Tuesday, March 24, 2020


You can almost read the thought balloon: "People like money, so if I give them money they'll like me – and I'll be reelected!"  Toss in some corporate giveaways — the standard Republican solution to every problem — and you have the Administration's plan to "stimulate the economy."  Economic stimulus helps in a typical recession, but the current crisis is far from typical.  It's hard to go out and spend money when you're barricaded at home, and when the places you might spend it are closed.

Democrats, of course, have no aversion to giving away free money, but hope to put some limitation on how corporations can use essentially interest-free loans, hoping to avoid some of the abuses we saw in the 2008 economic crisis: using government funds for stock buybacks and absurd levels of executive compensation.  By the time you read this, there's likely to have been some sort of "compromise" negotiated.

The current plan to pay $1200 to 85% of the American people, and a bit less to another 5%.  The "stimulus" effect would be negligible.   To many higher earners, $1200 will be just a blip in the bank balance; and with so few places to spend it, most of the "stimulus" wouldn't make it into the broader economy until the pandemic is over.  For the unemployed, $1200 won't cover a month's rent.

Proposals coming out of the House, though, seem to recognize that what America needs now isn't stimulus, but relief — money individuals and small businesses need to survive the crisis.  Needless to say, there will be plenty of resistance to new "entitlements," but if you're going to give people money, it makes sense to give it to those who need it most.

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