I Introduction
The COVID-19 pandemic underscored glaring weaknesses in the ability of American safety net programs to adequately respond to a national crisis. The pandemic and ensuing economic recession left millions of Americans struggling with joblessness, hunger, unstable housing, and insufficient access to health care. Government action was often either short-lived or long-delayed. Policymakers can learn from these mistakes. They must reform safety net policies to ensure that American families can survive future crises. This chapter charts a path for how they can do so.
First, we start by summarizing how Congress and federal agencies responded to the COVID-19 pandemic through various changes to safety net programs.Footnote 1 Second, we explore how existing safety net programs proved inadequate in the face of such a catastrophic and sustained crisis, and how Congress can remedy the systemic flaws underlying this inadequate response. We argue that Congress should enact mechanisms – often called “automatic stabilizers” – to ensure that safety net programs respond more immediately and effectively to future emergencies. Third, we defend strengthening automatic stabilizers on democratic grounds, arguing that doing so would increase transparency, limit delegation, and heighten responsiveness.
II Pandemic-Related Changes to Safety Net Programs
The COVID-19 pandemic was both epidemiological and economic in nature. It resulted in a breathtaking loss of life, leaving over a million Americans dead and many others suffering from debilitating and perplexing long-term symptoms. Meanwhile, the pandemic’s economic effects shattered many Americans’ financial security. Yet although the pandemic was initially hailed by some as “the great equalizer,” it was anything but. The pandemic both reflected and augmented preexisting social inequalities. Low-income people and people of color in particular were disproportionately harmed by its economic and health impacts.
To address these twin crises, the federal government enacted six major pieces of legislation between March 2020 and March 2021.Footnote 2 The most prominent and largest of these were the Families First Coronavirus Response (Families First) Act, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Consolidated Appropriations Act, 2021, and the American Rescue Plan Act (ARPA). These laws altered the US safety net in various ways, including through bolstering cash transfers, food support, medical assistance, and job-related support.
This part briefly describes some of the most important changes, though our discussion is necessarily incomplete, given its brevity. We focus in particular on the federal response, due to the federal government’s important role in funding these programs and setting their requirements. However, state and local governments likewise play key roles in funding and administering safety net programs, and we highlight these roles as appropriate.Footnote 3
A The Tax System
The CARES Act directed the Internal Revenue Service to send “recovery rebate” checks of $1,200 per adult, and $500 per child, to millions of American households.Footnote 4 The Consolidated Appropriations Act and ARPA authorized additional payments of $600 and $1,400, respectively, to all adults and children.Footnote 5 All payments phased out for incomes above $75,000 ($150,000 for married couples). The Consolidated Appropriations Act also temporarily modified the Earned Income Tax Credit (EITC) and Child Tax Credit to ensure that taxpayers would not be penalized for losing their jobs during the pandemic. The provision allowed taxpayers to use either 2019 or 2020 income to calculate the credit amount for 2020.Footnote 6 This change ensured that taxpayers did not receive a smaller credit if they lost work due to the pandemic, since both tax credits phased in at low income levels in tax year 2020.
With ARPA, Congress temporarily expanded the Child Tax Credit by making it available to all families, regardless of employment status, and by increasing the credit amount from $2,000 to $3,000 per child (or $3,600 for children under six).Footnote 7 Congress also temporarily increased the maximum EITC for childless workers, from about $540 to just over $1,500.Footnote 8 These expansions expired at the start of 2022.
B Unemployment Insurance
Unemployment insurance (UI) is a joint federal–state program that states administer pursuant to federal guidelines. The CARES Act, Consolidated Appropriations Act, and ARPA temporarily expanded the amount, duration, and scope of UI benefits for those who lost work during the COVID-19 pandemic. With the CARES Act, Congress provided a $600 per week supplement to be paid on top of state UI benefits through July 31, 2020. It also extended the duration of benefits by funding additional weeks of support for workers who had exhausted all state benefits.Footnote 9 The CARES Act also expanded UI eligibility by providing federal funding for states to pay benefits to workers who lost hours (even if they retained their jobs), as well as to “gig workers” and other non-employee workers who would otherwise be excluded from UI programs.Footnote 10 Congress extended these various provisions with the Consolidated Appropriations Act and then ARPA, and further authorized a $300 weekly UI supplement through September 6, 2021.Footnote 11
C Food Assistance
In the Families First Act, Congress authorized the Department of Agriculture to allow states to create “Pandemic E B T [Electronic Benefit Transfer]” programs.Footnote 12 Pandemic EBT was created for families with children who were missing out on free or reduced-price meals as a result of school closures.Footnote 13 Congress also allowed states to make “emergency allotments” for households receiving Supplemental Nutrition Assistance Program (SNAP) benefits; however, this provision excluded the poorest Americans, who were already receiving maximum benefits. In the Families First Act, Congress also made emergency appropriations to the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), the Emergency Food Assistance Program (one of the commodity food programs), and the nutrition assistance block grants for the three territories (Commonwealth of the Northern Mariana Islands, American Samoa, and Puerto Rico) that federal law excludes from SNAP.Footnote 14 Finally, Congress addressed ongoing efforts by the Trump Administration to restrict access to food assistance for roughly 750,000 SNAP recipients.Footnote 15 Even though a federal court had enjoined the Trump Administration’s regulation before it could go into effect, Congress suspended all SNAP work requirements until a month after the end of the COVID-19 emergency declaration.Footnote 16
Subsequent COVID-19-related legislation made additional appropriations and built on the Families First Act’s food assistance provisions. In the CARES Act, Congress increased federal funding of SNAP assistance by over $16 billion.Footnote 17 In the Consolidated Appropriations Act, the stimulus passed at the very end of the Trump Administration, Congress strengthened food assistance in the same manner that it did at the start of the Great Recession. It increased SNAP for all food stamp beneficiaries by 15 percentage points.Footnote 18 Through ARPA, Congress extended that increase through September 2021.Footnote 19 In passing ARPA, Congress also made additional appropriations for SNAP, WIC, and the nutrition block grants to the three territories.Footnote 20 ARPA contained provisions strengthening Pandemic EBT as well. Congress removed date limits to the program, explicitly allowed its operation in summer months, and expanded the program to cover children in schools with reduced hours, as well as children in SNAP households who were enrolled in child care facilities affected by pandemic closures and reduced hours.Footnote 21
D Medical Assistance
The federal government took an array of legislative and administrative actions to address the cost of COVID-19-related medical care for patients, health care providers, and states. For instance, through the Families First Act and the CARES Act, Congress generally required most private health plans, Medicare, and Medicaid to cover testing for COVID-19 during the public health emergency.Footnote 22 The CARES Act – together with the Paycheck Protection Program and Health Care Enhancement Act and the Consolidated Appropriations Act – provided $178 billion in funding for hospitals and other health care entities struggling with the cost of COVID-19-related care and the cancellation of elective procedures.Footnote 23 In addition, to help defray the costs of rising Medicaid enrollment and prevent states from cutting benefits (the Medicaid program is jointly funded by the federal government and the states), the Families First Act temporarily increased the Federal Medical Assistance Percentage (FMAP) for state and territorial Medicaid programs by 6.2 percentage points until the end of the public health emergency.Footnote 24 States were required to meet various conditions to be eligible for the increased matching funds, including not imposing more restrictive Medicaid eligibility standards or procedures, increasing premiums, and terminating beneficiaries from the program involuntarily.Footnote 25 ARPA also provided additional funding for COVID-19 public health activities, including vaccine distribution, contact tracing, and supporting the public health workforce.Footnote 26
ARPA included several reforms that built on the coverage expansions of the Affordable Care Act (ACA), and went beyond paying specifically for COVID-19-related medical care. For instance, ARPA provided that states that newly adopted the ACA’s Medicaid expansion for low-income adults would receive a 5 percentage point increase in their FMAP rate for two years, giving the holdout states that had not yet adopted the Medicaid expansion additional incentives to do so.Footnote 27 The law also temporarily created an option for states to extend postpartum coverage in Medicaid and the Children’s Health Insurance Program (CHIP) for twelve months.Footnote 28 In addition, ARPA temporarily offered enhanced premium tax credits for individuals who enrolled in private health insurance coverage through the ACA’s health insurance marketplaces, for the plan years 2021 and 2022. Previously, the tax credits had been generally available only for people with a modified adjusted gross income between 100 percent and 400 percent of the federal poverty level (FPL), and even people at the poverty level had to make some premium payments. ARPA both offered increased subsidies for individuals making between 100 percent and 400 percent of the FPL (who were already eligible for subsidized coverage) and expanded the subsidies so that people with incomes above 400 percent of the FPL were newly eligible for assistance.Footnote 29 In addition, ARPA included temporary subsidies to defray the cost of Consolidated Omnibus Budget Reconciliation Act premiums for people who had lost employer-sponsored insurance.Footnote 30
III Making the Safety Net More Responsive
A The Pandemic Revealed Structural Flaws in the Safety Net
Although it provided essential support, the federal government’s response to the COVID-19 pandemic was inadequate in numerous ways. For one, because Congress chose to provide benefits through existing safety net programs, the response excluded the same people these programs have excluded from the beginning. These include childless adults, immigrant families, and those with unstable ties to the labor market. Meanwhile, other stimulus bill provisions – and the ways that agencies implemented those provisions – directed huge sums of money to wealthy individuals and hospitals, and large businesses.Footnote 31 In addition, the Families First Act’s FMAP increase provided less Medicaid funding than states needed and did not apply to enrollees covered through the ACA’s Medicaid expansion.Footnote 32 The COVID-19-testing coverage provisions in the Families First Act and CARES Act also had loopholes which caused some Americans to remain on the hook for testing-related out-of-pocket costs.Footnote 33
Second, administrative complexity and technological problems common to safety net programs hampered the speed and efficiency of the pandemic response. As one example, many states’ UI systems simply were not equipped to handle a large influx of claims. Claimants faced network crashes and confusing messaging; many failed to access benefits as a result.Footnote 34 As another example, six months after the passage of the CARES Act, approximately nine million people still had not received their rebate checks because the Internal Revenue Service lacked their contact information.Footnote 35 Many of these overlooked individuals had incomes below the tax-filing threshold and thus were particularly vulnerable.
Third, while Congress acted quickly to pass the first round of stimulus relief, some relief came too late, while other relief ended too early. For instance, Congress did not increase SNAP benefits for all beneficiaries until ten months into the crisis.Footnote 36 The delay left millions of families in need. Meanwhile, although Congress initially expanded UI benefits, the expansion ended on July 31, 2020, just as the virus began surging around the country. Congress did not renew the expansion until December 2020 (and then again in March 2021). The legislative process throughout was rushed and chaotic, then partisan and unproductive. Both modes left little room for community participation, but plenty of room for well-heeled lobbyists. Congress ultimately delayed far too long to provide additional support after the first round of relief bills, each side blaming the impasse on the recalcitrance of the other. Meanwhile, poverty, hunger, and despair deepened.
The COVID-19 pandemic was unexpected and, in some ways, unprecedented. Although the federal government’s response was essential, it was also flawed. We can learn from this experience to improve crisis lawmaking in the future. The next section describes how.
B Principles to Improve Future Crisis Response
The flawed response of Congress to the pandemic points to several key principles that should inform how policymakers react to future crises. These principles apply to safety net reforms that seek to address not only national emergencies, but state and local emergencies as well.
When future crises occur, safety net program expansions and emergency responses should be:
Immediate. Crises deepen as government delays. While Congress can act quickly, it may not always do so. And, as the COVID-19 response shows, it may not do so comprehensively. Linking temporary program expansions to economic indices or other automatic triggers is one possible way to ensure an immediate response.
Inclusive. The US social safety net has long been and remains exclusionary, especially for Black Americans, immigrants and their families, Indigenous Americans, and Americans living in the territories. During normal times, political pressure and concern over scarce resources may overshadow calls for inclusivity. Yet improving the inclusivity of safety net programs during normal times will ensure that federal programs can reach everyone during hard times.
Targeted. Programs must deliver support to the places and people that need it most. In the context of extreme weather events, for instance, federal programs must deliver support to a specific region only. State and local indices should therefore drive automatic responses.
Sustained. Program changes triggered during a crisis must continue until the crisis is truly over. In some places, the economic fallout of a crisis might last several years, as was true after the Great Recession. Once again, automated, quantitative indices will provide a more accurate measure of continued need than a politicized decision-making process.
C Strengthening Program Responsiveness
Experts have advocated improved crisis lawmaking for some time. Many such proposals focus on automatic stabilizers – governmental mechanisms that do not require legislative approval and that increase spending or decrease taxes when the economy slows.Footnote 37 In other words, they automatically inject money into the economy during contractions. Of course, some safety net programs already are automatic stabilizers; for instance, SNAP, UI claims, and Medicaid enrollment tend to increase during recessions. In doing so, they help to protect individuals and families from the worst financial and health effects of economic downturns, as well as to mitigate the downturns themselves through stimulating aggregate economic demand.Footnote 38 Yet policymakers can improve these stabilizing effects. This section surveys various proposed reforms that aim to improve how well safety net programs respond to crises, focusing on automatic responses that obviate the need for approval from Congress.
1 Tax Credits
The EITC provides cash transfers to low-income families and childless workers, targeting households living near and just above the poverty line. It therefore operates as an automatic stabilizer by providing cash support to households when incomes drop. However, the work-incentive structure of the EITC mitigates this automatic stabilizer effect. Specifically, the program excludes non-working individuals; further, below a certain income level, benefits decrease as income decreases. This design feature means that a recession can cause many people to lose their benefits or receive a smaller benefit amount if they lose work entirely or lose enough hours to place them in the phase-in range. Imagine a server who works fewer hours when a recession causes her restaurant to cut shifts. This worker could face the double harm of reduced wages as well as a smaller EITC. To prevent this procyclical effect, tax policy experts have urged Congress to accelerate how quickly the benefit phases in at low income levels or to eliminate the phase-in entirely.Footnote 39
Outside of ARPA’s temporary tax credit expansions, childless workers receive only a small EITC compared to families with children. ARPA’s expansion expired after one year. Tax experts and policymakers have routinely called for permanently increasing the benefit provided to childless workers, or to all workers, which would strengthen the program’s ability to shore up the economy during recessions.Footnote 40
2 Unemployment Insurance
UI is already a vital automatic stabilizer. Even so, Congress and state policymakers can improve the programs’ ability to support struggling workers during economic downturns. To start, UI systems have historically excluded certain “nontraditional” workers from coverage – including part-time, temporary, and non-employee workers – leaving them without protection and undermining the systems’ ability to act as a safety net during recessions. This exclusion is becoming increasingly untenable considering that such jobs have dominated job-growth figures over the past decade.Footnote 41 Since the Great Recession, experts have called on Congress and state legislators to expand UI coverage for self-employed workers and workers who lose hours while retaining their jobs.Footnote 42 Although Congress did so in response to the pandemic, the changes were only temporary.
Additionally, states’ budgets are often overburdened during economic downturns, since demand for public assistance tends to increase just as tax revenue decreases.Footnote 43 Instead of relying on Congress to expand UI funding during each economic downturn, experts have urged Congress to legislate automatic increases.Footnote 44 For instance, federal UI funding could increase automatically when a state’s unemployment rate increases rapidly or exceeds a threshold level.Footnote 45
3 SNAP
SNAP has a well-earned reputation in Washington, DC for its countercyclical track record. Policymakers know the program can expand quickly during recessions and crises.Footnote 46 That is in part because states contribute to the administrative costs of the program, but the federal government pays 100 percent of the substantive benefits.Footnote 47 But while SNAP excels at enrolling people who are newly eligible because of unemployment, extreme weather events, or pandemics, it could be made stronger for both new and existing recipients in times of acute need.Footnote 48 Experts have called on Congress to amend the Food and Nutrition Act so that SNAP benefits increase automatically when certain economic data suggest a national, regional, state-wide, or even intra-state surge in need.Footnote 49 Such a change would have prevented Congress’s nine-month delay in enacting such an increase during the pandemic. In fact, the federal statutes governing SNAP already let economic data drive eligibility for a certain segment of recipients.Footnote 50 The Food & Nutrition Service allows states to waive statutory work requirements for certain childless adults when the Bureau of Labor Statistics reports specified unemployment levels for a state or intra-state region.Footnote 51 Congress could simply automate these increases in benefit amounts and expansions in eligibility.
4 Medicaid
Medicaid is another essential automatic stabilizer. Enrollment in Medicaid increased significantly during the COVID-19 pandemic and likely helped to offset the effects of people losing employer-sponsored insurance.Footnote 52
Yet this stabilizing function should be strengthened. Because states typically must balance their budgets annually, they face significant pressure to cut spending on Medicaid during economic downturns – by making eligibility requirements more stringent, reducing the scope of covered benefits, or reducing the amount that they pay providers.Footnote 53 These cuts in turn not only limit health benefits for low-income Americans at a time when they are especially vulnerable, but also have deleterious economic consequences.Footnote 54
During recent economic downturns, including the COVID-19 recession, Congress has legislated one-off temporary increases to the Medicaid matching rates to prevent such negative outcomes.Footnote 55 Yet these increases have sometimes been too small or come too late.Footnote 56 To strengthen Medicaid’s role as a stabilizer, economists Matthew Fiedler, Jason Furman, and Wilson Powell III have proposed that Congress automatically increase the federal share of spending for Medicaid and the Children’s Health Insurance Program once a state’s unemployment rate exceeds a threshold level.Footnote 57 The Government Accountability Office has likewise proposed automatically increasing Medicaid matching rates during national economic downturns.Footnote 58 Either of these approaches would help to mitigate the damaging consequences of future economic downturns, and would help to ensure that the Medicaid program can provide support when Americans need it most.
IV Strengthening Democratic Norms
Until now, most of the arguments in favor of strengthening automatic stabilizers have been made on welfare grounds: that doing so would bolster important protections for vulnerable groups and cushion the impact of economic downturns.Footnote 59 Yet, perhaps counterintuitively, we believe that augmenting automatic stabilizers would also help to strengthen democratic norms. Before the COVID-19 pandemic ravaged the United States, scholars had repeatedly criticized the decreasing capacity and increasing dysfunctionality of Congress.Footnote 60 In particular, researchers identified how Congress’s increasing incapacity to legislate raises concerns about its democratic legitimacy. Relatedly, some scholars have critiqued Congress’s reliance on infrequent and unorthodox lawmaking as well as its broad delegations to agencies on the basis that they make the US national legislature less accountable. Here, we offer some preliminary thoughts on the extent to which legislating automatic stabilizers can address the prevailing ills that afflict Congress.
This section tentatively makes a case for automatic stabilizers because of their democracy-protecting potential. In particular, we defend automatic stabilizers on three grounds: transparency, delegation, and responsiveness.Footnote 61
A Transparency
The status quo of legislating one-off emergency packages to temporarily bolster safety net programs raises concerns about transparency. Because Congress is under intense time pressure to pass such packages, they tend to do so in ways that bypass traditional procedures – such as committee deliberation and report-writing – that promote transparency.Footnote 62 The speed, opacity, and complexity associated with such emergency legislation serve in turn to advantage well-resourced business interests, while making it more difficult for public interest groups and individual members of the public to participate in the legislative process.Footnote 63
By contrast, if Congress were to enact, in a non-emergency context, a set of prospective rules governing how safety net programs would automatically adjust during future economic downturns, there would be ample time to follow the standard legislative procedures that enhance transparency and accountability. Public interest groups and members of the public would be better able to understand and participate in the legislative process, and to hold members of Congress accountable for their decisions. It seems plausible, therefore, that enacting automatic stabilizers would actually strengthen – rather than weaken – democratic values.
B Delegation
One concern about strengthening automatic stabilizers is that doing so would weaken the democratic legitimacy of statutes by allowing legislators to escape taking responsibility for decisions about the safety net.Footnote 64 This concern is related to a more general critique that has been levied against broad delegations to administrative agencies: that such delegations enable members of Congress to avoid taking public positions on consequential matters of public policy, and thereby render it more difficult for voters to hold them accountable.Footnote 65 Leaving aside the question of whether this more general line of criticism is persuasive, we believe that automatic stabilizers should actually appeal to those who are concerned about excessive delegation.Footnote 66 When Congress enacts automatic stabilizers, it dictates how agencies must act and how programs must respond to future crises. This strict control contrasts with a status quo that, in some cases, gives broad authority to federal agencies to choose the best policy response during a crisis. In short, by choosing an automatic stabilizer, Congress decides ahead of time how safety net programs will respond to the next crisis, and in so doing serves to limit the scope of delegations to agencies.
C Responsiveness
Currently, the American safety net is insufficiently responsive to the needs of the American public. The Electoral College, state representation in the Senate, and gerrymandered districts in the House skew incentives and lead politicians to focus disproportionately on helping certain swing states or vulnerable members, while ignoring others. Politicized assignment to congressional committees, seniority, alliances with formal caucuses and informal voting blocs, and other legislature features confer unequal power on certain states’ federal representatives.Footnote 67 Intransigent state policymakers hold up needed assistance or refuse federal support, undermining the federal government’s intention to shore up the national economy.Footnote 68 Various features of the legislative process, particularly the filibuster, contribute to legislative gridlock and prevent Congress from addressing major social problems on which there is a broad public consensus.
The poor and middle class have less influence on policy outcomes than the rich.Footnote 69 Strengthening automatic stabilizers would enable a more equitable, less politicized distribution of benefits to the people and places that need it most and make the safety net more responsive to the needs and circumstances of the electorate as a whole.
V Conclusion
The COVID-19 pandemic revealed significant weaknesses in the US social safety net. Despite the scale of the federal government’s response, Congress failed to provide adequate assistance to many Americans as it channeled benefits through existing safety net programs. Moreover, although Congress acted relatively quickly by its standards, relief came too late – and ended too early – for many Americans.
This experience underscores the need to legislate a more responsive safety net. During a major crisis, relief should be immediate, inclusive, targeted, and sustained. To achieve these goals, policymakers should strengthen the stabilizing effects of existing safety net programs such as the EITC, UI, SNAP, and Medicaid. Doing so would serve to protect vulnerable populations during economic downturns and to mitigate the downturns themselves. In addition, we defend strengthening automatic stabilizers on democratic grounds, arguing that doing so would increase transparency, limit delegation, and heighten responsiveness.
The COVID-19 pandemic will not be the last major crisis that necessitates temporarily strengthening the safety net. Rather than waiting until the next crisis, Congress should act now to make the safety net more secure and responsive for the future.
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