Is Trump’s ‘Back to Work Bonus’ a Good Idea?

Right-of-center economists express reservations about the latest stimulus proposal some top Republicans are considering.

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Congress is hashing out the details of the next stimulus package, with both parties seeking to spend trillions but some disagreement over the specifics. Democrats are pushing for the continuation of expanded unemployment benefits, more stimulus checks, bailout funding for state governments, and more. Meanwhile, President Trump has long argued for a temporary payroll tax cut and Republicans leaders like Mitch McConnell are focused on liability protections for businesses reopening during the ongoing COVID-19 crisis. 

Some prominent figures in the GOP are pushing another big idea, a “back-to-work bonus.” It sounds great on the surface but isn’t actually supported by many right-of-center policy experts. 

Still, President Trump and his top economic adviser Larry Kudlow have touted their support for such a bonus. This temporary, taxpayer-financed sum would be given to businesses and/or workers who return to work in an effort to jump-start the economy. 

Republican Sen. Rob Portman has proposed giving workers who return to their jobs a $450 bonus for the first few weeks. Meanwhile, Rep. Kevin Brady, the top Republican on the House’s Ways and Means Committee, has offered up a plan to turn unemployment payments into a $1,200 “back-to-work bonus” of sorts. Rep. Dan Crenshaw, a prominent Texas Republican and conservative social media star, has also offered up a variant of this proposal. 

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  1. Avatar photo
    Tracie

    "Tanner said that money allocated for testing, contact tracing, or other measures that actually address the virus—the root cause of our economic distress—will do more to restore the economy than any of what he called the “bandaid” stimulus efforts."

    Yes. It's the virus stupid.

    I realize everyone's situation is different, but I "furloughed" from late March through mid May w/o ever applying for unemployment. I used up my vacation days and lived off savings. One pay period my whole check was ~$170.00. I only got restored to full-time in the last couple of weeks - and no guarantees. And I'm lucky.

    Two young co-workers got laid off for the crime of being the most recent hires. In some industries, peoples' jobs have simply disappeared. I worry about the people who used to do my hair and nails, but I don't think I'll be back to see them before January. Why shouldn't they get unemployment?

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  2. OP Longhorn

    How about creating a new special benefit that provides an amount of extra unemployment benefit on a sliding scale according to the recipient’s prior income? Provide enough support to address the pain and suffering but not so much to disincentivize working when work is available.

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      Tracie

      That sounds reasonable. It doesn't address the issue of propping up our economy, which is about 2/3 consumer spending. Anybody with reserves is going to be sitting on them about now. It's putting money into the hands of low income people that has sustained a lot of retail and services.

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  3. Avatar photo
    Pat Riot

    Paul Krugman has an excellent understanding of this situation, both with the extension of unemployment and generally this subject. I've been following his recent lecture course on this and its very insightful, and backed up with good data and economic precedents.

    His view on the unemployment extension expiring is that if the Republicans block it, short the freakin market asap (that's my take on his conclusion anyhow). That also goes for the State/Local funding as well, as these entities are getting utterly hammered in revenues right (viz. tax way down etc.) so if that runs out we'll see massive layoffs.

    Also--and we have to point this out these days--but Congress passing a law won't magically make COVID go away. Republicans blocking the extension of EB will *not* magically make restaurants and hotels and airplanes fill up again. All it will do is make millions of people not pay their rent anymore, and crater the economy. This insane Ayn Rand crap needs to be stricken from the "conservative" lexicon. This is a crisis and we're all Keynesians now.

    So as for how long, the answer is simple: as long as we need to quarantine. (Krugman is *against* it lasting any longer than that).

    As for this "bonus" idea, that sounds like a disaster since the whole idea here is to get people to quarantine so we can get this over with, and such a bonus would create weird incentives--and would be a nightmare to administer and introduce all kinds of crazy scenarios. This sounds like certain Republicans trying to graft their Ayn Rand stuff onto the bill so they can feel good about themselves.

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    1. Avatar photo
      Victor Clairmont

      Negative. We are not all Keynesian's now. Even Keynesian economics doesn't anticipate the government shutting down almost all the economy. We use taxes and allow the government to help grow it in Keynesian models. What has happened now has not been done before in recent history and is a first. The government literally drove a semi-truck through a persons house, jumped out and said, "Here's $1200 to help fix your house". To which, the person says, "Damn right you trashed my house. Give me the money and fix it since you broke it." It's not, we take your taxes, to shut down your business, to give your taxes back to you for the business we shut you out from, that makes what is happening Keynesian's at all.

      Also, supply side economics existed long before Ayn Rand (which she is terrible so we agree there) so yeah drop her from the Lexicon. But basically, whoever thought it was a good idea to lower taxes on business's and people would have stumbled across the model for growth.

      Hence as Milton Friedman points out, the first trillion dollar company (when adjusted for inflation) was the West Indian Trading Company, in England. At the height of Queen Victoria's Diamond Jubilee, the tax rate on business was 7% to 10%.

      Also, Krugman believed the internet was going to affect the economy as much as the fax machine affected business. I honestly think he needs to stop writing seemingly opinions in the NYT's and retire and give his chair up to a different economist....to go through a laundry list of all of his ....trying to put this charitably....mistaken predictions especially outside his field....would take a long, long while. His early work on economic theories was interesting (going back decades) that netted him a Nobel Peace Prize, but well....Obama got a Noble peace prize and he fought almost 4 wars simultaneously (Irag, Afghanistan, Libya overthrow and Syria), so.....I am not sure Noble Peace Prizes are the best indicator of accomplishment these days. Also Pulitzer (Looking at you Nicole Hannah Jones).

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      1. Avatar photo
        Pat Riot

        Well, the virus took down the house. And not really took down the house, but just made it so they couldn't leave the house for a while. The house will still be there when the quarantine is over.

        I'll gladly drop Ayn Rand from my lexicon as soon as the Republican party does. Paul Ryan made her required reading for his staff and her ideas are still repeated a lot in GOP punditry. The fact is that we have a large Federal government always will have.

        Anyhow, Republicans generally agree with Krugman about what to *do* now, so he's not complaining.

        Also, Krugman's Nobel Prize was in economics, not peace. You can hate on him politically, but his economic analysis is spot on and his advice on the economy has, for instance, made me a lot of very real, non-partisan *money*.

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        1. Avatar photo
          Victor Clairmont

          Lets start a club to remove Ayn Rand from politics.

          I'd be on board for that.

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  4. Avatar photo
    DougAz

    Wow. Mr. Polumbo sir. Why do conservatives believe people don't want to work, but rather be safe and keep their families safe? I thought Conservatives valued families? Guess not.

    I will tell you my single mother in the late 60s needed welfare and food stamps. She worked as a secretary to provide for her five children. That removed us from welfare. And we HAD LESS income !! I went to work as a HS Janitor to make up the difference and help feed my younger brothers and sisters.

    Shame again on you for saying people don't want to work when
    A. They risk Covid
    B. They have no health insurance
    C. At that level 60% work a 2nd job.

    Enough of this disgusting "Welfare Queen" conservative BS.

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    Finlie Brezter

    I don't think that considering this a "stimulus" is really the correct mindset. The goal is not to get the economy going again, the goal is decrease hardship and suffering. The fact that is still the goal is an indictment on this countries inability to focus on the most urgent task. If any sort of incentive is required, it should be targeted at reducing the spread of the virus.

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      Tracie

      It's a little of both.

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  6. McMakinKP

    I think the last quote hits on the most important point here. Hand wringing about the disincentive that the unemployment benefit created seems overblown when the entire purpose was to give money because the shut down made work impossible. The right approach seems less about incentevising work and more about continuing to provide the benefits to those whose work options are gone from covid, and providing a wind down option as economic conditions improve.

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  7. Avatar photo
    Victor Clairmont

    Great update on the stimulus and the problems of how it will effect economic recovery. It’s not as simple as pump money into taxpayers hands. Economies, quite the different beast.

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      Tracie

      Our economy is 2/3 consumer spending. The people who must spend money need money - whether via paycheck or unemployment check.

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        Victor Clairmont

        Which means they also need to work to get the money, and socially distance while working with masks. The fed cannot pump money indefinitely or give our own tax payer dollars back to us that we worked for. It dries up, and whatever is sent out will have to be paid back via higher taxes at some point too.

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          Tracie

          Victor, I don't think you understand. Going to work with a mask is not possible without a job. Jobs have simply disappeared for a lot of people, and it's a terrible time to look for one.

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            Victor Clairmont

            If I meant to sound like I did not mean I don't want another spending package, that's not what I wanted to say. So let me make myself clear as I am in favor of people in fear for their lively hood to stay home and that the government has shut down businesses so there is no work for many people. The economy is on fire, so we can pump more money into it. Gotta save the house from burning. It will have an effect long term though, as this policy is unsustainable at 30 million unemployed.

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          Angie

          I have a problem because I am going to be shortly out of work, and the market was bad here before the coronavirus, especially in my field...

          I want to go back to work, but, I am not sure I can...in the meantime unemployment only pays me half of my normal salary...and I can't survive on that

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          1. Avatar photo
            Victor Clairmont

            Not sure if the next bill will extended unemployment benefits. Most likely will, and the republicans in the senate seem intent on passing another one.

            My future and children's future though is enslaved to debt it seems. 2020 just seems like a no good scenario situation. What a bad year.

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