National Review
Joe Biden’s pandemic relief bill is a mess
At the start of the pandemic, the government made a deliberate effort to curb economic activity in what was widely considered a necessary measure to slow the spread of COVID-19. While most recessions require policies that stimulate the economy, the COVID-19 recession required the opposite – measures that would allow workers and businesses to pause until a vaccine or therapy becomes widely available. Now that vaccines are being administered, policymakers face a different challenge – not to keep Americans indoors, but to get them back to work as quickly as possible. In that context, President-elect Biden’s $ 1.9 trillion stimulus package misses the mark. The proposal is in favor of public health – with $ 20 billion allocated for vaccine distribution, $ 50 billion for testing and $ 40 billion for medical supplies and emergency response teams – but it does not address the most urgent obstacles to COVID immunity -19. Vaccines are not used not because of lack of funding, but thanks to heavy rules that determine which patients can receive vaccines and which doctors can administer them. Additional spending to speed up the delivery of the vaccine is welcome, but its effects will be silenced if bureaucratic obstacles remain in place. Even if public health provisions are successful in reopening the economy, much of the rest of Biden’s plan guarantees that it will reopen weaker. On the one hand, an increase in expanded unemployment insurance of $ 400 a week would mean that more than 40% of those receiving unemployment insurance would earn more out of work than at work until at least September, and possibly for longer. The food service and retail sectors most affected by the pandemic would see the biggest declines in labor, exacerbating the challenges they faced last year. The rise in unemployment may have been reasonable when we wanted workers to stay at home, but it is catastrophic when we want them to go back to work. Meanwhile, raising the minimum wage proposed by Biden to $ 15 nationwide would eliminate about 1.3 million jobs, hitting low-income states harder. In Mississippi, where the median salary is $ 15, about half of the state’s workers would be at risk. An increase in the minimum wage may be at the top of the Democrats’ wish list, but it does not belong to an emergency aid project. The Biden plan is not all Democratic priorities, however. He took a page from Trump’s book and proposed checks for $ 1,400 to families, bringing the total for the second round to $ 2,000. With family income now 8% above the pre-pandemic trend, additional checks would do little more than fill out savings accounts. In fact, 80% of recipients of last year’s checks put their money into savings or debt, not consumption. The main item in Biden’s plan would do little to stimulate economic growth, even under Keynesian assumptions. The same goes for state and local aid, for which Biden is seeking $ 370 billion over $ 170 billion in donations for public education. The total of US $ 540 billion far exceeds the approximately US $ 50 billion reached in state and local tax revenues last year. As we wrote in December, states and cities are slow to spend federal funds, so most of that stimulus wouldn’t come until 2023. Instead of trying to stimulate the economy, Biden hopes to launder bailouts from wasteful Democratic states through COVID -19 relief. Other parts of the bill – income expansions and tax credits for children – are long-term defensible structural reforms, but as one-year emergency measures, they will have the same silent effect as direct checks. By including a series of proposals unrelated to the pandemic, Biden weakened the negotiations and made urgent measures less likely to pass quickly. In the depths of the COVID-19 pandemic, economic policy makers showed themselves up to the occasion. After an unprecedented external shock, the United States economy has emerged in relatively good shape, with less unemployment and bankruptcy than most feared. But the policies implemented to contain COVID-19 are not adequate for what will start to become, in the course of this year, a post-pandemic economy. Biden may have campaigned during a recession, but he will take over during a recovery. He must govern accordingly.