Don’t Call It a Stimulus

National Review Online

Wednesday, March 25, 2020

What is before Congress is not a stimulus bill. We have often opposed stimulus bills in the past, considering it a mistake for the federal government to borrow money to expand a depressed economy. At the moment, though, the government is not trying to expand the economy or even arrest its contraction. It is principally trying to enable the temporary shutdown of much of the economy with the least humanitarian damage.

The legislation should be judged on whether it aids efforts to slow the spread of coronavirus, aids the treatment of the infected, relieves the plight of those adversely affected by it and the fight against it, and supports the overall economy. These purposes, as we noted at the outset of this debate, sometimes overlap and sometimes conflict. They also call for placing speed ahead of efficiency, and both ahead of mere partisan objectives.

Congressional Democrats have not risen to this occasion. They saw an opportunity to advance goals on the environment, racial diversity, and Planned Parenthood funding that, whatever their other merits, do not belong in this bill. And they have been willing to slow down the process toward these ends.

Some Republicans are also losing perspective, albeit less crassly. They fear that the expansion of unemployment insurance in the bill is too generous and will incentivize quitting or refusing to take work. Under normal circumstances, we would share this concern. But at the moment we should be more focused on helping the unemployed — especially since the rules of unemployment insurance discourage the gaming of the system, however imperfectly, and this expansion is temporary. (Congress has let temporary expansions expire before.)

The bill’s rebates — $1,200 for singles and $2,400 for married couples up to an income limit — are not especially well-designed. The income limits are based on previous years’ income, which means that some people who need help won’t get it. It would have been better to give the rebates to everyone, and count them as income for the taxes collected next year. But they will mitigate some near-term hardship.

The provisions to support businesses, small and large, are especially valuable. Businesses cannot be expected to have saved enough money to weather a once-in-a-lifetime pathogen. The public has an interest in their being able to pay ongoing expenses during this crisis and to resume as viable enterprises once it ends. The legislation stipulates that businesses receiving loans cannot pay dividends or engage in stock buybacks for several years. This is faddish thinking, and there are better ways to protect taxpayer interests and keep existing shareholders from making windfall gains.

The legislation is far from perfect. The enormous spending involved would be easier to stomach if legislators and presidents had shown greater restraint before this crisis hit or showed any interest in getting the national debt on a sustainable trajectory. But we will take our own advice. The support for business, the relief for individuals, and the expansion of medical capacity are all urgent matters. They justify a bill that, in a happier time, nobody would consider, and we ourselves would vehemently reject.