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Trump Tries to Kill Covid Relief
Is it ignorance, or is it cynicism?
The next few months will be terrible. Several thousand Americans are now dying from Covid-19 every day; given the lag between cases and deaths, the daily toll will almost certainly rise through the end of this year, and if people are careless over Christmas it could surge even higher in the new year. Economic recovery has stalled, with employment still down almost 10 million from pre-pandemic levels.
The most we can hope for at this point are policies that mitigate the suffering, getting us through the horror while we wait for widespread vaccination. And a few days ago it seemed possible that we would in fact get some good news on the economic front. A bipartisan group of senators seemed close to agreement on a Covid relief bill that would fall far short of what we should be doing, but would be much better than nothing.
Then the lame-duck Trump administration intervened — destructively.
Before I get to what’s wrong with the administration’s proposal and why it may do a great deal of harm, let’s talk about what the goal of economic policy ought to be right now.
I still keep seeing news reports that frame congressional arguments about relief bills as a debate about “stimulus.” But stimulus is what you do when unemployment is high because people aren’t spending enough. And that’s not the problem we face.
Think about it. Why are there still two million fewer workers in “food services and drinking places” than there were before the coronavirus struck? It’s not because people can’t afford to eat out or go to bars. It’s because eating out and gathering in bars are dangerous activities. In many parts of the country these activities are, rightly, either banned or sharply restricted; even where they’re allowed, many people, understanding the risks, choose to stay home.
The role of economic policy in this situation isn’t to bring those jobs back while the pandemic is still raging — we actually don’t want a resurgence of employment in high-risk sectors until vaccines are widely available. What we should be doing, instead, is minimizing the suffering while we wait. That is, the issue isn’t stimulus, it’s disaster relief.
What should this relief involve? It should provide support for the unavoidably unemployed, sustain businesses through the dark months ahead and aid state and local governments that are suffering severe declines in revenues and that will otherwise be forced to make drastic cuts in essential services.
And no, this last problem isn’t restricted to blue states. In fact, six of the seven states expected to face the biggest revenue declines have Republican governors.
House Democrats have always been willing to pass a relief bill along the lines I’ve described. And as I said, until a few days ago the Senate appeared to be moving toward a bill that, while much smaller than Democrats wanted, would be better than nothing. The main obstacle seemed to be the determination of Mitch McConnell, the Senate majority leader, to include a poison pill — a blanket exemption of businesses from any liabilities related to exposing their workers to Covid-19 risks. But observers were hopeful that an agreement could still be reached.
Then came the Trump administration intervention — a proposal from Steven Mnuchin, the treasury secretary, that McConnell quickly endorsed even though it was disastrously wrongheaded.
I’m not sure whether the coverage of this discussion has fully explained just how bad Mnuchin’s proposal is. Many headlines emphasized the cost, a bit over $900 billion, which was similar to that of the emerging bipartisan bill, suggesting that the administration was weighing in with something positive.
In fact, however, the administration proposal completely eliminated the most important piece of any relief deal — expanded benefits for the unemployed — replacing it with one-time $600 checks that would be sent to everyone.
Again, think about it. For Americans who won’t be able to return to work while the pandemic is still raging, a one-time payment of $600 is grossly inadequate, while for those who haven’t lost their jobs it’s unnecessary. It’s true that people might spend some of the grant, boosting overall demand — but overall lack of demand isn’t the main problem right now.
So what is Mnuchin thinking? We can’t rule out sheer ignorance. It is, sad to say, entirely possible that, nine months into the pandemic slump, administration officials still don’t understand the basic logic of relief. Or they may be in thrall to the thoroughly debunked myth that unemployment benefits actually cause high unemployment.
Or maybe this proposal reflects the expiring administration’s special combination of delusion and cynicism. President Trump is still trying, in ever more desperate and destructive ways, to overturn the results of the election. And in his madness he may imagine that he will gain more politically from sending everyone another check with his name on it than from helping those truly in need.
Whatever the motivation, Mnuchin’s proposal couldn’t have come at a worse time. It may well undermine the economic relief millions of Americans need.
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