The best argument for $2,000 checks for (almost) everyone is that (almost) everyone has had a terrible year

us capitol coronavirus stimulus checks
People walk past the US Capitol in Washington, DC on December 16, 2020.
  • Checks aren't the most efficient way to provide COVID relief. But they're popular, and people have valid reasons to want them.
  • It's been a tough year. Even people who are coming out ahead financially on paper have reason to feel they deserve relief, too.
  • Within the context of a fixed $900 billion for relief, checks could (and did) crowd out more urgent matters, like unemployment benefits.
  • But if we could add on another $400 billion worth of checks, why not?
  • We probably won't. But it's up to Mitch McConnell to explain why not.
  • This is an opinion column. The thoughts expressed are those of the author.
  • Visit Business Insider's homepage for more stories.

Throughout the negotiations over the recently-signed COVID relief bill, my priorities have been shaped by my view that there was a political cap on the size of the package. Keeping the package under $1 trillion was a red line for Republicans, and therefore more money for one priority was necessarily going to have to come out of some other program.

Democrats could talk all they want about how unreasonable the $1 trillion cap was - it's always more fun to talk about how unreasonable your opponents are than to make the best of the negotiating position you have - but Republicans were going to (and did) hold to it and so prioritizing within the constraints of the cap was necessary.

And my view has been - and remains - that broad-based stimulus checks are a worse way to allocate those funds than other potential programs: extensions of unemployment benefits, aid to state and local governments, and direct programs to fight virus spread, to name three. So I have been wary of the push to include and expand stimulus checks.

In fact, the mass popularity of stimulus checks is a reason I have been especially wary of the push for them. The push for checks was likely to succeed, and therefore crowd out more important spending. This actually happened; enhanced unemployment benefits were only extended for 11 weeks instead of the 16 weeks in the original bipartisan proposal.

But, as I said earlier, I can read a poll. I know that stimulus checks are popular and therefore inevitable. I also get why they are popular.

While unemployment spending is on average better targeted than stimulus checks (unemployment checks go to people facing acute financial distress, while stimulus checks go to almost everyone) there are individuals who either don't qualify for unemployment or who have trouble getting unemployment benefits from dysfunctional state unemployment systems. For some people in acute need, checks provide relief that targeted programs do not.

I do agree with Matt Yglesias that the emphasis on the shortcomings of the targeted aid has undersold the enormous good that these programs have done to keep people out of poverty. The CARES Act, Congress' $2.2 trillion March relief bill, was a huge success and should be talked about as such. Still, missing out on needed aid is a real and existing problem.

But even beyond the issue of people doing poorly who fall through the cracks, what does it mean to be "doing well" this year?

(Almost) all Americans are having a miserable 2020

The average US household has a better balance sheet now than at the start of the year, because of generous benefits from the CARES Act, less-severe-than-expected declines in labor income, low interest rates, and reduced consumption due to the lack of fun and safe things to do. But does an improved balance sheet mean that a household has had, subjectively, a good year?

Even if you've kept your job and your income, you still can't do a lot of the things you would usually enjoy with that income. Maybe you got the virus, and maybe someone you love is dead from it. Even if that's not the case, you've been living with dread of disease.

It is perfectly valid that even people who are doing better on paper than they were in January feel they've had a rough year and they deserve a chunk of the relief package, too.

And the idea that we can provide net relief to everyone is not as bizarre as it might sound. Yes, when the government sends out checks, it's borrowing money that we'll all collectively have to pay off later. But is that so bad? Especially when interest rates are very low, why not bring forward some consumption into this awful time, with an expectation that we'll save a little more in some better future years to pay it off?

We can do that. More money in Americans pockets doesn't have to be inflationary, chasing an essentially fixed volume of goods and services. We can use (and are using) added household income to buy more imported goods. Contrary to popular belief, the American fiscal response has been more generous than in most other rich countries, which is a reason the trade deficit has soared during the COVID crisis.

While residents of other countries experienced declines in household income, Americans took their last round of stimulus checks and bought Korean televisions en masse. And that's great. Why shouldn't American families have nice, new televisions when they're spending a year stuck at home?

Why not a little more?

Think of it in a non-financial way. If you let your diet go this year - putting on a few pounds with a plan to lose them when you resume your normal activity routines - that's effectively a form of borrowing: borrowing calories from future meals.

Maybe you're drinking more, too. I hope you're not overdoing it too much, but federal government has reached what I consider to be the wise decision that this is not the time to reduce the official recommendation about how much alcohol it is healthy to drink. People have enough to deal with right now. If you need to tell men to go down to one drink a day, tell them in 2022.

Mass checks that allow people to put off some tougher financial choices in the same way they're putting off their dietary and lifestyle choices are a good thing, under these challenging circumstances.

All that said, I still think stimulus checks are a worse use of any given dollar of relief spending than other programs. Everyone has reason to be mad about this year, but people who have been cooped up at home with their usual incomes have less reason to be mad than people who have been out of work for months, or people who rely on services that local governments are cutting back. And that's who I felt the relief bill should prioritize to while staying under the politically-imposed cap.

But now there is the (faint) prospect of an add-on. There is now $900 billion of diversified relief enacted. If there is the possibility of a further $400 billion that can only come in the form of broad-based stimulus checks, well, then, let the money printer go brrrrr.

To be clear, I do not think this is going to happen. While the House has passed an enhancement to the relief checks with bipartisan support, Senate Majority Leader Mitch McConnell, predictably, is indicating his intention to tie up the checks with poison pills that will make them impossible to implement before this congressional session ends on January 3. McConnell's approach is intended to allow Senate Republicans to appear to support $2,000 checks to most Americans without actually causing the checks to be issued. It is posturing.

When it looked like this posturing might derail the enactment of the rest of the relief package, I was alarmed. Now that the president has signed the package into law, whatever, it's fine. I'm not holding my breath. But if somehow they get it done, great.

But my focus is on March, when unemployment benefits will be set to expire again for many Americans. The labor market will still be severely depressed then, even with a substantial fraction of the population vaccinated. It will be necessary to negotiate another round of relief that both generates enough support to get enacted and targets benefits toward the Americans most in need. Another round of checks may be a necessary political aspect of building that package, but the top moral and economic imperatives will remain elsewhere.

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