The global economy is being hammered by the effects of widespread illness and business closures due to the COVID-19 pandemic. Congress has put together the largest financial relief package in history. Will it be enough to blunt the economic decline in the U.S? And what will it mean for Alaska’s economy and workers? We’ll discuss the $2 trillion CARES Act on the next Talk of Alaska.
HOST: Lori Townsend
GUESTS:
- U.S. Senator Dan Sullivan
- U.S. Senator Lisa Murkowski
TRANSCRIPT:
Lori Townsend: First, I would like to get your overall thoughts on where we are as a nation in response to this pandemic. Where do you see we are having success? And where are the biggest current pinch points and concerns from your perspective?
Sen. Lisa Murkowski: I will start by by beginning at the first of the month, if I may, because I think it’s important for Alaskans to recognize that while we’re talking about the CARES package right now, which is really designed for for economic relief on so many levels, it was it was less than a month ago, it was March 5, that we passed phase one, and this was different direct assistance from the CDC to states and local governments. There were HHS grants out to local health care providers. There was a waiver to the Medicare rules to allow for reimbursement for things like telehealth, $4.9 million to the state of Alaska. In fact, many of those grants from HHS that I mentioned are already out on the ground to local health care providers. Everyone from the Girdwood Health Clinic to the YKHC to Aleutian-Pribilof that is in play.
Phase two was with just a couple weeks ago, the focus on paid leave, the unemployment, the waivers so food benefits can be provided, requiring health plans to cover testing and supporting the state Medicaid system. So we have put that in place and then CARES comes along was passed, President signed into law last Friday. So where are we seeing some successes? I would suggest to you that the early action focused on making sure that we are getting resources to the CDC to focus on the vaccination. The cure for the disease, ultimately, we know is a year away, but making sure that we get funding out there quickly, funding directed towards various treatments. I think that early support to the CDC was very important. We know that we have not found the vaccine yet, but we needed to put early money out there quickly.
I think the failures — and I should not use the term failure — the challenge we’re facing right now as a state, as is every state out there, is the adequacy of supply. And I think we have all realized across the country that we were simply not ready for a pandemic of this nature when it comes to necessary materials, everything is basic as gowns and masks to ventilators. So getting early money out there was important and I think it’s important for people to realize that it’s been now close to a month, but between the first three phases here there has been a very, very broad effort to address not only individuals, businesses, small and large, tribes, states. It is a coverage that is very, very broad.
Sen. Dan Sullivan: You know, obviously, we have some very challenging times here. Our prayers and thoughts are going out to everybody, particularly who’s suffering from a health perspective. We’ve already lost Alaskans, but also people who are suffering on the economic side with jobs, a lot job losses, and the uncertainty that we have right now. I think there’s no doubt we’re going to get through this. We’ll get through this stronger, more resilient. I think a couple areas that are positive. Certainly, really remarkable how everybody, not just in Alaska, but in America, is sacrificing for each other. You just see it on a daily basis in our state. And [in the] senate, have you have a perspective of what’s happening sometimes in other states; It’s just remarkable. And I think it gives people a deep sense that we’re all in this together, we’re going to sacrifice together. Recently, there was a Washington Post article saying, well, maybe Americans don’t have the metal or the resiliency to get through this crisis like they have before in World War Two or the Civil War. And my reaction to that is, of course we do. Maybe those reporters need to get to Alaska and see what’s happening there.
The other thing I think that’s going well is we’re working day and night with the governor and his team and other community leaders. I just got off a conference call with the Fairbanks Chamber [of Commerce]. And, you know, it’s a we’re all in it together moment, what we call in the Marine Corps ‘one team, one fight.’ And I think you’re seeing that in our state. So I think that that’s important. Senator Murkowski mentioned the supplies, and I think it’s an area where every state is struggling. This CARES Act does try to address that, but that’s obviously been a shortfall that we’re trying to overcome right now. Not just in Alaska, but nationally.
I know we’re going to talk about it, but the legislation — Senator Murkowski mentioned the first two pieces of legislation, and then this CARES Act that we put together. The whole point was really focusing on four areas: putting cash directly in the hands of families. That’s going to be happening soon; delivering rapid relief to small businesses, particularly if they can keep their workers, and that’s going to be happening as we speak; stabilizing broader sectors of the economy from experiencing massive layoffs that are having a really difficult time like the airlines; and then a surge of new resources to medical professionals, hospitals, community hospitals, the states, tribes, all of whom are on the frontlines. So that was the goal of this CARES Act. It passed 96-0 in the Senate; that doesn’t happen very often. Now we have to make sure it’s implemented. That’s a big part of what we’re trying to do with all these calls and even the ability to on Talk of Alaska today.
LT: The New York Times reports that the White House is expected to release models today predicting the spread of the virus. Have you been briefed on some of these models that paint a pretty grim picture saying as many as 100,000 Americans could die if containment measures fail? What kind of information are you getting in the lead up to the release of these things? Or are you finding out about them along with the rest of the public when these things are being released? How is that being messaged to lawmakers before it goes out to the public?
LM: Lori, we are scheduled to have a teleconference, I believe it’s Thursday morning, with Dr. [Anthony] Fauci. And, Dan, do you recall who else is leading that?
DS: I think it might be Dr. [Deborah] Birx as well.
LM: Maybe it’s the two of them. I don’t know whether the vice president will also be on the call. But that will be an opportunity for us to get the latest information before we departed last Wednesday when we had the vote on [the] CARES Act. Most [lawmakers] left to go back to their states; Dan and I are on this end of the line. But we were receiving multiple briefs maybe three times a week from the health professionals and from the task force team. This would be the first briefing that we have had since folks departed, and I believe that that is Thursday. But, but again, much of this is us reaching out individually asking questions. So the opportunity for a more comprehensive brief is certainly welcome.
LT: Have you seen these models that I mentioned?
LM: I have not seen the models. I read the reporting on them this morning.
LT: NPR is reporting that the CDC may be changing their guidance on masks, that Director Robert Redfield says masks may be effective to stop the spread from people who show no symptoms but have the disease. Have you seen new guidance on this or been briefed?
LM: I have not seen the guidance, but what I have read on this as early as this morning is that there’s discussion about the advisability of masks. What has been made clear is that those that kind of make the do-it-yourself mask out of cotton or the like, that these are not a substitute for what our medical professionals require. There’s a distinction there. So I have not seen any guidance as of yet.
DS: The other important factor to consider, you may have seen a tweet, I think it was just last week or two weeks ago from the Surgeon General, essentially saying that we need to be careful and cognizant that the priority is for the masks to go to the frontline health care workers. We don’t want to create a situation where everybody starts to believe they need a mask, and the people who actually really need them are not getting them. So I think until there’s definitive guidance — I actually read the article you’re talking about — I think we need to go with what Surgeon General was advising, which is make sure the masks get to the people on the frontlines who need them the most.
LT: Within the CARES Act, describe what benefits beyond a $1,200 payment there will be for individuals. Will there be health care related funds for people? Or will that just be hospitals? What specifics are there for citizens themselves?
DS: You mentioned that payment to the individual families and/or individuals; that’s going to be $2,400 per couple and then $500 per child. Of course, that’ll be according to certain income levels, but the estimates are about 90% of Americans will get some form of relief. Really, the heart, the soul of this bill is a $350 billion program that’s backstopping the small businesses in Alaska and throughout the country. The idea actually on a lot of the economic elements of this is to try to keep the connection between employers and their employees.
For example, on this program called the Paycheck Protection Program, if a small business — and that’s defined pretty broadly up to 500 employees. And in certain sectors like the airline sector, the oil and gas sector, in the mining sector, it’s actually over 1000 employees — If a small business takes out a loan, and these are loans from local lenders in Alaska, SBA approved lenders in our state and we’ve already briefed a lot of our financial institutions, and they take out a loan. And if they use that loan in the first eight weeks of when they originate the loan primarily for payroll, keeping people on the payroll for other things like mortgage utilities paying healthcare premiums, then the federal government will turn that federally guaranteed loan from a loan into essentially a grant. So the whole purpose here is to get these loans out through existing local lender channels, hopefully as early as this week, and if they’re used in that way, it’ll help keep our small businesses afloat during these very challenging times, but also help keep them connected to their employees where they are continuing to pay their employees.
Now this CARES Act has a huge plus up in unemployment insurance that will be paid out through the state, about a quarter of a trillion dollars to the unemployment insurance programs. But Congress thought the preference should be keeping employees paid by their employers that way when we finally and hopefully soon get out of this health crisis, our economy, our workers, our small businesses will be ready to really take off and quickly ramp up again. We defined what a small business is very broadly, it’s down to independent contractors, it’s fishermen, its sole proprietorships. So everybody can take care of this element of the CARES Act.
LM: Dan did a good job with the impact on the small businesses and where they can find relief. For individuals that are students that are facing student loan debt payment, they can have student loans deferred — that’s including the principal and the interest — for six months. Which is significant for so many of our young people. We’ve supercharged unemployment insurance, adding $600 to the weekly compensation benefits that the state already provides, and this is for a period of up to four months. Included with that is the provision that those who might not be eligible under state law for unemployment insurance, like self employed individuals, independent contractors, those that are part of the gig economy, or those who are sick or caring for a family member, are eligible for these enhanced UI unemployment benefits.
Oftentimes, we don’t think about the big benefit that may come through individual tax provisions. But for those who are on retirement income, seniors, the CARES Act provides relief for individuals by waiving minimum distribution rules for retirement accounts; it waives early penalty for distribution. So measures like that, when you don’t think about them from a monetary perspective, actually can have significant benefits, depending on what your status is as a senior or as a student. Fisheries assistance for those who have been impacted, the market has been impacted because of coronaviru, so there’s direct assistance available to not only fishing communities but to tribes, to charter operations, to aquaculture businesses. So that is an avenue of relief.
There is significant funding that will be coming to the state, a minimum of $125 billion will come to Alaska under the state stabilization fund. That will be an opportunity for those, whether it’s school districts or municipalities, to gain some relief to offset coronavirus costs. Education support funds, tribal programs, $8 billion set aside for tribes with everything from food distribution, to telehealth, to mental health services. And then additional benefits for instance to firefighters, first responders who are really out there on the frontlines as well.
You asked the question about whether or not there is money specific for health care for an individual, and I’m assuming that you are meaning if somebody has to go to a hospital for care, will that be covered under the CARES Act? What we did do, as you know, is we provided for free testing for anyone regardless of insurance, but CARES does not directly address the cost to an individual if you are hospitalized. I mentioned the phase two which provides for medical and family sick leaves, that may help to offset expenses that may or may be attributable to exposure to the virus
LT: Do you think that in a future relief package there might be something that addresses that very aspect, that if people are overburdened, they don’t have a job and then they have these huge medical expenses, do you anticipate that Congress may have to take up something that addresses just that?
LM: It may very well be that that is where we are in a fourth package. I think we can see very clearly not only the economic devastation, but when you are hospitalized for a period of time, you may have limited insurance coverage, but you’ve got some. But now as a small businessman, you’ve either lost your business or you’ve lost so much in revenue… you can see how this snowballs together to be a recipe for disaster. And so how we can be, again, be sensitive to not only a health crisis, but an economic disaster coming at the same time.
I just want to add one of the things that I think we’re going to have to focus on in this next phase is support for mental health, behavioral health. We know that following a disaster, that oftentimes it is not just devastation that’s left by a hurricane or a flood or an earthquake: It is the mental stress. And I think we’re going to see this, we’re seeing it play out with domestic violence reports. We know from past history that we need to worry about increased suicide rates. This is something that we must focus on and factor in.
LT: Let’s go to the phones quickly. Laurie Wolf, the president of Foraker Group is on the line. Hello.
CALLER: Hello, thank you, Senator Murkowski and Senator Sullivan for specifically ensuring that nonprofits and tribes are included in the recently passed relief packages. I just want to note this is no small thing. And as you know, Health and Human Services, as you just mentioned, our providers are struggling to adapt their services to meet the increasing demands. I’m wondering if you could specifically address the concerns of the nonprofit community by distinguishing how they will be treated in the SBA loan program, the 7A program as well as note changes in charitable deduction contributions in the relief packages.
DS: One of the things that we work to ensure through your advocacy and other nonprofits in Alaska is that we wanted to make sure that that small business program I just talked about would include nonprofits, and it does so with certain nonprofits. There’s definitions with less than 500 employees, which would cover the vast majority and Alaska, they would be covered in the same way that a small business would be for that long program, including the loan forgiveness element if you use most of the loan to maintain your payroll. That was an important element of that; typically, nonprofits are not included in SBA lending.
And then we also worked to ensure the large unemployment insurance package that Senator Murkowski described would include eligible participants from the nonprofit sector if they lost their job. So those are two kind of non traditional approaches to help make sure our nonprofit sector was not just taken care of from an employment perspective, but given what we’re going to see, some of the societal stresses that Senator Murkowski mentioned, the mission of nonprofits in Alaska is going to be more important than ever. So we want to make sure you guys are up and running to help us all get through this. There were elements, and I can give you more specifics that were also included in this legislation, to encourage continued charitable giving to nonprofits with regard to standard deductions and itemized deductions with regard to charitable organizations, that help encourage increased the charitable giving, even though we’re obviously facing some strong economic headwinds right now,
LT: I want to get to some email questions. We have a question from John, who says he just graduated from UAF. He lives by himself in Anchorage, the job he was supposed to get to support himself was postponed to an unknown later date and now he’s unemployed. He asks, how are you going to address the problem of millions of college students and recent college graduates, both here in Alaska and the rest of the United States, who are excluded from receiving help from the new stimulus bill so we’re not left behind during these troubling times?
LM: I actually got that same email from John. He asked a good question, a fair question. The direct payments are available to him as long as he’s not dependent on, say for instance, his parents’ taxes. The deferrals on loans I think are substantive if he has loans. I received another email, also this morning from someone who is a student, who is a minor and is a dependent on his parents’ taxes. He was saying that he was not eligible for anything and he had lost his work study funding. I think it is important to recognize that the CARES Act does allow for universities to continue to pay those students that were on work study. Even while they are not working. So that is an avenue if you’re on a work study. So for those who are kind of caught in between as the student is, and John is, it’s a limited benefit unless he wants to apply for unemployment.
DS: In John’s case, we would need to take a harder look at that. But as Senator Murkowski just mentioned, the unemployment benefits that are in the CARES Act does try to be much broader than what is typically allowed on unemployment, especially those with limited work history, self employed independent contractors, fishermen. So it would depend on the specific circumstances. If there’s no work history, I think that’s more difficult than those with limited work history, who might not normally qualify for unemployment, would under this expanded program.
LT: Let’s go back to the phones for a moment. Evan is in Kwethluk. Hello, Evan.
CALLER: The tribes and villages are on lockdown. And the concern is that they’re the initial stage of trying to get the COVID-19 monies to communities is on the stipulation that says that there needs to be a working agreement between the tribe and FEMA. Right now, it seems impossible to be able to fulfill that because of all the restrictions, and is there a way for conferencing agreements to be set so that requirement can be met?
DS: One of the things that we have been doing back here is making sure A) that federal officials, literally everybody from the President and Vice President, all the way down to people throughout the federal government, are aware of the history of pandemics and viruses that have been through rural Alaska. And that, to be honest, can be quite frightening, given the history, whether it’s the Spanish flu or other aspects that have really hit our rural communities hard. My wife’s family was actually impacted by some of these, personally, and so it’s something that we have raised. But more importantly, I think we’ve advocated very strongly to make sure that tribes are not left out of this CARES package. Senator Murkowski and I worked with others to make sure there was actually an $8 billion tribal [payment] set aside that directly relates to some of these challenges. And that’s in addition to over a billion with CDC that tribes get, BIA in this package had almost a half billion.
So there’s a lot of resources. The key issue you are indicating is how do you get those resources quickly out to our rural communities. We actually had two different conference calls yesterday with the Assistant Secretary of Interior for Indian Affairs, Tara Sweeney, who is in many ways going to be in charge of a lot of this. And the key from my perspective is making sure Tara’s aware — which she is, she’s an Alaskan Native — very strong leader, but is very, very particularly focused on Alaska in addition to lower 48 tribes. And then coordinating that closely with the governor and his team. And, again, we had some calls as recently as yesterday, to make sure that the resources, which are coming and they’re significant, don’t get blocked, don’t get misappropriated, to get out to the community. So we’re aware of it and you’re raising a really important point, particularly the tribal relationship with FEMA, which is one that you raise and we discussed yesterday.
LT: I want to get to a question about the money coming to the state that came in from one of our state lawmakers. Natasha von Imhoff wrote in a question in regards to the 1.2 billion in cash coming into the state from the federal stimulus money. Is the governor the only person in charge of how that’s spent? She’s asking can he spend it all on a permanent fund dividend if he so chooses, and in the process leave businesses and affected industries high and dry?
LM: The conditions with regards to the state stabilization funds, the $1.25 million at a minimum that we know is coming, are that they be used for coronavirus related purposes. So, these must be funds that will be accountable to the Treasury. So, if the state of Alaska chooses to use those funds for things that are other than coronavirus related, they will owe those amounts back. There will be guidelines based on how it will be spent. And it’s also important to note that the expenditures can’t be for things that were already previously budgeted prior to COVID-19.
DS: Senator Murkowski mentioned there is this minimum payment. And I was another one that we were working on to make sure that states like ours, big states with small populations weren’t just given crumbs. And so the $1.25 billion as a minimum is just one element of what would be coming to the state. We’ve been trying to break down other aspects of the bill, but it’s going to be significantly more in different streams from the CARES Act. As I mentioned, $8 billion for tribes, hundreds of millions for telehealth, the surge with regard to hospitals and community health centers and medical professional staff is $150 billion. The FMAP increase that was just in the phase two bill, that was a 6% federal match on Medicaid, which doesn’t sound like a lot, but just for our state in 2020, that’ll be about $61 million. So there’s a very significant amount of funds coming from the federal government in different streams, in addition to the one that Natasha highlighted.
LT: We are gonna go back to the phones for just a moment. Mike is in Palmer. Hi, Mike.
CALLER: My name is Mike Coons, I’m the president of Matsu chapter of AMC Action and I’m asking this for my for my membership. Gilead just got the okay for remdesivir to be used as an antiviral. Of course we had the hydroxychloroquine that was just released by the FDA for testing nationwide. I got two questions: this one is Alaska going to get these drugs so we can actually use these antivirals at an early stage of person showing symptoms, or are we going to be behind the power curve with all the rest of the lower 48? And the second question, are we going to be getting the latest, greatest in testing, including the latest from Abbott Labs here quickly, so that we that those that have the symptoms can get tested immediately, and then get on the antivirals or whatever treatment is going to be needed to take care of them before they end up in an ICU bed.
LT: Senators, do you feel like this is a question you can answer or is this more of a CDC type question?
LM: Well, I think that it is important that we look very critically at what the CDC is saying in terms of those, whether it’s antivirals or testing kits. At the discussion at the governor’s press conference last night, our state’s Chief Medical Adviser Dr. Zink gave the warning when she was talking about the rapid testing kits that there are some kits, some tests out there that have not yet been FDA approved. So she said, you know, be careful about what it is that we’re moving towards. When it comes to the FDA approved rapid kits through this Abbott Lab and the test there, it’s my understanding that there is an effort to work with the delegation, get it out quickly. I’m told that there are a couple hospitals in the state that have Abbott machines. And so the ability to move quickly to those locations where they can do the tests rapidly is an advantage. So it is moving quickly. And I think there is a real interest in ensuring that we can have a much more rapid turnaround on the testing. But again, we want to make sure that the tests will be able to be accurate predictors. As Dr. Zink mentioned, there are different sensitivities within the test. So, I think it is important that we follow good guidance, and whether it’s from the CDC or what Dr. Zink and her team are sharing with us in terms of accurate information.
DS: I mentioned at the outset, kind of one team, one fight with the state. The Governor, Dr. Zink, and the congressional delegation, we’re all kind of working these on different avenues. The lack of testing or rapid testing has been something that’s hitting every state. But we did have some good news: Dr. Zink announced yesterday 60 new ventilators arrived in the state. So that’s critical equipment in the event we need it that’s making its way to our state. We’ll continue to work on that. One element, though, that I think provides a lot of hope to people is in that CARES package there was $11 billion set aside for what some of us were referring to as a “Manhattan Project” focused on vaccines and antivirals that go to some of your insightful comments at the beginning about how we can do that quickly. And we’re putting our best minds to it — whether they be in the military, NIH, private industry or research universities — on these issues. We have the best scientists, and we’re going to make some breakthroughs here. I have no doubt about it.
LT: I’ve had a few questions about people who own rental properties. Here’s one from Kelsey saying, “My wife and I own a fourplex. We have no employees, we run it ourselves. We want to be generous to our tenants because everyone is suffering and losing income. Right now we’re not sure who is going to be able to pay rent going forward. How can we utilize the small business relief to help us avoid evictions and foreclosures?” This mirrors some other questions, similar questions that have come in about this level of business. Will they be able to access funds to help in this respect?
LM: They’re self employed businessmen, they’re sole proprietors. Because they don’t have any employees to speak, when you think about the forgiveness provisions of the small business, the paycheck protection that’s designed to keep, as Senator Sullivan has said, keep the employees connected to the businesses. But I think one of the reasons that we have provided for these expansions is to make sure that those who are self employed are not left without some form of assistance.
LT: And would this apply to another question from someone named Laura who says she has a very small business, makes under $30,000 a year. She sets up at gun shows and holiday festivals. All that’s been shut down, and she wants to know, is there any sort of relief for a business such as hers that is that small or some kind of assistance through unemployment.
DS: The answer from my perspective is yes on both of the questions. As I mentioned at the outset, we tried to define both the parameters of the paycheck protection program as broadly but also narrowly, meaning sole proprietorships, independent contractors, individual fishermen, as narrowly as possible so everybody could be covered. And similarly, with regard to unemployment insurance, we tried to make that expansive beyond the traditional levels defined in the state. But there’s gonna be bumps in the road, there’s no doubt, in terms of executing this, so I certainly want to leave it out — and I know Senator Murkowski is of the same mindset — to anyone who has those kind of questions or is not getting the relief they need as we’re setting this up, please, please reach out to our office, my office and [Sen. Murkowski’s] office. We’re here to help run the traps for everybody who has problems on these issues. That’s a big part of our job.
LT: Now we know that we’re shut down as a nation through April, this may go on much longer. It may be necessary to come back for other relief packages, you’ve already mentioned that that’s a very real possibility. What are your concerns about how this will all be paid for in the future when things start coming back. There was a corporate tax cut in 2017. Do you think some of that set to sunset and in 2025, do you think that’s going to have to be re-examined and that taxes are going to have to be imposed so that when the economy comes back, we can pay for these huge expenses that we’re having right now?
LM: You know, I think right now, Lori, we are so focused on the immediacy of the crisis, the fact that this is a health crisis as well as an economic crisis that continues to unfold every day. So I think right now, the focus is on how can we stop the spread? How can we develop the vaccine? How can we address the economic impact that comes when a government legitimately closes down, shuts down commerce in our state and around the country in an effort to check this virus. And so the focus now is on those priorities. We’ve acknowledged that a $2 trillion plus package was significant and extraordinary. But I think we all recognize that this crisis demands a big, very strong, very direct attack. And that costs money. We will have opportunity when we get on the other side of this to again, assess where we are, assess how we move forward, and consider the many alternatives or options that we may have. But I think right now, we’re focused on the immediacy of the crisis.
DS: The $2 trillion number has been put out there. A lot of that will be loans that we anticipate will be paid back by the companies that get it, particularly the bigger companies as has happened previously. And you know, it’s a good question. If you look at World War II, that debt as a percentage of our GDP was much higher. I think, as Senator Murkowski mentioned, we’re in an unprecedented moment in US history where we do need to put as many resources into that. But already, there’s been ideas, for example, in the next piece of legislation that we might be looking at, do something similar that we had during that time of national emergency, like war bonds or something along the lines of, you know, bringing our citizens into the whole national effort as was done during World War II, which I think is an idea that some of us think could have some merit.
LT: All right, thank you so much, Senator Lisa Murkowski and Senator Dan Sullivan for joining us today.
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