The coronavirus relief package should work -- for now

“I am incredibly impressed by how quickly it was done, how large it is, and how comprehensive it is,” said Jason Furman, a professor at the Harvard Kennedy School and the former chairman of President Obama’s Council of Economic Advisors.

I have been baffled by complaints from the left that this bill reflects small-think. The interventions here are really large. The unemployment insurance expansion makes payments larger by $600 per week for four months, which means in most states, jobless workers will be made whole up to the equivalent of $50,000 or more of annualized salary. The bill also makes unemployment benefits much more widely available, including to self-employed people and to people who weren’t laid off but were compelled to quit their jobs due to the crisis. It provides one-time payments of $1,200 to most American adults, even if they are keeping their jobs or weren’t working to begin with, plus $500 for their children. It provides hundreds of billions of dollars in financing to help the Federal Reserve expand its lending activities that aim to keep large companies liquid and able to preserve their operations. It authorizes more hundreds of billions of dollars of loans to smaller businesses that can be forgiven if those businesses keep employees on the payroll. It has a special grant provision to help airlines keep their staff employed even as operations are largely shut down. And it provides extensive aid to hospitals and to state and local governments to cover costs associated with the epidemic.

What all these provisions have in common is that they help people and enterprises keep their finances as close as possible to business-as-usual, even while much of the economy is shut down. In some cases, as with the lending provisions, that is achieved by promoting liquidity: ensuring that businesses that will be profitable again once this is all over have the cash they need to pay the bills today. In other cases, the intervention is more generous than that, handing out cash instead of lending it, and thus having the government bear financial losses that otherwise would have fallen on a private party.