More stimulus needed to prevent economic nosedive
As the expiration date for previous rounds of federal stimulus spending approaches, Senate Republicans are rudderless, with no consensus on what to do.
The Coronavirus Aid, Relief and Economic Security Act, passed in March, propped up the economy with $2.8 trillion providing emergency, short-term relief to businesses, states, and hospitals.
CARES stimulus included $1,200 one-time checks to 160 million households. State unemployment benefits were augmented with $600 federal weekly payments.
The relief was designed to end in July under the assumption that that the pandemic and its economic damage would be catastrophic but short lived.
That assumption is proving incorrect. The pandemic remains deadly and gaining strength throughout large parts of the country. No swift economic recovery is emerging.
The Federal Reserve Bank projects unemployment above 10% into 2021. Fed Chairman Jerome Powell says additional aggressive relief spending is imperative to avoid a prolonged economic calamity.
House Democrats in May passed the HEROES Act — Health and Economic Recovery Omnibus Emergency Solutions — another $3 trillion bailout package.
One-third of HEROES spending targets state and local governments that have seen tax revenues disappear. Without federal relief those governments are facing mass layoffs and/or tax increases to remain solvent.
About $2 trillion goes to individuals with another $1,200 stimulus check, and $600 weekly federal unemployment benefits extended until January.
Democrats are united in support. Republicans are divided and leaderless.
Senate Majority Leader Mitch McConnell said the Senate will not consider the matter until July. Meanwhile, President Donald Trump hints about support for another $1,200 stimulus, but the White House has issued no policy position.
Some Republicans oppose additional relief spending citing concern with mounting deficits. Other Republicans want relief targeted only to those most in need. Still other Republicans argue further stimulus relief is unnecessary because the economy rebounded in May.
True, retail sales increased 17.7% and the country gained 2.5 million jobs, but 21 million remain unemployed. Plus, the May figures reflect the impact of the massive federal stimulus coursing through the economy. Once those stimulus funds are exhausted, the economy likely will nosedive.
The pandemic will be a devastating health threat and drag on the economy for at least another year. Additional federal stimulus spending will stop the nosedive and deliver a faster and more humane recovery.
There is much in the HEROES Act to applaud, but all of it needs scrutiny, debate, and alternatives. But nothing happens until the Trump administration and Senate Republicans get back into the governance game and supply their ideas.
The Day editorial board meets regularly with political, business and community leaders and convenes weekly to formulate editorial viewpoints. It is composed of President and Publisher Tim Dwyer, Editorial Page Editor Paul Choiniere, Managing Editor Tim Cotter, Staff Writer Julia Bergman and retired deputy managing editor Lisa McGinley. However, only the publisher and editorial page editor are responsible for developing the editorial opinions. The board operates independently from the Day newsroom.
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