Handouts give too much
The $2.2 trillion stimulus package just enacted to soften the huge economic blow to the United States from the coronavirus has no precedent as far as magnitude.
But the principle echoes that which justified the stimulus plans used to shorten the Great Recession a decade earlier. When a gargantuan economic calamity is in the making, throw as much government money onto it as fast as possible. When things are going good, Americans want the government out of their lives, so they can keep their earnings rather than pay high taxes. But when the economy starts to tank, they want Uncle Sam to bail them out. Such is life.
When such sums and such haste are in play, though, there are going to be mistakes. One of them with the coronavirus stimulus is giving nearly every adult American a $1,200 handout. The money should have been reserved for those whose financial livelihood is being truly impacted by the extreme measures the nation has taken to curb the spread of the virus.
For people who have kept their jobs or haven’t had their hours cut, the economic problem is not that they don’t have money to spend. It’s that, with so much of the retail economy forced into temporary closure, there aren’t many places to spend it.
Still, the financial bailout is needed to give Americans some confidence that they can make it through the burden imposed by the coronavirus restrictions. But it’s not going to last if the social isolation restrictions continue for several months. At that point the U.S. will have two options: Continue to give handouts to residents and businesses (at the expense of the national debt) or try a different strategy.
It might be worth taking the approach of testing like crazy and then only isolating those who have the virus, while also putting a full court press on tracking their movements. U.S. testing capacity is rapidly increasing, giving hope that this strategy can be implemented.