March 20, 2020

Checks In The Mail

“Senate Majority Leader Mitch McConnell unveiled a sweeping economic rescue plan Thursday to pump $1,200 direct checks to taxpayers, $300 billion for small businesses to keep idled workers on payroll and $208 billion in loans to airlines and other industries.” AP News

“President Donald Trump and Treasury Secretary Steven Mnuchin on Tuesday proposed mailing out checks of up to $1,000 to American adults to quickly pump hundreds of billions of dollars into the U.S. economy.” Reuters

See past issues

From the Left

The left supports cash payments and argues that even more assistance is necessary to support households.

“One of the strangest spectacles in the economic scramble to respond to the coronavirus crisis is that Republicans seem more willing than Democrats to just give everyone straight cash aid… The fact that Pelosi had the chance to lead this charge a week ago and demurred, insisting on means testing as a condition, is blinkered and insane, on both the politics and the policy merits…

“The downside of means testing is that the ‘testing’ part takes time and bureaucracy… And in the case of the coronavirus' economic impact, the speed and scale of the policy response is everything… a much better tool for enforcing [distributional] justice is readily available: namely, progressive taxation. Government spending on welfare aid and public programs should be as simple and universal as possible — and then we can tax the rich much more heavily afterwards to flatten out the income distribution.”
Jeff Spross, The Week

It’s much more important to get the aid out quickly than it is to target it precisely. Congress needs to worry about people being unable to pay their bills, falling behind on their rent or feeling the need to keep working when they really should be self-quarantined… Besides, the government can always try to claw back some of the money after the crisis ends by making some percentage of it taxable for higher-income households.”
Jon Healey, Los Angeles Times

“Republicans would have screamed bloody murder if Obama had written $500 billion worth of checks and simply added the cost to the federal deficit, but under Trump, they’ve stopped warning about debt crises or national bankruptcy or runs on the dollar. So what’s not to like? Direct government payments are hard to steal, hard to screw up and easy to understand. Forget timely, temporary and targeted. Dumping cash on the American people is like those Xfinity ads: simple, easy, awesome… The industry lobbyists begging for bailouts argue that they need help in order to help their workers, but a more reliable way for the government to help workers is just to help the workers directly.”
Michael Grunwald, Politico

Many argue that “We need a much bigger and much better targeted fiscal stimulus… the government should pay $10,000 to every adult and child younger than 40. They are more likely to go out and spend this money, partly because Covid-19 presents much less of a health risk to them. Second, the government should pay a bonus to each person who gets tested for the coronavirus (as long as they haven’t been tested in the prior week). Finally, as was done in the Great Recession, the government should both increase and extend unemployment-insurance benefits beyond the normal 26 weeks.”
Narayana Kocherlakota, Bloomberg

Some critics, however, posit that “The main problem right now is not a shortage of cash… We need medical supplies, as everyone knows: masks, oxygen, respirators, ventilators. We need field hospitals, converting hotels and dormitories and even stadiums. We need people trained quickly to work these facilities and to be paid well for work that requires them to be on the front lines. We need to gear up factories all over the country to make the necessary goods…

“Cash grants come with two big hazards. First, they may fuel panic buying and hoarding, accelerating the rush to shortages, deepening hardship and even hunger for those who do the right thing and refuse to panic. Second, cash grants may encourage essential low-wage workers to stay home, making it difficult to keep the distribution chains working as they must. We need instead to guarantee that our critical sectors — food, fuel, medicines, household basics — all stay open, while everything inessential is closed. For this, workers in those sectors need higher wages, health protections, a guarantee that medical costs will be covered if incurred.”
James K. Galbraith, Los Angeles Times

From the Right

The right is generally supportive of helping consumers but worries about the long-term consequences from additional spending.

The right is generally supportive of helping consumers but worries about the long-term consequences from additional spending.

“Fiscal conservatives, like the Tea Partiers of the Obama presidency, would consider [cash payments] anathema in normal circumstances, but clearly these are not normal circumstances… the economic damage does not come from a structural failure of the economy itself, but necessarily dramatic government action that temporarily halts economic activity… This rescue package should focus sharply on the points of the economy where government inflicted the most damage. The highest priority has to be consumers sidelined by business closures — putting enough money in their pockets to keep them engaged in the economy.”
Edward Morrissey, The Week

“Some form of massive financial relief is in order at a moment when local authorities are forcing people out of work due to a dire public health threat. The argument for cutting a check to everyone who’s been affected is crystal clear: They need cash quickly to pay the rent… But what’s the case for shooting out thousand-dollar checks to everyone irrespective of need? Most members of the middle class (me included) who don’t need to spend that money to keep the lights on are going to pocket it, I suspect, in the very reasonable expectation that this economic pain will drag on for awhile.… it seems highly inefficient to send too much money to a huge cohort of people who don’t need it and won’t spend it while sending too little money to a huge cohort that desperately needs it and will spend it.”
Allahpundit, Hot Air

“President Trump and Congress must be strategic, targeted, and short-term in whatever measures they take. Washington and individual states alike must not establish brand-new, expansive schemes that would inevitably or likely be made permanent, such as the proposed universal basic income or an unfunded paid family leave mandate placed on small business… The United States now faces a genuine crisis. It is something everyone must take seriously. But we must also beware calls to grant more ‘temporary’ emergency powers to the president and Congress for a supposedly safer and more secure society.”
Jimmy Sengenberger, Washington Examiner

“We need to make an important distinction between spending to fight the disease COVID-19 that is spread by the coronavirus and spending on economic assistance programs. We can’t limit spending to help fight the spread of the coronavirus. This is, quite literally, a matter of life and death. I’m all for opening up the taps to fund emergency medical services, provide all the medical equipment and protective clothing needed, expand testing, develop vaccines, support our elderly, and get hospitals more beds and supplies. However, we can’t afford to write a blank check for spending on enormously costly economic assistance programs like sending thousands of dollars to every American…

“No one knows the extent of the pandemic. Will COVID-19 stay with us through the summer or follow normal flu patterns and become a much less serious problem as the weather warms? Will the pandemic then worsen again with the arrival of fall and winter? Even the experts aren’t sure. So will the $1 trillion economic assistance bill be followed by $1 trillion more in a few weeks or months? And then more and more spending, virtually without limit?”
Adam Brandon, Fox News

“John Maynard Keynes, the foremost economic father of modern liberalism, argued that governments should spend against the wind, building economic surpluses in times of growth so they could splurge during crises… But contrary to the advice of Keynes, we haven’t spent against the wind. We’ve simply spent ourselves to exhaustion, racking up $22 trillion in national debt with our annual deficit slated to cost at least $1 trillion indefinitely. After over a decade of monumental economic growth, we don’t just lack a rainy day fund to bail us out of this crisis — we already have 22 trillion tons of debt weighing us down.”
Tiana Lowe, Washington Examiner

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