The pandemic has shined a harsh light through every gaping hole in the tattered American social safety net, which has been deteriorating for decades. People who get sick with Covid still aren’t guaranteed any paid sick leave. Our unemployment insurance program has been underfunded and neglected for decades, which left it entirely unprepared for the influx of demand. We don’t have enough affordable housing for everyone who needs it, an acute emergency when, for so long, the way to stay safe from the pandemic was to stay home. We’ve made huge strides toward getting more Americans insured, but our profit-minded health care system means that many people are afraid to go to the doctor if they feel sick, or even to get a free Covid vaccine for fear that there’s a hidden cost.
But the crisis didn’t just expose the fact that the country is miserly in the help it offers the downtrodden, the sick, the old and the very young, parents, and workers. It also exposed the fact that, if and when we change our minds and decide to help people in crisis, we don’t even have ways to do it.
When Congress finally turned on a spigot of federal rent relief, the money got bottlenecked by state and local governments that were entirely unprepared to deliver a brand new kind of aid. When government shutdowns threatened the future of the country’s small businesses, there was no funnel to deliver billions in relief to keep them afloat, so the government turned to the anemic Small Business Administration, which in turn routed the money through banks. While the funds were a lifeline for some, the program has been absolute chaos from the start, and it failed many of the business owners who needed it most. And as the country realized that one of the best responses to poverty is to send people direct cash—first through a number of stimulus checks, then an enhanced Child Tax Credit that’s acting as a one-year child allowance—it found that getting cash to the poorest is much easier said than done.
We could have seen this coming. After the Affordable Care Act was passed, a country that had never before tried to ensure that all Americans could get health insurance had to figure out how to extend it to more people. Few can forget the disastrous launch of HealthCare.gov, the federal insurance marketplace that kept crashing and was impossible to use for months.
By now, public servants and dedicated nonprofit volunteers have scrambled to create new pandemic systems from scratch, connecting as many people as they can with the aid they deserve. Pipelines and portals have been slapped together and deployed. But these efforts are likely to sunset as the worst of the crisis someday fades from view; some already have. Will the country learn a crucial lesson? Not just that we owe more to each other outside of a historic, global crisis—that we can alleviate more everyday suffering if we choose to—but that we have to build the infrastructure and systems to ensure help actually gets to everyone? Or will we let the streams run dry and the pipelines crumble, wasting our chance at a kinder, more equitable society?
How to Rent a Room
Evictions have been an urgent crisis for decades. Landlords file 3.7 million evictions in normal years, according to the Eviction Lab. In the four worst offending cities in the United States, landlords filed evictions against more than 10 percent of renter households in 2016. In North Charleston, South Carolina, the very worst offender, about ten households were sent packing every day that year.
And yet the country has never offered tenants rental assistance in any substantial or ongoing way. Section 8 rent vouchers are reserved only for the poorest of the poor and are still often impossible to get; even if someone manages to obtain one, many landlords refuse to rent to them. Other federal rental assistance is only available for select groups and isn’t meant to plug a gap when someone suddenly falls behind. Some states, cities, and localities have offered a bit of support here and there, often funded by philanthropic money, but there has been no comprehensive effort at the federal level.
For the first nine months of the pandemic, congressional lawmakers dithered over fixing this problem, forcing tenants to rack up huge debts in back rent—or to forego other necessities in order to make rent on the first of each month—and wasting time during which rental assistance programs could have been well-designed on a national scale. States were allowed to use money from the CARES Act for rental relief if they so chose, but they used just a fraction of it: $2.6 billion out of $150 billion. Even so, a year after the bill passed, $425 million of the $2.6 billion had not made it to either landlords or renters, according to an investigation by the Center for Public Integrity. New York and Florida, both states hit hard by the pandemic, returned tens of millions of unspent funds that they couldn’t manage to get to those who needed it.
Last December, and then again in March of this year, Congress finally acted, passing $46.5 billion in rental assistance specifically. States scrambled to set up brand new programs to get out ahead of expiring eviction moratoriums. Administrators, not accustomed to funneling rental money or emergency aid out the door, had to wade through technological problems as they set up new application portals. “It is a huge undertaking to try to set up and scale a program like this in a very short period of time,” said Sarah Saadian, vice president of public policy at the National Low Income Housing Coalition. “They’re sort of learning the ropes as they go along.”
Administrators also had to make key decisions about who could get the aid and how they would prove they deserved it. Many programs ended up being “way too cautious and are oftentimes getting in their own way,” Saadian said. As of late September, about 91 percent of rental assistance programs still required proof of tenancy, about 82 percent required proof of income, and 55 percent even required proof that a tenant had experienced Covid-related hardship. Although the Biden administration has urged programs to allow tenants to swear that they qualify, many renters must submit reams of paperwork: tax returns, proof of residency, and records of any assistance they’ve received during the pandemic. Meanwhile, less than a third of these programs send money directly to tenants, bypassing the many recalcitrant landlords who don’t want to agree to tenant protections or would simply prefer to kick their tenants out. Not to mention that renters who have never been offered this kind of help before don’t necessarily know it now exists. Simply making everyone aware takes time and effort.
What should have been a deluge of money into tenants’ pockets, allowing them to get current on rent and stay housed, has instead been a pitiful dribble. In the first six months of this year, states got a mere $3 billion, or 6.5 percent of the total funds at their disposal, to tenants in need. Just six hundred thirty-three thousand families received help, even though over seven million were behind on rent and, as of this writing, 3.6 million are on the brink of eviction. Things weren’t much better by July: by that point, states had only gotten 11 percent of the total funds to people who needed them, and at least fifty cities and counties hadn’t sent out a single penny. New York State didn’t distribute any aid through June; by early August, only about seven thousand tenants had actually gotten money.
The Middleman Can’t
Renters aren’t the only neglected group. Before last year, the government had never given aid directly to small businesses en masse, either. So, when governors across the country issued stay-at-home orders and millions of businesses were faltering on the brink, the government brought in banks as middlemen to sort through applications for relief and issue emergency loans. It was a form of “path dependence,” argued Mehrsa Baradaran, law professor at the University of California Irvine. “We just take the route we always take.” It’s the country’s default response, at this point, to outsource things to the private sector instead of having the government do them itself.
But routing emergency aid through banks allowed the financiers to rake in billions in government fees for processing loans without adding much of use to the process. Sure, they spent time on paperwork, and they’re supposed to be on the hook if they issue fraudulent loans. But the banks assumed no credit risk: if qualified business owners end up defaulting on their loans, the Small Business Administration, the agency tasked with running the Paycheck Protection Program, takes the hit.
The banks have also made life difficult for the worst-off businesses. First was the struggle just to get the loans, when every day’s delay was another day closer to permanent closure. Banks prioritized bigger, wealthier clients that they already had existing relationships with over smaller, underserved lenders, particularly people of color. JPMorgan Chase, the bank that has issued the most PPP loans, processed loans for over $5 million nearly four times faster than those for below $1 million, according to a congressional report. “They [were] choosing recipients based on their own business models, which would be fine if it was their own money, but it’s the public’s money,” Baradaran said.
Routing emergency aid through banks allowed the financiers to rake in billions in government fees without adding much of use to the process.
Then it came time for those who had managed to elbow their way through the process to wipe the loans off their books. PPP loans took the place of the direct government grants that other countries sent to companies to cover payroll costs, but they were supposed to operate in basically the same way. So long as the money was used for the correct purposes—most of it on payroll, with some allowance for rent, utilities, and other expenses—the loans were to be forgiven. But, of course, that process broke down in practice. Banks don’t generate any money for going through the trouble of forgiving loans, so they’ve been unmotivated to do so. A year after the start of the pandemic, most small business owners were still waiting for their banks to complete the paperwork to forgive their loans—or, in many cases, to simply open up the application process. Even by late summer, less than half of all PPP loans had been forgiven.
The more efficient and equitable way to protect small businesses would have been to cut the middlemen out and just give them government money directly. But this is not something we’ve ever done on such a scale, and the Small Business Administration doesn’t have a good track record of rushing money out the door in the case of an emergency. In the wake of Hurricane Sandy, for example, it took the SBA an excruciating average of forty-five days to process loans for affected businesses, and in the end, it only approved 42 percent of applications.
Other countries were ready for this crisis. Denmark, for example, already has a Danish Business Authority that was capable of directly accepting and processing applications for aid. “Since many European countries had similar social safety net programs already, albeit in far more limited form, the salary supports were relatively easy to expand, almost literally overnight in many places, amid widespread consensus,” Michael Birnbaum and Karla Adam wrote for the Washington Post early last year. “The United States, by contrast, has had to cobble together a support system that is in some ways brand-new.”
Portals to Nowhere
In 1969, Richard Nixon nearly enacted a form of guaranteed income through a negative income tax. We’ve sent monthly Social Security payments out to almost all seniors since 1940. But the country has never enacted a child allowance, even as most of our wealthy international peers have realized the value in keeping children from living in destitution.
That changed for the first time this year when Democrats pushed through an expansion of the Child Tax Credit, which, until recently, offered up to $2,000 for each child against a household’s tax liability, but only to families earning $2,500 a year or more. If the credit was more than what a family owed in taxes, they received a check for the difference in a lump sum. By contrast, the expanded CTC is designed to reach all poor families, with a beefed-up dollar amount to be sent out in regular monthly payments. Before, the money only kicked in gradually as parents earned more so as not to “reward” those who didn’t have a job or couldn’t find steady enough work. Now, over 90 percent of families will receive the payments, and they only phase out for higher incomes. In other words, we have a child allowance, at least before it expires at the end of the year.
Yet getting the money out to all families, particularly the poorest ones who newly qualify, is where the excitement of a new benefit meets the drudgery of reality. The IRS is in charge of sending out the new Child Tax Credit, as it was for the three rounds of pandemic stimulus checks that came before it. Families who file regular tax returns have experienced the best that our government has to offer: stimulus checks and the CTC payments have showed up in their bank accounts automatically, without them having to take a single action. But everyone else—typically the very young and very old, as well as those who earn too little to owe federal taxes—has had to wrangle with the worst of government: battling with bureaucratic systems designed by people who don’t seem especially attuned to the realities of people’s lives.
To get stimulus checks out, the IRS needed to know who people were, where they lived, what they earned, and how many children they had. There are other government agencies that have this information—Social Security for disability recipients; the VA for veterans who interact with it—but at first, instead of working directly with those other agencies to get the details it needed, the IRS threatened to make all of these individuals file returns on their own. “Their natural indication is to put the burden on a population that really can’t handle the burden,” said Nina Olson, former IRS taxpayer advocate and executive director of the Center for Taxpayer Rights.
The IRS eventually reversed course, and yet its ethos—to not care very much about easing requirements on a population whose lives are usually complicated and overburdened—has carried forward. The agency created a portal for people to enter information in order to receive stimulus checks that didn’t work on mobile phones and was at first only available in English. This, during a pandemic that meant vulnerable populations, already reeling from the trauma of the pandemic itself, couldn’t go anywhere for in-person help. The result was that nearly six months after Congress passed the first round of checks, an estimated nine million people still hadn’t gotten their money because they hadn’t filed with the IRS.
All of the same kinds of problems reared their heads as soon as the IRS started trying to send out CTC payments to families. For the first time, the credit has been extended to all poor families, even those who earn too little to file tax returns. But that means the IRS doesn’t already have information on them, and these families represent about seven million of the ten million children who should be getting the new benefit. Once again, the IRS set up a portal for people to register for their payments, developed with the help of private tax-filing behemoth Intuit—the same Intuit (the parent company of TurboTax) that has lobbied against efforts to make filing taxes easier for everyone. As with the stimulus payments, this portal is online-only and not mobile friendly, missing anyone who doesn’t have a computer and internet at home. It’s again only in English. Users also need to enter an email address, which many low-income people don’t have. The instructions are densely written. And the portal has strict security check points that people have struggled to get through, particularly those who aren’t very comfortable with technology. “For this population, if you meet a barrier, you ultimately give up,” Olson noted.
That’s if they even know about the expanded payments to begin with. While the IRS has put information up on its website, that’s going to miss many of the families they’re supposedly trying to reach. “The IRS has no, zero, zip, nada infrastructure in the field for outreach and education,” Olson said. It had no existing relationships with anti-poverty groups, community organizations, or even state agencies and has done nothing to create them now. “It’s divorced from what’s actually happening on the ground.” The effort to get people to sign up has instead been taken up by a group of volunteers.
Can the Government Do Good?
Plenty of other creaky structures nearly gave way under the weight of the pandemic. Unemployment insurance systems were crushed under the masses of people who rushed to sign up in the first few months, forcing many to wait weeks or months to get jobless relief. At least nine million ended up with nothing at all. Benefits distributed through Temporary Assistance for Needy Families, the country’s only cash assistance program for poor people, barely rose to meet the need and even fell in ten states that didn’t do away with harsh rules. But at least in the case of UI and TANF, something had existed before this catastrophe. For too many other needs that predated the pandemic, we’ve failed to do anything at all.
Now that the country has rushed to set up new pipelines to deliver pandemic-related aid, are we going to let them run dry and be dismantled as we start to try to put Covid behind us? Some of them might not be worth salvaging. The Paycheck Protection Program has been so chaotic and so unequal that it would be better, instead, to plan ahead for the next emergency, be it natural or manmade, and create a more functional system. The Treasury Department, which tracks all companies through the IRS, could send money out directly, perhaps with the aid of a better-funded, better-organized SBA.
But evictions and poverty won’t end when the pandemic winds down. The government decided for the first time in its history to offer tenants meaningful money to keep them housed when faced with the threat of removal, or at least to send landlords checks so they wouldn’t kick renters out. Democrats coalesced, at least momentarily, around the broad idea that sending cash payments to parents could significantly reduce poverty and give children healthy, more stable lives. And yet everything that has been built up to send those benefits out is scheduled to someday disappear.
The National Low Income Housing Coalition is working with a bipartisan group of senators to make rental assistance permanent “so we wouldn’t lose some of this infrastructure being built now,” Saadian said. They want to see at least $3 billion flow through these new pipelines down to state and local governments every year and, ultimately, directly to tenants themselves. And they “don’t want to see the knowledge, the expertise, the systems, infrastructure to be allowed to wither away,” Saadian said. “Because then the next time we’re experiencing a crisis like this pandemic, or the next time a family’s just facing their own crisis because they lost a job or saw a reduction in hours at work, we want there to be that infrastructure to help them.”
The IRS is in similar danger of letting a mediocre effort go to waste. While its portals to get people signed up for stimulus checks and CTC payments have been riddled with problems, they are better than having nothing to connect families with the benefits they’re owed. “I kept saying to them, ‘Are you going to keep this up and improve it?’” Olson said. As of early this year, she said, the IRS’s answer was no. Without legislation forcing it to maintain the portal created for the expanded CTC, Olson thinks the agency will let that disappear too.
These aren’t just logistical problems. They quickly become existential.
Creating new benefits is the exciting part of policymaking, not to mention a rare occurrence. But if no time is spent on figuring out how to actually get them to the people who need them, they might as well not exist. The experience of the CTC, Olson argues, has exposed the need for a one-stop-shop for government benefits. Instead of navigators to help with the Affordable Care Act, and social workers to guide people toward housing assistance, and other bureaucracies for SNAP and TANF and all other programs, we need one place for people to sign up for exactly what they need.
These aren’t just logistical problems. They quickly become existential. For many female and minority business owners who got PPP loans, it was the first time they had ever tried to access government lending programs. But after such a bruising experience, they will probably think twice about trying again anytime soon, allowing the white men who are more comfortable with the system to keep enjoying its fruits. Similarly, renters were promised that, as eviction moratoriums started to lift, their government would send them funds to keep them housed. Then they were forced to wait months to apply and receive money, all while their rent kept piling up; many of the lucky few who have gotten aid haven’t gotten enough to make them whole. Why would they believe that the government is capable of providing people like them with the help that they need?
For many Republicans, that’s the very point of making public benefits difficult to access and onerous to receive. Their project of imposing work requirements on anything and everything they can, for example, doesn’t help people work, but it does tie applicants up in so much red tape that they get kicked off or can’t enroll in benefits. For any good government-minded moderates, or for Democrats who purport to champion the needs of poor and working Americans, these details can’t just be glossed over and forgotten. Government benefits are only worth as much as what people can access. Democrats will need to commit not just to keeping these systems in place—very much a question mark, given that at least one senator, West Virginia’s Joe Manchin, has been threatening to hold up an agenda that includes a more permanent expansion of the Child Tax Credit—but ensuring that they actually function.
The government undermines its own case for doing more when it can’t deliver on its promises. And thus it becomes a self-fulfilling prophecy: we don’t put the time and money into public infrastructure because we don’t believe it can work. The pandemic was a glimpse at a different world, one in which we do offer help and it can arrive on time. Now we have to decide whether or not that’s the world we want to live in.