Is It Time for a Stimulus Package?

Another crisis, another opportunity to spend.

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Speaking to reporters at a coronavirus task force briefing on Monday night, President Trump said his administration plans to discuss with congressional leaders measures the federal government can take to mitigate the economic fallout of the COVID-19 outbreak. Some items the White House will bring to the table: A payroll tax cut, cash assistance to hourly wage earners, loans for small businesses struggling with liquidity, and relief for the airline, hotel, and cruise industries. Trump reiterated that he didn’t want American workers and businesses to “get penalized for something that’s not their fault.”

The president’s comments came after the markets closed on another day of financial turmoil. The Dow Jones Industrial Average had its worst day since the 2008 financial crisis on Monday, dropping 7.8 percent. The 10-year U.S. Treasury yield briefly hit an all-time low of 0.318 percent in overnight trading. Oil prices fell more than 24 percent, with some markers registering their biggest intraday losses since 1991.

But perhaps of even greater economic significance are the continued institutional closures and cancellations sweeping across the country: Small businesses reeling after expected revenues vanished, parents scrambling to find childcare after schools were shuttered, service or gig economy workers forced to choose between safeguarding their health and paying the bills.

And that’s where fiscal stimulus efforts come in.

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  1. Greg G

    As someone who is hoping to retire in the next few years, I’m keeping a nervous eye on the stock market. But my “what’s good for the country” instinct is that a stimulus to artificially prop the markets up is not likely to stem the tide in any significant way. Moreover, it isn’t ancient history to find the myriad of ways that the last stimulus was hoarded and wasted (see current stories on the FCA/UAW scandal as only one example).

    Agree with Mr. Eggleston below. Creative Destruction isn’t very popular these days . . .

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    Alan Lowenthal

    In their well-honed skill at spending other people's money, Congress and the President don't even consider how an individual or family would react to an unexpected expense that "isn't their fault": What are we going to forego this year to be able to pay for this unexpected expense? How about cutting an equal amount from this year's budget to pay for whatever political goodies you hand out to voters, favored industries, etc.

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    Rev Snow

    "So these decisions become really, really hard"

    Only if you insist on improvising a response instead of sticking with what's been done before. I don't see any strong reason government assistance dealing with damage from an epidemic needs to be different from any other natural disaster. Would all those food vendors at SXSW get benefits if a tornado canceled the event instead of a virus? At some point, preparedness for failure is the responsibility of every business for itself.

    And broad stimulus should be out of the question. Our deficit is already more than $1 trillion. We need not only a strong economy, but one that operates under its own power. Do we even remember what that looked like?

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      Idontdocute

      I don't think they are getting this. When covid-19 becomes community driven cases will be 80% mild / 15% needing care / 5% needing ICU care with about a 3 % death rate. The nursing home in Seattle in 3 weeks had 105 residents, 14 are dead, 15 more got taken to the hospital the end of last week, 70 of the 180 employees are now showing symptoms and it is noted that 3 additional nursing homes in that area may have residents showing symptoms.

      There are 327 million US citizens, 5% in need of ICU beds is 16 million additional critical patients and 3% is about 10 million dead in a very short period of time. Do we remember what this looks like, yes. It, by hospital pandemic policies, usually includes harsh triage and large tents. I just don't see what payroll tax cuts are going to do to mitigate these damages.

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    Man-Eating Cow

    "Fratto disagreed. “I don't want to wait for the whites of their eyes,” he said, referencing William Prescott’s apocryphal order at the Battle of Bunker Hill. "

    I dunno. That seemed to work out pretty well for Prescott and his men.

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    Jesse R.

    I understand that the virus is a shock to the economy and is reducing earnings for some, but is using targeted policies smart and efficient? So far, most of our economy is still fine. We also have large deficits already, which drives home the need for belt-tightening during times of economic growth. I lean more toward Mr. Strain's take. Wait to see how things play out further before we commit to billions in spending. If you want to help people who have been sidelined by events already, then maybe state and local jurisdictions should have the power to expand UI benefits and medical leave. Unless we get on top of controlling the spread of the virus and treating it, spending a ton of money will do little. Moreover, if international trade suffers due to supply chain issues, consumption and investment will suffer regardless. Finally, I was shocked the Fed made the rate cut last week. It seemed premature and even exaggerated, leaving little room for it to act in the wake of an actual recession.

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    John A. Daly

    The capacity to deal with an economy-jeopardizing public emergency is just one more reason why Trump and the Republicans should have been focused on cutting spending and tightening the budget these past 3 years. The driving up of deficits at a time when we've been pulling in record revenue was always insane (especially with the debt situation), but self-proclaimed fiscal conservatives have abandoned their principles for the sake of MAGA. No pressure has been put in the GOP to exercise fiscal restraint, and so here we are...

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      Logical

      GOP is the best gaslighter. Inherited a great economy; a revenue neutral tax reform would have been ideal to build cushion, but they went full Keynesian...talk about greed. Promised 4+% growth rates forever.

      Now they want "stimulus!" It will work politically because you can fool the MAGA base all the time.

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    Logical

    My memory is still fresh. Obama was mocked by the conservative and GOP establishments on the "stimulus" during the great recession. They turned the word stimulus into a joke. The word Keynesian turned akin to child molestation. Not a single vote came from GOP in the senate, thanks to McConnell.

    Which author at the Dispatch is willing to admit the hypocrisy?

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      Man-Eating Cow

      You'll have to find one that is actually in favor of the present stimulus. I've seen none so far.

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        Logical

        Just wait.

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    Murrayprof

    I think the "Freedom Caucus" would go full bore New Deal if Dear Leader told them to do so.

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    Steve Eggleston

    If the answer is longer than two letters, it's an incorrect answer.

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