What’s Actually In The Senate Relief Bill

to get to. We have to answer that question, what the hell do emission standards have to do with coronavirus? The Senate has just voted on the coronavirus stimulus package, a two trillion dollar package, the largest stimulus in American history. It is after midnight on the East Coast and I am joined, as ever in the middle of the night by one of the Senators who voted on that, Senator Cruz. Senator Cruz, what did we just see? Well, Michael, good morning.

It is twelve twenty seven in the morning, and once again, you know, it feels like deja vu all over again. It's you know, when we got got got started on the Verdict podcast, it was during impeachment, and it seemed every night we would be there till midnight one two in the morning and then head straight to the studio. So I just came from voting on the Senate floor. As you noted, the vote was unanimous. It was ninety six to nothing. Every single Republican voted yes, every single

Democrat voted yes. And we just passed out a two trillion dollar emergency relief package, which which hopefully will have significant effects relieving the economic devastation being caused by this Corona crisis. Well, I want to get into exactly what is in this package, because obviously there's a lot and some of it is controversial. But before we get to what is in it, I want to get to why we were sitting here in the middle of the night. You know, this bill was supposed to be voted on,

I think over the weekend. Then it was supposed to maybe be voted on yesterday, then earlier today, and here we are it's after midnight. So I want to know why this was so delayed, And I guess more specifically, I want to know who delayed the vote. Well, that's an easy answer. It's it's two people. It's Nancy Pelosi and it's Chuck Schumer. Everybody thought we were going to vote on this Sunday night. The bill had been negotiated with about a dozen Democrats were part of the negotiating teams.

They had all been active and engaged, and we thought we were going to take it up Sunday night and get it past. Nancy Pelosi came in at the last minute, and she threw a hand grenade in. She began making all of these completely unrelated partisan demands, and we showed up Sunday night and every single Democrat voted to block, are getting on the bill, are even starting to consider it,

And so they blocked it on Sunday night. They blocked it Monday, all day Tuesday, all day to day until just about eleven o'clock last night when we finally got it past. So, as you noted in that clip we played at the beginning, which by the way, I thought was terrific. I was a big fan of you really calling calling it like it is here and saying what do emission standards? What does the Green New Deal have to do with coronavirus? So it looks as though the

Democrats totally back down. I mean, I don't know, though you were there all day. Did the Democrats achieve anything by stalling the vote. What's the good stuff in the bill? What's the bad stuff in the bill? Well, look, it's complicated. Most of the extraneous partisan issues that that that Pelosi was fighting for, almost all of them are dropped out of the bill. So that's good that what she held everything hostage for Sunday and Monday and Tuesday is mostly gone.

So so so what's past looks two trillion dollars. It's a a lot of moneyn of money. I mean, I mean that's that's ten percent of our national debt, not our deficit, ten percent of our national debt in over two centuries. We just spent ten percent of it tonight. And it's worth pausing to think that was unanimous. That means Bernie Sanders voted for it. I voted for it, and everybody in between voted for it. And what I would say is the reason is these are not normal times.

This crisis is extraordinary. The health crisis is extraordinary. People are scared. We've got a global pandemic. But not only the health crisis, but the response to the health crisis has created an economic disaster that is unfolding. There are millions of people losing their jobs, and in response to that devastation, everyone feels an urgency to provide relief. Now, you mentioned at the outset, and this is something a lot of people are saying. They're referring it to it

as stimulus. I don't call this a stimulus bill. This is a relief bill. It's quite different. It is designed to provide relief to people who are hurting badly and are hurting through no fault to their own. They didn't do anything to cause this. So what are the different pieces what's in this monstrous bill? Yeah, so one big piece of it is individual relief. And for every American in the country who makes under one hundred thousand dollars a year, you're getting a check. You're getting a check

in the next couple of weeks. Individual adults are getting twelve hundred each, a couple's getting twenty four hundred each, and if you have kids, you get five hundred each for those kids. And those checks are expected to go out according to the Treasury Department. They're they're going to get them out in two to three weeks, So sometime probably early to mid April is when those checks are

going to arrive. And allot of me if I'm wrong, this is unprecedented, right, I mean, we've never seen the federal government mailing checks to this large number of Americans for direct relief. The only thing comparable to that to this was during the two eight crisis. There was a smaller set of rebate checks that were sent out under the Bush administration, but it wasn't nearly a sign if again is this This is much more broad based and

these are bigger checks. Look, if you're you look at restaurants that have been shut down all across the country. You look at bars, you look at at at hardware stores or nail salons. There are a lot of people who are hourly workers who suddenly finding themselves at home and are scared. How am I going to make the rent check next month? You know? How am I going to pay the basic expenses? How we're going to pay for food? And so these checks are providing relief on

a broad based manner. It's not picking winners and losers, it's providing it across the board. Most economists degree that's not going to be a major stimulus effect, but it is going to help people who are worried and being hurt by this right now, right, I mean people you know, they can't afford to not work for a month or however long this is going to go on. So the idea is that's going to fill the gap and hopefully you can take twelve hundred bucks and put it toward

your rent or whatever bill is do. What else is in the bill? You know, especially in terms of I know it was controversial that there's a loan program for businesses to stay afloat. The Democrats were vary against that. What does that program look like? Well, let me get to the Another major part of the bill that I think is really important is there's three hundred and seventy seven billion dollars for small businesses. And this is an emergency loan program that is going to go to small businesses,

essentially businesses with five hundred employees or less. So the hardware stores and barber shops and restaurants that we talked about, all these folks that are are shuttered right now and are on the verge of bankruptcy, they can now you can now go if you're a small business owner, you can go and apply for a loan and you can get it. It's a small business Administration loan, but you

can get it from your local bank. It's from all of the local banks in the community that you can go and apply for it, and it's up to ten million dollars. So it's small loans relatively speaking. But they're designed in particular to meet costs like payroll, to meet costs like rent, the basic costs that you have that

you don't want to lose your business. And the way it's designed, if you spend the money on payroll, if you if you say to your employees, we're gonna keep paying you, we'na keep your paycheck coming, then those loans are forgivable. So for the small business owner, you can take the loan and if you actually pay it out

to your employees, the loan obligation goes away. And so that's a direct lifeline not to these small businesses that are profoundly hurting, and a lot of them are making the decision right now do I stay open or do I shutter the door? Well, I'm sorry to interrupted. I mean this is a very important point here because you know, as we see the unemployment rate ticking up, you had claims last week for unemployment that we're comparable if not higher than you saw at the peak of the two

thousand and nine crisis. I mean, you could have massive unemployment, you could have businesses falling apart. So this would allow the businesses to continue to employ their workers, right, and that means people keep a connection into their job. It needs they keep their health insurance, which is a big challenge for everyone. If you lose your job, you may

be losing your health insurance. So we'd rather as many people as possible to stay employed, to stay in a position that when we get past this crisis, hope hopefully sooner rather than later, did everyone come back to work. That we want to get the economy moving again. And so these small business loans again are unprecedented. I mean to give you a sense. The Small Business Administration's budget, I think last year was twenty three billion dollars. This

is three hundred and seventy seven billion dollars. So this is more than ten times the size of the Small Business Administration's entire budget. But all of that money is designed to flow out through the community banks to small businesses and to be used for payroll predominantly and other essential costs like rent and utilities, just to keep the

businesses open. So I know that this brings up another question on employment that was really central to the debate today, and you played a central role in this, which is some Republican senators, I think Lindsay Graham mentioned it, and you spoke out very forcefully against it. Identified in the bill a provision that would actually incentivize people not to go back to work. What was that provision and where

does that stand right now? So part of this bill, and one of the things in particular the Democrats demanded as a price of supporting this bill, was increasing unemployment insurance compensation. So when you're when you file for unemployment in your states, the federal government is plussing up those weekly compensation and plussing it up dramatically. Is basically adding six hundred dollars a week to what you can earn from unemployment. So so what does that mean? And listen,

most Republicans, I think that is a good thing. We are going to see this week when the job numbers comes out. We're going to see millions of Americans who have lost their jobs in the last two weeks. I mean, it has been I've spoken to at least a dozen CEOs in the last week, who've laid off thousands or tens of thousands of employees. I mean, it's just one after the other after the other. And and and if you're suddenly laid off, having unemployment and enough to support

your family is important. So I think plussing it up made sense. Here's the problem. The way it is designed, the six hundred dollars is irrespective of what you were making before, which means, like I'll give you an example in Texas. So right now, in Texas, the maximum someone can make on unemployment is five hundred and twenty one dollars a week. That's that, that's what the state unemployment will and and that's that's based on your income. We're

now adding six hundred bucks a week to that. So instead of five hundred and twenty one dollars a week in Texas, it's now eleven hundred and twenty one dollars a week. It's a nice raise, that is a very nice race. But here's the problem. There's no constraint on whether it is more than you were making in your job, and and and so I and a number of other senators we introduced an amendment today, just a common sense amendment that said, look, you should not make more on

unemployment than you were making working. It's common sense, right, and we had so we debated it on the Senate floor. It was interesting, actually, an astonishing thing broke out on the Senate floor, real debate. Dick Durbin, Democrat from Illinois, was arguing back and forth, and our amendment just was a simple proposition that you shouldn't be paid more in unemployment than you were making in your job. And the reason is you don't want to disincentivize work. I'll use

the Texas example. Eleven hundred and twenty one dollars a week. That's a little bit over fifty eight thousand dollars a year. Now, that's four months worth, but annualize that's fifty eight grand a year. That works out to over twenty eight dollars an hour. The problem is, if we're paying people that much not to work, it incentivizes people not to work. And it was very much ever, go back to your job, well, and the back and forth. So Durban did what a

lot of Democrats did, which is he demagogued. He said, oh, these Republicans are saying anyone unemployed is lazy and rotten. And I said, Hold on a second. We're saying exactly the opposite, which is this policy will hurt workers and it'll hurt small businesses. Why let's say you're a waitress

and you've been been laid off from your job. You're getting unemployment, but suddenly you're making twenty five, twenty six, twenty eight dollars an hour at home not working, and you face the decision do I go back to work for ten, twelve, fifteen dollars an hour. We're creating incentives where it would be perfectly rational to say I'm not going to go back to work because I make a lot more money on unemployments. That hurts the workers. It

also hurts small businesses. Let's say you're trying to reopen your restaurant. The shutdown has stopped in your city. You want people to come back. You call up your old employees and they say, look, I'd love to come back to work, but I can't afford the pay cut. Yeah, you know, you gotta match my unemployment salary. So that I think was an unfortunate mistake, and we ended up the amendment loss. It was basically a party line vote. I think every Democrat voted against accept Joe Manchin. He

was the one yes. But I think that was unfortunate. But it nonetheless, there will be significant benefits from the additional unemployment insurance in this time of crisis. Right, Okay, that makes sense. It's too bad unfortunately that that seems to have been left in the bill. But I guess obviously there's a lot of debate here, and you did come to a unanimous vote. However, I have to pick up on what you said. You said the vote was ninety six to zero. There's more than ninety six senators.

Some people were missing. Yeah, Now we've got got several senators who are out on quarantine. And where that started from was a few days ago Rand Paul tested positive for the coronavirus and and he had been in in DC the whole week. And actually the way we found out about it, so we were meeting every day for lunch,

the Republican senators, and it was interesting. We shifted. We normally meet in a room in the capital called the Mansfield Room, and and it's um and actually, by the way, the Minority meets in the LBJ Room, which is a smaller room, but the Mansfield Room is bigger. So it's one of the things. It was nice. In twenty fourteen, we became the majority, we switched our lunch rooms and

got to a bigger room. That's a nice perk. But when coronavirus hit um, we all wanted a social distance, and so the Mansfield room we decided was too small, so we were meeting instead in a conference room, and we moved actually to a couple of different conference rooms that were sort of almost like big auditoriums in one of the Senate office buildings, And so we were in one of those big, big auditoriums where the acoustics were terrible. It's hard for everyone to hear because they're not they're

just it's not good acoustics. But but Mitch, every every day we were meeting for lunch, and we'd have often a two to three hour lunch because it would be a progress report on the negotiations of the bill. And there were different committees that we're working on different portions of the bill. So the people would stand up and say, all right, here's what's going on with this, and we'd

ask questions. We debate back and forth, and so a few days ago, we're there and Mitch's talking and he just kind of matter of facts says, and so Rand, Paul just tested positive for coronavirus, and we're all sitting there going, what the what like like like, I mean, it's and Mitch just very matter of fact mentions it and keeps going on and a whole bunch of a second, Hold on a second, can can you rewind that tape and play it again? And so it was well, and

Rand had been at the Senate. He had been that morning at the Senate. Jim, he'd been swimming in the pool. Wow, I gotta say, I don't think I've ever seen my colleagues as pissed off as they were, like he had just gotten the positive test results, and then they were pretty angry that he hadn't self quarantine. Now, Rand said he wasn't sick, he had no symptoms, he hadn't come in direct contact with the He was at a gathering with people who were sick, but he didn't come in

direct contact with them. I understand his reason. I can tell you people were freaked out. And so I remember we're sitting there going, Okay, well, what do we do? I mean, they're fifty three Republicans. The immediate question all right, are we all quarantine? Like, as you know, I spent eleven days in self quarantine in Houston, and I'm like, well, all of us have been here with Rand. What does

this mean now? And what ended up happening is within an hour or two, two people self quarantined as a result, Mike Lee and Met Romney. Yeah. And the reason is at lunch they had sat on either side of Rand. They had been at lunch with him, they sat next to him, They'd been there for a couple hours, and so they decided neither of them are feeling sick. Talk to both both Mike and Mit this week after they quarantine.

They both said they were feeling great, but they self quarantine because they sat next to Rand and spent a couple of hours. You know, I thought about it, but as it so happened this past week, I just didn't run into Rand. In fact, I didn't even I didn't know he's around. I'll often sit next to him at lunch. I just didn't happen to this week. So it was a good, good week not to sit next to Rand, Paul.

But it puts you in a tough position because as you're all sitting there and leader McConnell tells you all, by the way, one of your colleagues has coronavirus. You know, it's a pretty small club there in the US Senate. You're all voting on this very important legislation. If all of the Republicans self quarantined, what happens to the bill? That is was a real issue, And I think that's one of the reasons why all of us said, let's move forward and get this done quickly and get the

hell out of here. Everyone's flying home tomorrow morning, and the Senate is not expected to be in session for several weeks. But you know, look, if you look at the Senate, there are a lot of people in their seventies and eighties. I mean, you want to talk about a potentially vulnerable population. We're trying to stay away from each other. We're trying to like social distance. People are pouring hand sanitizers like crazy. But you know, Rand and and and Rand and I traded text. He said he's

feeling good and feeling healthy. But you remember Rand, what was it a year or two? Right? His neighbor tackled him, broke six ribs. The ribs punctured his lungs. He got pneumonia, and they did surgery and remove part of his lung. And and so what's scary about this is Rand, with with part of his lung removed, is in a vulnerable position where he's more vulnerable if he gets COVID nineteen, if he gets sick, he's potentially more vulnerable. And so

that's he's obviously taking it seriously. But all of us are are are worried and praying for Rand. Of course, Yeah, that that really does bring it home because some people have even kind of and joking about how the median age of the US Senate is about one hundred and fifty, and so you know that's an at risk population. But of course Senator Paul in particular is especially at risk here. So I suppose everybody should pray for his speedy recovery.

And it's one other actual coincidence I suppose with Rand Paul being out for this vote, is he's been so outspokenly say libertarian, you know, during his political career, and conservatives now are struggling with what to think about this bill because it's so much money. You know, it's the biggest package like this ever in American history. But this is a totally novel circumstance. How should conservatives be looking at this? Look, I've struggled with it. Every conservative is

struggled with it. Two trillion dollars is a ton of money. I think the magnitude of the challenge we're facing justifies it. And I also think it's very different. I mean, some people are trying to draw the analogy to tarp to to what happened with the two thousand and eight financial crisis.

I think they're dramatically different. And the biggest reason their difference is the financial meltdown was caused in very significant part by misconduct by the financial services firms who were taking undue risks, who got all the upside if they made money, they got rich and and got to enjoy the blessings. But then when it all cratered, the government had to step in and help them, and so it

it felt very much like a rigged gain. This is a very different circumstance because the people that are getting relief here, they didn't do anything to cause the coronavirus. It wasn't their conduct. You know, the individual waiter who's been laid off, it's not his fault that this started in Wuhan and spread across the world. It's it's not the fault of the guy who owns the local movie theater,

and and so I think that's different. I think it's also important that if you look at how this is structured, You've got the individual grants, which which are very important relief. You've got the small business piece, which is very important if you look at other elements of it. So there is one hundred billion dollars in this directed to hospitals and healthcare providers. Now look in the coronavirus circumstance. Hospitals are panicking. They need to spend their capacity. One hundred

billion dollars for hospitals. You know, God forbid, you have circumstances where we need to ramp up quickly. That is almost the very definition of emergency relief for this crisis. You've got sixteen billion dollars for protective gear, for ventilators

and medical supplies. That again is crisis appropriation. You've got one hundred and fifty billion dollars for state and local governments to meet the coronavirus and it's limited so that it goes to coronavirus spending on the state and local level. So you're saying that the states and the cities they can't just spend it on whatever pet project they want. There actually will be some checks on how they can

use the federal money. I hope, so maybe not. But look, let me throw in the caveat this bill is massive. It was drafted really quickly. We're going to find all sorts of ugly things there as it rolls forward. So when it comes to the constraints on the states, at least as it was relayed to us, as we understood it, it it was intended to be just coronavirus spending. Can I promise that there won't be states frittering the money away? No, but they are facing a massive and unprecedented health crisis.

So the intention was give them the funds. And that was one of the big Democratic holdouts and demands also as they wanted money for the state and local governments. And that's one of the big things that was added that was expanded in the last couple of weeks. The part that is deemed the most controversial is there's five hundred billion dollars for what's called the Stabilization Fund. Now that's what the Democrats have been characterizing as the big

corporation bailout. Right, listen of all the parts of the bill, that's the part I have the most concerns about. But I do think they're differences even in that part from from a bailout. Almost all of that is structured as loans. So what are the components of it? The components of it?

You've got four hundred and fifty billion dollars that basically goes to the FED to make loans across the economy, and it's designed for the FED to leverage it up so that four hundred and fifty billion is expected to result in about four trillion dollars in additional capital. So I'm sorry, pardon my economic ignorance. How does that work?

So the FED will make loans, will make loans that will go out to businesses, to companies all through the country, and you know, look in thinking about how to respond to this crisis, I try to talk to a lot of experts, to conservatives who I know in respect and trust. So one person I called his Art Laugher. Art Laugher is a good friend, was Reagan's chief economist, helped design

the Reagan tax cut, the Laugher curve. You you may recall he drew on a napkin that laid out the principle that if you raise taxes too high, tax revenue will go down. And in that circumstance, if you lower the tax rate, you can actually the federal grammer collects more taxes because of incentives. Art is a strong conservative, A great friend. I called Art said, all right, what should we be doing this? This is an economic catastrophe. What what should a conservative be doing it? Art focused

on two things. He said, Number one, we should do a payroll tax holiday from now to the end of the year. Payroll tax is about seven and a half percent paid by the employee, about seven and a half percent paid by the employer. We should just say nobody has to pay it from now to the end of the year. That would create enormous incentives for work. Look at Harkins, back to the fight we had over the unemployment compensation, the disincentive for work. I'm very focused on

incentives for work. Right. That makes sense. By the way, half of that proposal is in this bill. One of the things that is included in this bill is from now to the end of the year, employers don't have to pay their half of the payroll taxes. They have to repay it in twenty twenty one and twenty twenty two. But it defers those tax payments, which means for an employer lowers the cost of employment. It makes jobs less expensive. That is a good supply side step in terms of

tax really. But the other thing Art said, and this was important, He said, Listen, the most dangerous thing in an liquidity crisis is you don't want it to become a solvency crisis. Now what does that mean. That means your customers have dried up because the government is making people stay home, and suddenly your revenue is plummeting and you can't meet your basic bills. You can't meet your payroll, you can't meet your mortgage, you can't meet your rent.

And so when you face a solvency crisis, you've got a suddenly sell stuff on the cheap. We don't want to see the airlines suddenly have to auction off all their planes for ten cents on the dollar. That would take a temporary crisis and turn it into catastrophe and the and so what Art said is you want to have liquidity in the system. You want to have people being able to get a line of credit. Companies able to get a line of credit, so they survived the catastrophe.

And so that was his principal recommendation, which has been echoed by a lot of conservative economists I've talked to that four hundred and fifty billion is designed to do exactly that, to make want to take this acute problem and have it lead to very long term economic catastrophe because we were too cheap to do what we had to do in the moment. That's exactly right. Now. All of that is our loans. Those are not grants. So nobody's getting a special payment that they get to keep.

No one's getting bailed out in that sense. All it means is they're able to go and get a loan and they're able to get alan. Think about it, if you, let's say you run a hotel. Yeah, I talked to several hotel owners who described, like one said their occupancy rate was now six percent. Look six percent, you couldn't go get a loan. I mean, a hotel is not a going concern it with six percent occupancy rate. Now it won't always be. It didn't used to be. And

when the crisis is over, presumably it won't. But who would want to see every hotel auctioned off at a foreclosure sale? And all that would mean is whoever happened to have capital would suddenly have a windfall be able to acquire you know, let's go buy the Waldorf Astoria for ten cents on the dollar. That actually doesn't help the economy or anything to force every business owner to sell their assets. And so the liquidity is basically giving someone the capacity to get out of it. Now, look,

there may be some failures, there's some taxpayer exposures. Quidity is not cost free, yeah, but but it is not. It's designed to be broad based enough that hopefully it won't be the government picking winners and losers. Now, well, it does sound very different in that way from the two thousand and nine federal spending that we saw. Yes, now there are two exceptions to that, one of which

is more problematic than the others. So there's seventeen billion that is carved out they say for nationally security important companies that basically everyone knows means Boeing and maybe ge and and they were pretty candid about we're just writing it to help and listen, Boeing has all sorts of problems that had nothing to do with the coronavirus, and and and and I fought hard against that, the Boeing

and G money. I argued against it. I stood up in conference and I mean blasted my colleagues, and you know what, we couldn't get get it out of the bill. And the sad thing is the Republicans wanted it in, and so did the Democrats. The second industry specific component is airlines and airlines. It's interesting, you know, the Democrats talking point, which all of them are saying, is this is all corporate welfare for Republicans. They want the big corporations.

Here's the irony, Mike. The corporate welfare increased because of the Democrats demands. So the Democrats are entirely posturing. So let's take, for example, the airline portion of it. So there was fifty eight billion, and the Republican bill that we had, actually the bipartisan bill that we had that we're going to vote on on Sunday, there was fifty eight billion for airlines, but it was all in loans. It was one hundred percent loans that they would have

to pay back. The Democrats in the last three days of their negotiations, they insisted that fifty percent of it be grants, that it be direct grants rather than loans. So the next time you see if you listen to any of the Democrats rattling on about they're the ones that fought for the grants instead of the loans. You know, you don't see that reported and much of the mainstream press, actually you don't see much of any of this that

we're talking about right now reported in the mainstream press. Senator, we're already over time, but just before we go, do you have a sort of thirty second takeaway beyond everything we've talked about for the American people while they're looking at this crisis and while they're looking at this relief package. Listen, this crisis is extraordinary. But we're going to make it through this. We're gonna make it through the public health side. And people are scared. I get it. People are frustrated

about being at home. We will make it through this, but we'll also make it through the economic challenges. I mean, people are worried. Now. You and I have never lived through a great depression. We've never seen twenty percent, thirty percent unemployment. I don't know if we will see that or not. I certainly don't want to. I hope that this emergency relief package helps. But the way we stop the economic devastation as we solve the pandemic is that

we contain it. Is that we develop effective vaccines and treatments. We need to do that, and my focus and priority is stopping this pandemic but also ensuring that we have an economy that can keep going going forward. We don't want to see every small business in America destroyed in the process of keeping us safe. So we got to do both and that they're going to be challenging days ahead. But but it's worth remembering. Listen, America is a great country,

and we're great because of the character the people. We have overcome challenges before. We've overcome world wars, We've overcome nine to eleven, and we will overcome this and that I'm inspired every day by the heroism of the American people, and that's what's going to take us beyond this challenge as well. I agree, And part of the way that we will recover is by staying healthy. And Senator, part of the way you stay healthy is by getting enough sleep.

So we've got to let you get out of here and go back home and get at least a few hours of sleep. There's so much more cover. I guess we'll just have to get to it next time. I'm Michael Knowles. This is verdict with Ted Cruz.