As we write this, Congress is considering an economic stimulus package to address the damage the COVID-19 crisis is doing to the nation’s economy. This package must be designed to put families and workers first and not be a slush fund for wealthy corporations. If Congress -- understandably moving quickly -- passes a package that does not include the key elements outlined below, it should add them to followup legislation immediately.

The Greenlining Institute's Proposal:

1. Support workers and families by sending them direct cash payments every month for twelve months.

Greenlining agrees with the underlying concept put forward by Congresswoman Waters, former Obama administration economist Jason Furman, Senator Cory Booker, and Senator Mitt Romney: The right thing to do is just send cash to Americans. The figure originally floated by the Treasury was $500 billion paid out in two installments, though the latest Republican Senate proposal only includes a single payment. Considering that there is general agreement that the $1,000 sent to each family as a part of the TARP program in 2008 was too little too late, it is vitally important that at minimum, $2,000 per month for all adults and $1,000 per child be set aside for cash payments to begin immediately. Greenlining recommends subsequent cash payments every month through March 2021, with an adjustment for high cost-of-living regions.

While the situation is very fluid, Greenlining is extremely concerned with what has been reported to be in the current Republican Senate’s stimulus package proposal, such as the fact that the poorest families, those with no federal income tax liability, would see smaller benefits than middle-class families. It would be unconscionable to finalize a plan where about 22 million people earning under $40,000 a year would see no benefit under the GOP plan. Greenlining agrees with Sen. Josh Hawley (R-Mo.) when he said, “Relief to families in this emergency shouldn’t be regressive. Lower-income families shouldn’t be penalized.” 

2. Protect small businesses by providing significant, immediate cash flow and small business resources.

While the $300 billion figure currently being discussed is a good start, this figure should be closer to $600 billion in recognition of the size and severity of the crisis for small business owners.  This could be in a similar form to New York State’s program that combined interest-free loans and payroll cash grants.

Further, the stimulus package must include a concerted effort to target support to businesses owned by people of color, considering that even in the best of times these businesses are undercapitalized and vulnerable to market shifts. The best way to do this is in partnership with ethnic business chambers as well as media outlets owned by and targeted towards people of color.  

In addition, recommendations from small business advocates such as the Small Business Majority should be used as a blueprint for how best to support this vital section of our economy. These recommendations include: opening emergency Unemployment Insurance (UI) funds to replace lost wages and strengthening and expanding the Affordable Care Act. An additional idea to consider is an insurance fund to help businesses avoid layoffs by making workers whole despite reductions in hours, support debt payments, and effectively pause their commercial rent payments. Greenlining also recommends a pause in all loan repayment for small businesses over the next 12 months. 

3. Support homeowners with a pause in mortgage payments.

Historically, homeowners of color have been hurt first and hurt most in financial crises, and should be specifically prioritized in any homeowner support plan. Nationally, 19.4 percent of all foreclosures between 2007 and 2015 were in Hispanic communities – but only 9.6 percent of homes are in those same areas. Similarly, 12.7 percent of foreclosures occurred in Black communities, while 7.7 percent of all homes are in Black communities. While the disaggregated data is often hard to find, studies have also found that Korean and Vietnamese homeowners are estimated to experience foreclosure rates as high as those of African Americans and Latinos.

Greenlining agrees with Lawrence Yun, chief economist at the National Association of Realtors, who said that pausing monthly mortgage payments for households that have experienced a drop in pay as a result of the coronavirus “makes perfect sense.”  Debt payment holidays are already being utilized in Italy and, recently, Fannie and Freddie have paused foreclosures. The New York Times recently reported that  “a broad group of bankers and other mortgage industry participants is working on a plan to offer a temporary pause in payments on home loans, according to the Housing Policy Council, a trade group that includes Citigroup, Wells Fargo, JPMorgan Chase, and Quicken Loans.”  We already know that Union Bank, Wells Fargo, and Bank of America have put in place policies where struggling borrowers can suspend their mortgage payments, which Greenlining applauds. It would be best for all bank and non-bank mortgage lenders to voluntarily agree to support homeowners in need, but the bottom line is that all mortgage payments should be paused for at least the next six months. 

4. Stop all evictions, Help cities help renters. 

The Department of Housing and Urban Development has paused all evictions for residential units in its portfolio and this should be replicated across all privately owned apartment buildings as well.  Speaker Nancy Pelosi is correct in urging the Federal Reserve chair, Jerome H. Powell, to support state and local governments. The central bank can legally buy short-term local bonds, and it should begin to do so immediately. As Congresswoman Waters said in a statement Monday, “State and local governments may soon face funding pressures and need assistance as they address this public health emergency...I call on the Fed to re-evaluate its response and work creatively to address the needs of everyday Americans.” One of the best uses of these funds will be to support any family that cannot make rent over the next 12 months.

5. Amplify the trillion-dollar stimulus package by forgiving student debt.

This year there is approximately $1.7 trillion outstanding in student debt, which acts as an economic constraint on the spending and buying power of millions of Americans. If in a matter of weeks, the federal government can decide that $1 trillion in stimulus could be made available for the current crisis, then there is no reason not to also cancel all existing federal student debt. This is not only the right thing to do, but it could also potentially increase GDP by $108 billion a year and add up to 1.5 million jobs annually year to the recovery.

Student debt cancellation will also likely have a disproportionately positive impact on African American students, since a 2018 study found that these students held as much as 85.8% more debt than white students.

6. Bailout nonprofits with a $60 billion investment. 

The U.S. nonprofit sector employs 12 million people, putting it third out of 18 major sectors as an employer of American workers and ahead of construction, transportation and finance. The federal government should provide $60 billion in emergency stimulus funding aimed at helping adversely affected national and local organizations. These funds can be distributed quickly through multiple funding streams, including, but not limited to, expansion of the Economic Injury Disaster Loan program for nonprofit employers, emergency grants to nonprofits operating under grants from federal, state, local, or other pass-through entities, and others to ensure the continued flow of charitable donations. This number should be increased if needed in order to ensure that nonprofits throughout the country are provided 12 months of operating costs, including payroll. 

Further, any additional employment-focused relief or legislative stimulus package must expressly apply to employment at tax-exempt organizations. Congress should ensure that relief and stimulus legislation designed to assist for-profit businesses in the areas of unemployment insurance, employee retention, and risk insurance must also address the unique challenges and realities that nonprofits face.

While Greenlining encourages broad support to the entire non-profit sector, it is essential that any economic support is directed first and foremost to small grassroots nonprofits, especially those led by people of color.

A just recovery that protects the American Dream

The fundamental difference between today’s crisis and past economic crises is that in the past there was always someone to blame. In the current situation, literally no one is at fault and a strong case could be made to just bail out everyone. There is no moral hazard in a pandemic. 

While the current moment is scary, Americans will persevere as they always do and our country will eventually move past this crisis as we have every other. Economic and public health crises are a consistent facet of our country (and the world) and it is time that we stop treating them in a one-off fashion. In order to be better prepared for what could be a painful economic downturn and recession, let's pass automatic countermeasures now that allows us to stop treating these events as one-off catastrophes and instead of a consistent part of life in our modern economy. 

Adam Briones is Greenlining’s Economic Equity director. Debra Gore-Mann is Greenlining’s President and CEO.