It makes little sense for the government both to tell us to stay home and then also try to shovel cash out with the demand that we spend more money at the places government closed. It’s like pushing on both the brake and the accelerator at the same time. The only effect of more stimulus will be to further distort the economy and to burden future generations with tremendous levels of debt.
The budget deficit for the fiscal year 2020 was $3.1 trillion, or over 15 percent of our whole economy. As many commentators noted, this was the largest deficit since World War II. Yet in that case we were spending our money to fight the war, a most necessary cause. In this case, we are spending a pittance to fight the virus itself, but are spending trillions giving bailouts to businesses and already-comfortable families.
But Congress can still spend some money productively. First, it should spend almost anything to control the virus. Even shortening the impact of the coronavirus by just two months could increase economic output by over $100 billion. Therefore, spending tens of billions on contact tracing or more expansive drug trials would stimulate the economy more than any cash program.