The Price of COVID Relief

By Kevin D. Williamson

Wednesday, December 30, 2020

 

Why $2,000 relief checks? Why not $20,000 relief checks? Why not $200,000? Why not $2 million?

 

“Oh, don’t be ridiculous,” comes the response. “Nobody is talking about that.”

 

Okay, but why not?

 

The coronavirus epidemic is an extraordinary situation in which extraordinary measures are appropriate. And the U.S. government has taken extraordinary measures, notably in the form of the $2.2 trillion CARES Act, an emergency-relief/economic-stimulus package that included some shotgun blasts ($300 billion in one-time cash payments handed out to households with scant regard for need), a useful and proper extension of unemployment benefits, loans made to support business payrolls through the Paycheck Protection Program, and some questionable wheel grease (nearly $1 trillion, almost half of the original bill’s spending, went to subsidized loans to corporations and state and local governments, a $10 billion line of credit for the Postal Service, special grants here and there, a nice arrangement for defense contractors, and so on). Because some of the money will come back in the form of loan repayments, the package will add — only — $1.7 trillion to the national debt, according to preliminary Congressional Budget Office estimates. But there’s other spending to consider, too, including the half-trillion-dollar Paycheck Protection and Health Care Enhancement Act, etc.

 

It matters how much we spend. It also matters what we spend it on, and how we go about spending it.

 

Sending checks willy-nilly to householders from sea to shining sea is politically popular for obvious reasons: People like getting checks, and politicians don’t mind writing them on other people’s accounts — “bribing the public with the public’s money,” as Alexis de Tocqueville famously put it.

 

The United States already has many programs for people suffering from serious economic privation, ranging from food support to housing support to health-care support. Some of these welfare programs are better-designed and better-run than others, and many would be better administered at the state or municipal level, but that is not an indictment of the programs as such. The United States also has epidemic-specific measures in place, which is entirely appropriate, and the most important of these is providing extended/enhanced unemployment benefits. The main economic effect of the epidemic has been preventing people from working when businesses were appropriately obliged to suspend operations or operate at some reduced capacity, which has cost both employees and business owners (let’s not forget them) a great deal of income.

 

The way to respond to that is not firing money at the general public from a confetti cannon.

 

President Donald Trump, the master negotiator, was busy sulking while Congress and his treasury secretary were putting together the latest relief bill, which is to include $600 stimulus checks for most Americans. Democrats said they wanted $2,000 checks. Trump, who was very excited by the prospect of putting his own signature on stimulus checks the last time around, roused himself and chimed in to declare that he was with the Democrats, demanding $2,000 checks. Senator Mitch McConnell (R., Ky.), the majority leader, perhaps muttering quietly to himself, began sharpening his knife, and the $2,000 checks are not expected to survive his attention.

 

Frédéric Bastiat, the great French economist, described government as “that great fiction through which everybody endeavors to live at the expense of everybody else.” The sentiment may be cynical, but it is not incorrect. In the matter of sending checks more or less indiscriminately to American households, very little attention is given to the question of whose account is being dinged to pay for them.

 

Our government is operating in deficit right now and has been for some time. That isn’t necessarily a problem: A government like ours with an economy like ours can carry a fair bit of debt without too much trouble, and, at times, it makes more sense to borrow than to tax. But debts finally have to be paid. That means that spending has to be funded, either with taxes today or with taxes tomorrow to cover principal and interest. Interest rates are very low at the moment, which makes borrowing attractive. Will they stay low forever? There isn’t any reason to think that they will, and to pretend that there is no risk of their rising is irresponsible.

 

Wishful thinking is not going to change that. But wishful thinking is always with us, from the deathless Republican legend of self-financing tax cuts to the recent leftist vogue for “Modern Monetary Theory,” which holds that money, among all commodities, can be magically liberated from the laws of supply and demand as long as the right people have political power. Experience should make us skeptical.

 

Of course we cannot and should not ignore the economic consequences of the epidemic that is still, let’s not forget, raging across our country. From unemployment benefits to emergency support for hospitals, there is much that can and should be done. But we also cannot and should not ignore that this all has to be paid for, at some point. Nor should we ignore that, under the tutelage of Donald Trump, Nancy Pelosi, et al., we are training a generation of Americans to wait by the mailbox for their check from the government.

 

There will be a price to pay for that, too.