Last post I discussed the Covid-19 Relief Bill and the benefits it will provide for all those impacted by the pandemic. That much could be achieved with no more than $825 billion of this $1.9 Trillion-dollar bill. That was the good news. The bad news began with the revelation that the bill would try to bail out ObamaCare by providing supersized subsidies to middle class Americans. (see Covid-19 Relief Bill to Relieve ObamaCare.)

But the bad news gets much worse. Casey B. Mulligan and Stephen Moore, two highly respected economists, now report the bill will kill jobs. Writing in The Wall Street Journal, they say, “President Biden’s $1.9 trillion Covid-relief package is being sold as an effort to ‘get America back to work.’ It will do the opposite. We estimate that between five and eight million fewer Americans will be employed over the next six months if the bill passes.”

They say the bill would create one of the largest expansions in government welfare benefits since the birth of the modern welfare state. In combination with December’s $900 billion package, the new bill would expand the safety net to include six months of weekly $400 bonus unemployment benefits on top of the normal weekly benefits, a $3000 per child tax credit, an expansion of food stamps and rental assistance, $2000 per person checks, and expanded health benefits.

This is a reversal of the highly successful Clinton era welfare reform. It would repeal many of the successful work requirements of that plan and it contains only minimal requirements in exchange for its cash payments and other benefits. Moreover, unlike wages and salaries earned from work, many of these benefits are tax-free. That raises the disincentives for working. There is no 7.65% payroll tax deducted from an unemployment check. There are even six states where unemployment benefits are not subject to income taxes.

To illustrate the absurdity of this situation, consider the following example: In Kansas, a family of four with two unemployed adults who had earned U.S. median wages could get paid, including the Biden add-on package, the after-tax equivalent of more than $135,000 on an annual basis without working a single hour. In Massachusetts, that figure is $170,000. This doesn’t even include any housing or rental assistance the family may also receive. To put this in perspective, the Biden package of benefits would exceed the wages and salaries of at least 85% of households.

Perhaps the most egregious part of this plan is the $400 a week bonus above and beyond the normal unemployment benefits. Mulligan and Moore calculate this bonus offers roughly 60% of unemployed workers more money for not working than for returning to their jobs. For historical comparison, during the recession of 2009, the Obama administration provided supplemental bonuses of $25 per week.

The Trump administration must take some of the blame for this since they approved $600 per week bonuses short-term during the early lockdowns of the virus pandemic. With that precedent, the Biden plan gets less scrutiny even though it is proposed for a longer period of time when the economy is already on the rebound.

These economists accurately predicted the impact the Trump administration bonuses would have when the original Cares Act legislation passed in early 2020. They said this added benefit would reduce employment by millions when jobs came back and Labor Department statistics confirmed millions of jobs went unfulfilled last summer. Now they predict the same will happen, lowering employment by five to seven million jobs. Add another million jobs or more if the $15 per hour minimum wage passes in the bill.

They propose a better solution is suspending the payroll tax for jobs that pay $100,000 or less per year. This would provide an immediate 7.5% raise and would cut the cost of hiring unemployed workers by the same amount.

Why would the Biden administration want to kill jobs when they say their goal is to “get America back to work.” I’ll let economists Mulligan and Moore try to answer that question. They say, “President Biden’s bill will make millions more Americans dependent on checks from the government, not an employer. Could that be the point?”

The Covid-19 Relief Bill is a $1.9 Trillion dollar attempt by Democrats to relieve much more than the impact of Covid-19. It seems the Biden administration wants to add on a long list of Democratic priorities that would otherwise never get approval without riding the coattails of a bill intended for Covid-19 relief.

The Wall Street Journal editorial board analysis generously attributes about $825 billion to things remotely related to the Covid-29 pandemic. This includes $75 billion for vaccinations, testing, and medical supplies; $19 billion for “public health” primarily to support state health departments and community health centers. There’s also $6 billion for the Indian Health Service and $4 billion for mental health. Another $7.2 billion goes to the Paycheck Protection Program, $15 billion for economic injury disaster loans, $26 billion for restaurants, bars and live venues, and $15 billion in payroll support for airlines. The recipients of this taxpayer money will at least be required to prove economic harm, and in some cases, repay the loans.

Another $425 billion is intended for household checks of $1400 per man, woman, and dependent that begins phasing out at $75,000 of individual income. There’s also additional money to provide “enhanced” unemployment benefits of $400 per week through August which will undoubtedly increase unemployment rates as workers realize they can make more money by staying home than working.

Even if you accept this $825 billion as “necessary Covid-19 relief,” that still leaves nearly $1.1 Trillion of additional spending that has nothing to do with Covid-19. It’s not the aim of this post to discuss all those other dollars and where they will be spent – with one exception. It now has become apparent that some of that money is intended to bail out ObamaCare.

The latest WSJ analysis reveals that the Biden administration intends to use these funds to supersize subsidies on the ObamaCare exchanges. The Centers for Medicare and Medicaid Services (CMS) reported last fall that unsubsidized enrollment had dropped 45% between 2016 and 2019. In other words, ObamaCare policies aren’t worth the money unless you receive a subsidy.

Here’s how the editorial board of WSJ puts it: “Instead of making the underlying product better or less expensive, Democrats now want to pass more of the cost onto taxpayers. More low-income buyers would pay little to nothing for insurance. Democrats would also remove the income cap for receiving subsidies, which is 400% of the poverty line, and reduce a person’s maximum contribution to 8.5% of income from 10%.”

As a physician who accepts patients with ObamaCare insurance, I know the problem isn’t having insurance; the problem is not being able to afford the deductibles. An insurance provided by the government is mostly useless if the deductibles it requires are unaffordable. Many of the patients I see have to cancel the surgery they need when they find out the high cost of the deductibles required to be paid before surgery. The same is true of co-pays required with every physical therapy session. Unless the government lowers the actual cost of receiving treatment, by lowering the total cost of healthcare, subsidies of the premiums won’t solve the problem.

What’s worse, the Biden plan to increase subsidies will spend scarce resources on those who don’t need help. Brian Blasé of the Galen Institute has pointed out that a family of four headed by a 60-year-old earning $240,000 could qualify for a nearly $9,000 subsidy. This hardly gets the money in the hands of the needy.

The House bill also offers a temporary five-percentage-point increase in federal funding to states that decide to expand Medicaid to childless, prime-age adults above the poverty line, a demographic never intended for Medicaid when it was established. This has nothing to do with Covid-19 relief. It is intended as another way to make more Americans – and more states – dependent on the federal government.

Why would Democrats want to spend so much money where it is not needed?

The WSJ editorial board has this opinion: “Democrats will talk all of this up as merely helping struggling Americans get health coverage. The true plan is to continue to chip away at private health insurance, creating more market dysfunction that they will later claim to solve with more government insurance.”

More government insurance means Medicare for All, the socialized medicine system promoted by Senator Bernie Sanders – the socialist considered too radical to be the Democratic nominee for president. It looks like Bernie may have the last laugh!

(Note: More on the Covid-19 Relief Bill tomorrow. The House of Representatives just passed the bill by a 219 – 212 vote. The bill now goes to the Senate.)