Congress needs to put money in people's pockets, help keep jobs – pet projects put us all at risk
The best way to do the most good for the economy is to send as much stimulus as possible directly to individuals and families
The U.S. economy needs immediate support as businesses shut their doors and customers and workers stay at home. The threat of a severe, prolonged recession is real, yet too many of our elected "leaders" in Congress have been engaged in business-as-usual political games rather than passing effective relief.
Congress must resist the temptation to spend money on ideologically-driven projects and special interest supporters and direct the money where it is most urgently needed.
CORONAVIRUS LAYOFFS SKYROCKET, CATCHING NEARLY HALF OF STATE UNEMPLOYMENT PROGRAMS UNPREPARED
If we're going to cushion the blow the coronavirus has inflicted on the economy without wasting taxpayer money and recklessly ballooning our debt, then aid should be focused on putting money in people's pockets and keeping them on the job.
As Congress works on a so-called "Phase 3" stimulus package, special interests are already lining up for a piece of the action.
The Wall Street Journal reports that interest groups ranging from the seafood industry to solar panel manufacturers to the Commercial Space Flight Federation are asking for grants, loans, and changes to immigration laws for seasonal workers.
Senate Democrats, meanwhile, have reportedly called for more money for companies like AT&T and Verizon to expand broadband services.
As important as seafood, space travel, and expanding high-speed internet access may be, they're simply not at the heart of economic challenges facing workers and small businesses right now.
Every dollar and every minute spent placating a special interest or pushing a pet project is putting ordinary Americans, and the American economy, at greater risk.
Work opportunities are evaporating for tens of thousands of Americans whose companies have shut their doors and whose customers cannot be served from home. They need to keep their refrigerators stocked, pay their mortgages and car loans, and educate their kids at home as schools close.
WHAT TRIGGERS AN ECONOMIC RECESSION?
It won't be long before a juggling act like this without an infusion of cash will become impossible for many Americans. When it does, the first payments to stop will be on debt.
The best way to do the most good for the economy is to send as much stimulus as possible directly to individuals and families. Direct cash payments, which Senate leaders have proposed, will have the most immediate effect and should be Congress' priority
As that happens on a large scale, the effect could be a financial system meltdown reminiscent of 2008. That's a one-two punch that would buckle the U.S. economy for a very long time.
Congress can avoid making a bad economic problem worse by resisting its worst instincts to lard up government aid with money that never reaches those most in need.
The best way to do the most good for the economy is to send as much stimulus as possible directly to individuals and families. Direct cash payments, which Senate leaders have proposed, will have the most immediate effect and should be Congress' priority, even if that means passing them on a standalone basis before pursuing anything else.
A payroll tax cut, favored by the president but opposed by some in Congress, would have the double benefit of putting more money in workers' pockets and giving businesses breathing room to keep workers on the payroll, even as sales decline.
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Unemployment benefits, already expanded in the “Phase 2” stimulus passed by Congress last week, will help those who have lost or will lose their jobs. But our goal should be to help workers stay on the payroll—and businesses keep employees on the payroll—so that they can quickly get back to work once the virus passes. Recovery is the ultimate goal of any stimulus, not merely the distribution of cash.
Targeted relief to industries most directly and heavily impacted by government orders to stay home and avoid travel is necessary and inevitable. But the more latitude we give Congress to use their "judgment" to give aid to pleading businesses, industries, trade groups, and lobbyist friends, the more they will be tempted to spend money on their own political interests, not the interests of cash-strapped Americans.
We're in a moment when immediate, direct, substantial financial assistance to individuals and families is critical to help them stay on their feet and meet their commitments in a moment of temporary but real financial need.
Congress will be tempted, as always, to delay action in an attempt to deflect money toward uses that have more political payoff than economy-wide benefit. But it's a temptation we simply cannot afford.
Americans should demand that Congress show a bit of rare discipline and act now on temporary, direct cash and tax relief to families, workers, and employers.
Professor Brian Brenberg is Chair of the Program in Business and Finance and Executive Vice President at The King's College in Manhattan. Follow him on Twitter: @BrianBrenberg.
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