The federal government has already borrowed at least $3 trillion for economic assistance during the coronavirus pandemic.
With infections continuing to rise in many states, a second round of aid of at least $1 trillion appears likely. Since this package, like the first one, will be paid for with borrowed money that adds to the federal debt, it’s worth looking at the details since the government already is in uncharted fiscal territory.
Of primary importance is the continuance of federal unemployment aid, which are schedule to expire on Friday. The first relief bill approved by Congress provided $600 per week to the unemployed on top of the state jobless benefits to which laid-off workers already were receiving.
Republicans in Washington want to reduce the federal unemployment contribution to as low as $200, with an ultimate goal of state and federal payments providing 70 percent of what a jobless worker earned previously.
Democrats have proposed extending the $600 per week to January, and most certainly want a much higher number than do Republicans. The answer is somewhere in the middle. Republicans are right when they say that $600 on top of the state assistance encourages too many people not to bother looking for a job. This must be balanced with the knowledge that the economy cannot truly restart until the virus subsides.
A second round of $1,200 stimulus payments to individuals also is being discussed in Congress. If that occurs, the feds must be aware that there were a number of serious glitches in the delivery of the first round of assistance.
The Washington Post also reported that some people still haven’t received a check from the IRS, a direct deposit into their bank account or a debit card with their money on it. This assistance is useless if it’s not getting to the people who need it.
The current legislation also includes money to help schools get their classrooms open and at least $100 billion for the Paycheck Protection Program. The PPP helped a lot of businesses weather a sharp downturn in revenue, but it has become evident that the assistance did not get to many smaller businesses that badly needed it.
A second round of this aid should be focused on helping these companies first.
Other elements of the bill include money to expand coronavirus testing and tracing the source of infections. This is a worthwhile expense, as at many medical offices, it now takes several days to get results. The bill also is likely to include tax credits to encourage businesses to hire employees, and — strangest of all — increased business deductions for meals and entertainment, even though both activities are restricted in many parts of the country.
Given the way the economy has been pummelled, it’s hard to criticize much in this second relief package. The better goal should be to do it properly: Make unemployment assistance fair, get stimulus checks to individuals promptly, and use the PPP to help deserving businesses. Otherwise this is a waste of time and money.