My favorite part in reading up on this was finding some math-challenged lefties scolding Kamala Harris for the supposed stinginess of her own plan relative to Mitt’s. Romney the Republican wants to give everyone $1,000, as happened during the 2008 recession. Harris the Democrat only wants to give them $500!
We cannot ignore the strain that emergency situations like the coronavirus pandemic put on many families who are already living paycheck to paycheck.
I introduced the LIFT Act to give working families up to $500 a month. We need it now more than ever.
— Kamala Harris (@SenKamalaHarris) March 17, 2020
The key phrase there is “a month.” Romney’s proposal calls for a one-time cash payment of $1,000. Harris wants to make the payments recurring. Oops.
Anyway, whether or not it’s a gross affront to conservative orthodoxy for the government to be handing out checks to people, 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 and a payroll tax holiday, which would be highly regressive in its effects, won’t help much if you’re no longer on someone’s payroll. The situation is already very bad:
Portman said he received new data on Ohio’s unemployment claims today: 45,000 claims this week compared to 6,500 last week.
— Liz Skalka (@lizskalka) March 17, 2020
A new NPR national poll finds that 18 percent(!) of Americans say that either they or someone in their household has already lost a job due to the coronavirus shutdown. The case for immediate financial assistance is plain, as are the economic benefits of having more money suddenly in the hands of consumers.
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’s cash for a rainy day, knowing there’ll be many rainy days ahead. It’s not like businesses are open for us to spend it even if we wanted to. So the stimulus effects from the payment may be blunted. Meanwhile, while $1,000 is better than nothing, it’s clearly not full monthly income replacement for most people who’ve been laid off. Right, right, it’s not supposed to be — they can also apply for unemployment benefits. But 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.
Of course, there are ways around that:
I think a good way to deal with “not everybody needs a check” is to send everybody a check and have a high-profile campaign urging people who really don’t need the money to give it away to those who do.
— Josh Barro (@jbarro) March 17, 2020
Other plans circulating in Congress call for means-testing the beneficiaries:
Among Democrats, Sens. Cory Booker of New Jersey, Michael Bennet of Colorado and Sherrod Brown of Ohio are proposing sending $2,000 to every adult and child below a set income, with future payments in July and then quarterly until unemployment levels drop.
Last week, Reps. Ro Khanna (D., Calif.) and Tim Ryan (D., Ohio) proposed sending a check between $1,000 and $6,000 to every American who earned less than $65,000 last year.
Josh Hawley proposed a “refundable monthly benefit” based on a sliding scale, from $1,446 for a family of three to $2,206 for a family of five. Is there some comparative virtue to a flat $1,000 payment to every adult that I’m missing? A logistical thing, maybe? If all you want to do is get cash out the door ASAP, doubtless it’d be simpler to cut every taxpayer a check for the same amount than it would be to have to calibrate amounts to each individual’s AGI last year or whatever. One of Obama’s top economic advisors, Jason Furman, endorsed the “$1,000 for everyone” idea in an op-ed 12 days ago, with the caveat that parents should get an additional $500 per child. And Furman wants the payments to continue so long as the unemployment rate is 5.5 percent or higher, which seems like a cinch. This will be a very costly intervention, especially if it drags on.
Good thing we weren’t carrying much debt until now, huh?
The coming (deep) recession makes it unconscionable that Washington had been running nearly-$1 trillion deficits during a long run of prosperity. The tax cuts & higher spending caps should have been paid for, & soaring health care spending should’ve been reformed. Total failure. pic.twitter.com/AQQprspODc
— Brian Riedl (@Brian_Riedl) March 15, 2020
Here’s Tucker Carlson critiquing Romney’s idea last night as well-meaning but foolish in that it risks encouraging people to avoid work. Better that we follow the German example, he says, by encouraging employers to offer workers reduced hours instead of laying them off and then compensating workers for those hours they’re no longer working. That would spare employees from being severed from their current places of business, which means they’d be in place to resume normal operations once business resumes. But how are businesses supposed to compensate them for the limited reduced hours they’re working if they’re not actually working? If the business is shuttered for health reasons, or if it’s open but drawing no customers due to fear of confined space, those hours may need to be reduced down to virtually nothing. It might not be in the employer’s interest to keep the place open and try to make rent, let alone keep people on the payroll part-time. What do you do in that situation?