On Tuesday, the Trump administration launched a plan to put money back into the hands of Americans in the form of stimulus checks. According to reports, the plan is an $850 billion stimulus package that would include help for small businesses and airlines. It comes after suggestions from Senators like Mitt Romney (R-UT) for $1,000 to American adults.
Democrats have countered the plan with income based assistance that would include more assistance if issues persist. The end result could potentially be quarterly payments to Americans to help with their bills. Pelosi’s spokesman suggests that the Speaker is interested in working towards an agreement, but not without some reservation. She suggests that they should also include a focus on refundable tax credits, further expansion of unemployment and direct payments. The call was for these efforts to be targeted responses, but all of these should scare us.
Treasury Secretary Steven Mnuchin suggested that unemployment could top 20%. This is a drastic increase from the most recent 3.5% numbers that were reported in February. These changes are part of the sweeping government intervention in the coronavirus situation. Governors across the country have shuddered businesses and events, leading to catastrophic losses in revenue for businesses. But what about the employees? Service employees all across the country are out of work as Americans are forced to stay home.
Representatives around all aspects of the government are worried about potential weeks of unemployment for individuals leading them to be unable to pay their bills. The money will be a huge help for those who find themselves unable to work. But will it be enough? Trump has asked for tax relief, but noted that the help wouldn’t arrive in time. As they weigh their options, Trump needs to give some consideration to the past.
In 2008, the financial crisis affected the United States. Mnuchin has warned that this crisis could be worse than that, which is an interesting thought to consider. In that year, Bush enacted the Economic Stimulus Act of 2008. The act was designed to put money back into the pockets of Americans through a tax rebate, as well as encourage businesses to invest into the economy. The problem? The checks were delayed until late summer. The checks never arrived in time for Americans to spend them when they would have been more likely to spend them.
Another problem was that the checks were small and the majority of Americans used them to pay off debt rather than to spend. This resulted in very little benefit for the economy. The issues continued to be present into the Obama administration for many years. If you look at this history, there’s something to be learned here for President Trump.
First, he says he is going to go big. He better deliver. Failure to do so will be a let down to the American people that they will not forget in November. Second, those involved say that they want this quickly. They better deliver as well. If business shut downs continue at the hands of the government, this could make for an ugly economy very quickly.
Finally, Trump should consider the risk. I understand that there are a lot of risks with inaction, but there are a lot of risks with action as well. We have essentially seen our government resort to Republicans wanting to spend like socialist Democrats, providing free money for all. Our national debt will drastically balloon through these initiatives, but no one seems concerned about that. While I expect Alexandria Ocasio-Cortez to act like money grows on trees, I never would expect the Republicans to act this way. But they are.
Mandatory closings and restrictions have and will continue to cripple the economy. Trump has reacted to the pressure of the media and Democratic leaders across the country. Democratic governors have implemented some of the most drastic responses to a crisis that we have ever seen. I will admit COVID-19 is more deadly than 2009 H1N1 by the numbers, but we never considered this drastic of a response. We heard for months and months over the course of 2019 that a recession was coming. It never did. In fact, the Trump economy continued to roar, until the COVID-19 response began. Now, we see the government manufacturing a recession before our very eyes. I guess you can argue that it is out of necessity, but is it all really a necessity?
Long term, my concern is that we may never recover from many of the socialist plans that are being implemented during this crisis. Andrew Yang has praised the actions as a great step towards Universal Basic Income. AOC has praised it as well. That should immediately concern you if they are both happy with what is happening. We are looking at student loan debt relief, healthcare relief and more, over a virus. I guess the joke is on us, we all thought this socialist move would come at the hands of Democratic Socialists.
I am sure the President will give strong consideration to the past as he makes his move towards this package. We know the President is concerned with his appearance and what people think of him. Nearly every American is going to face some sort of hardship through the changes in our lifestyle with the virus. Even more, it will be nearly impossible for many small businesses and service workers to be able to make it through this event without suffering hardship. Especially given the drastic measures that many state governments are taking. I understand the need to take action and you may disagree with my final statement. I’m not sure that the action being taken is the best course of action for us.
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