$1.9 trillion relief bill far bigger than needed
The American Rescue Plan, the name given to the latest COVID relief bill with its $1.9 trillion price tag, is larger than necessary to meet the economic challenges the nation faces, and it could do a better job of targeting help where it is most needed. Yet polling shows the bill has the strong support of the American public and passage now appears almost certain.
Less popular, we suspect, will be the tax increases that will eventually be needed to offset it. Given the fiscal hole that is being dug, those tax increases are likely to extend beyond reversing the corporate tax slashing of the Trump years and raising the top tax rate on billionaires.
The Congressional Budget Office has projected that the nation’s output gap – the difference between actual economic activity during the pandemic and expected output in a normal economy – will be $380 billion for the rest of 2021. CBO placed the gap through 2023 at $700 billion. That means the $1.9 trillion American Rescue Plan is far overshooting the runway in its “rescue” mission.
We don’t mind Congress approving massive deficit spending if a crisis dictates, but it is dangerous fiscal policy to deepen the nation’s already dire debt situation needlessly.
This bill should be about half this size.
We support the funding for vaccine distribution, testing, and assuring adequate medical supplies and personal safety equipment. There is also critical funding for community health centers and state health departments, and for addressing the mental health crisis that has accompanied the pandemic but has not received the attention and resources it deserved.
Portions of the bill do send money to where there has been the greatest economic damage — $15 billion in payroll support for airlines, $7.2 billion for another round of the successful Paycheck Protection Program (The Day has participated in the program), $26 billion for the hard-hit restaurant and entertainment industry.
And there is $129 billion to bolster education, money that will be expended over years. If spent wisely, it can help close the instructional gap caused by normal schooling being interrupted for a year now.
We are far less thrilled with another round of checks to nearly everyone, carrying a $413 billion cost that will go right on the national credit card. Another $1,400 payment will be due for every adult and child dependent. While payments start to phase out at $75,000 of individual income, the fact is that money will be going to tens of millions who have not suffered economically as a result of the pandemic.
Also questionable is the $350 billion being sent to state and local governments. True, in the past we advocated for this aid as critical. But that was earlier in the pandemic when projections showed states suffering dire revenue losses. That is not how things turned out. Fiscally speaking, the vast majority of states have weathered the COVID storm fiscally well, including Connecticut. Policy should be adjusted to align with facts.
Some will call us foolish, we suppose, for finding faulting with a bill which, if approved by the Senate, will send an estimated $2.7 billion to Connecticut. But the warning, “Too good to be true,” comes to mind. Or at least, too good to be wise.
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 Izaskun E. Larrañeta, staff writer Erica Moser 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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