal aid, as well as on credit cards, help from family and friends, and selling assets. With the biggest supports cut off — the federal assistance — there are few places left to turn. We are beginning to see the worst of all possible recovery configurations: the K-shaped recovery, with bigger firms and wealthier families relatively unscathed, but damage and fear growing among less well-off people and places.

Even still, without the federal action we’ve seen, Ohio would be in far worse shape. Federal unemployment checks pegged to median household income helped the hundreds of thousands of Ohioans laid off in the recession. Some businesses could keep from laying workers off, despite weak demand for goods and services, because of the paycheck protection program. Local economies were kept afloat by these programs. They ended weeks ago.

Medicaid has helped constrain the pandemic. Enrollment is increasing primarily because millions have lost their jobs and their job-based coverage and are newly eligible, and people on Medicaid who might have found jobs or better-paying jobs in a stronger economy are remaining eligible. In Ohio alone, an estimated 1 million people lost employer-sponsored health insurance in the first two months of the pandemic. An additional 182,467 people enrolled in Ohio’s Medicaid program by June compared to February; a jump of 7% in just four months.

The federal government is the only entity large enough to ensure coverage can continue as the deadly virus spreads. In the recession of 2008, the federal government increased its share of each Medicaid dollar in Ohio from about two-thirds to over three-quarters, but has boosted its share by much less in this recession, although this one is caused by a complicated and deadly illness. To ensure the sick are treated and the virus contained, a much greater federal contribution is needed, as proposed in the HEROES Act. This enhanced Medicaid funding will be needed as long as the recession lasts, until unemployment subsides to pre-recession levels, state by state.

State and local governments still face gaping budget deficits. Local governments can only use CARES Act aid for COVID related expenses — not to pick up the trash, run the water plant or pay public workers. Ohio’s many cities have CARES Act money they can’t spend. What they do have runs out by the end of December — far before the pandemic and recession will be over. Over 1 million public workers have been laid off nationally, increasing the struggle of too many families and deepening the recession.

During the last recession, federal aid helped the economy recover, but it didn’t go far enough or last long enough. The result was a slow, painful recovery for Ohio. This time, our leaders can avoid making the same mistake. Our future depends on the decisions they make now.

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Wendy Patton
Wendy Patton is the team leader for the fiscal project of the State Priorities Partnership, which is affiliated with the Center on Budget and Policy Priorities. Prior to joining Policy Matters Ohio in 2009, Wendy served as an executive assistant for economic development for Governor Ted Strickland, as a deputy director of business development for the Ohio Department of Development, as a vice president for the Columbus Urban Growth Corporation and as a program coordinator for the Ohio Employee Ownership Center. She worked with AFSCME international as an economic policy analyst, serving 13 states in tax and budget policy and forecasting revenues for collective bargaining. She has written about public finance, regional development, workforce training, steel and automobile supply chain configuration. Wendy has a master’s degree in city and regional planning from the University of California at Berkeley and a bachelor’s degree from Kent State University.