To repeat a point I made last night: Does anyone outside the Senate GOP itself think $600 to poor people versus $1,200 to everyone else (up to $75,000 in income) is a good or fair idea? It’s terrible policy and terrible politics, especially while they’re weighing the precise number of billions to shower on airlines and maybe cruise lines.
This isn’t a farking tax rebate. We’re not returning a little prosperity dividend from the federal coffers to taxpayers, a circumstance that would justify bigger sums for people who paid more. This is money to keep your family from starving while local governments choke off every last means of earning a living. Poor people aren’t less likely to starve under those circumstances. On the contrary.
How can their political instincts be this bad?
Even apart from the coronavirus crisis, as a pure mechanism for economic stimulus it doesn’t make sense. Odds are that the poor will spend this money instead of sitting on it. (Realistically they won’t have a choice.) If you want money circulating in the economy, they’re more likely to circulate it than a higher earner who doesn’t need to make purchases immediately and might pocket the check.
Hawley knows an obvious political opportunity when he sees one.
I’ve introduced an amendment to remove the exclusions on lower-income families and individuals for direct relief pic.twitter.com/gtxAsY60UP
— Josh Hawley (@HawleyMO) March 20, 2020
Bear in mind that Goldman Sachs is projecting a 24 percent contraction in GDP in the second quarter, nearly two and a half times the biggest contraction in modern U.S. history. Next month’s unemployment numbers will shatter the current record several times over. The UK announced today that it would pay 80 percent of wages for workers, up to roughly $3,000 per month, if their employers will keep them on the payroll in the name of job continuity. Everyone from progressives to Steve Mnuchin thinks the Senate GOP proposal is too meager.
So why did they even offer it? Without support from the White House for the plan, McConnell has little leverage with which to drive a hard bargain with Pelosi once she inevitably proposes a more robust stimulus. They’re going to end up being attacked for not caring about the poor and get nothing meaningful for it in return. And they’ll deserve that.
Do they not grasp the situation here, asks Ramesh Ponnuru?
We should not be worrying about preserving the incentive to work; in a lot of cases, we have sought to keep people from working for public-health reasons. Nor should the current goal be reducing tax burdens that we think are too onerous. It’s offering relief for hardship, some of it caused by a virus and some of it caused by the government’s justified response to that virus — and very little of it the fault of the tax code…
Varying the rebate by income makes even less sense because of our time constraints…The reason the Senate Republicans are using income from two years ago to determine the size of the rebate is that it’s the most recent information that the Internal Revenue Service has, and they want to get the money moving before it has the 2019 tax returns, let alone the 2020 ones. The price of opting rightly for speed and wrongly for an income-based rebate is that even more Americans won’t get the needed help. According to one estimate, roughly 10% of households go through a 50% plunge in income over two years. A lot of people who were doing well in 2018 might not be today.
I still like the idea of phasing out the check at the top of the income scale and fattening it up at the bottom, partly because it’s a more effective stimulus and partly because the people at the bottom need it more. But the argument that we just don’t have time to mess around with fine-tuned calculations is getting stronger. Bloomberg reported today that it could take at least a month for the IRS to get all of this money out the door because “there isn’t a centralized, up-to-date list of every household, number of children, income and address or direct deposit bank information.” The last time Treasury cut checks to people, it took two months to work out the logistics; Americans will have rent to pay 11 days from now. How does that problem get solved? Maybe some arrangement in which everyone who has an account at a bank somewhere immediately has $1,000 added to it, with the feds to reimburse the banks later? Is that even feasible?
Just push the money out the door. The near-term future of this country will be defined by death, the medium term by exploding social pathologies caused by economic decline, and the long term by a grueling fiscal crisis driven by accumulating too much debt for too long. The future’s going to be horrendous on every level. Might as well get people a little cash to prepare.
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