President Donald Trump’s call to raise the $600 payments included in the recent COVID relief plan to $2,000 gave Democrats the opportunity to deliver extra help to the economy while embarrassing the opposition. Their House majority, with support from 44 Republicans, quickly passed a measure to deliver the additional payments. The Republican-controlled Senate then blocked it. With crucial votes in Georgia’s Senate runoff looming, Republicans are at odds with each other and with their president, and obstructing a popular proposal to boot.
The only problem is that, as Democrats ought to realize, there are far better ways of spending those funds. Tempting as it might be to press their political advantage, they should pause and ask how best to help those in need.
When the first big COVID relief plan — the CARES Act — was enacted in March, there was a good case for including generous and near-universal per-person payments. These could be delivered faster than more carefully targeted supports, at a time when concerns were high that demand in the economy might slump. That’s no longer the situation. In the aggregate, household incomes and savings aren’t under pressure. If anything, as former Treasury Secretary Lawrence Summers points out, it’s the opposite. For the great majority, the constraint on spending is the pandemic’s narrowing of opportunities, not financial stress.
Despite all the strains of the pandemic, most Americans still have their jobs. Most aren’t falling behind on rent or mortgage payments. Extra cash is always welcome, but most Americans don’t need emergency financial aid. Yet many households are under severe financial strain and desperately need more support. For them, an additional one-time payment of $1,400 isn’t the right kind of help.
The recent COVID relief plan was indeed too small. Democrats insisted on this throughout and they were right — but not because the plans under discussion skimped on the checks. The recent package should’ve included far more targeted relief for the neediest. Additional unemployment insurance should be put in place for the duration of the emergency. Support for renters facing eviction should be extended and improved. Subsidies for essential low-income workers who’ve put themselves at risk make sense. And state and local governments should be a priority. They’re having to deal with surging costs and diminished revenue — pressures that risk spilling over to teachers, health care staff and other workers, while undermining vital public services.
With interest rates close to zero, this is no time to be obsessed by fiscal rectitude — but spending almost half a trillion dollars on a relatively ineffective near-universal benefit isn’t costless or even, as its more reluctant supporters might argue, better than nothing. By significantly expanding public borrowing, it will narrow the scope for the additional well-targeted help that so many people still need.
A new administration is poised to take office, presenting an opportunity to think again. President-elect Joe Biden and his team have rightly argued for additional fiscal support. They should make the case for a plan that’s smart and responsible. Giving $2,000 to most Americans whether they need it or not is neither.
— Bloomberg Opinion