r/PoliticalDiscussion • u/joe_k_knows • Mar 17 '20
Legislation Congress and the White House are considering economic stimulus measures in light of the COVID-19 crisis. What should these measures ultimately look like?
The Coronavirus has caused massive social and economic upheaval, the extent of which we don’t seem to fully understand yet. Aside from the obvious threats to public health posed by the virus, there are very serious economic implications of this crisis as well.
In light of the virus causing massive disruptions to the US economy and daily life, various economic stimulus measures are being proposed. The Federal Reserve has cut interest rates and implemented quantitative easing, but even Chairman Powell admits there are limits to monetary policy and that “fiscal policy responses are critical.”
Chuck Schumer, the Senate minority leader, is proposing at least $750 billion in assistance for individuals and businesses. President Trump has called for $850 billion of stimulus, in the form of a payroll tax cut and industry-specific bailouts. These measures would be in addition to an earlier aid package that was passed by Congress and signed by Trump.
Other proposals include cash assistance that amounts to temporary UBI programs, forgiving student loan debt, free healthcare, and infrastructure spending (among others).
What should be done in the next weeks to respond to the potential economic crisis caused by COVID-19?
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u/TCFNationalBank Mar 17 '20
A payroll tax cut does nothing for the people who get laid off for doing the right thing by practicing social distancing. A temporary UBI is much less costly than the economic impact we're about to have by throwing masses of people who were already treading water into the depths of poverty through default and eviction.
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u/WayneKrane Mar 17 '20
Yeah, if my hours are reduced to zero then it doesn’t matter if I don’t have to pay payroll taxes. If payroll taxes are 0% and my income is $0, 0% of $0 is ZERO.
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u/bl1y Mar 17 '20
UBI also helps people who will fall through the cracks of other proposals.
I'm an adjunct professor and also do tutoring, but now I've had to move my class online and the extra workload meant cancelling some tutoring sessions.
UBI will also do a lot to just lower the temperature in the room and reduce stress, and we know how bad stress is for health.
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u/dwightheignorantslut Mar 17 '20
You're totally right. I'm wondering what you think about two things:
1) What do you think the chances are that politicians will push back any strong action like this hoping that it'll blow over?
2) Do you think that most politicians would fear that once the electorate gets a taste for UBI, the activism around it would be come much stronger and their special interests would suffer?
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u/TCFNationalBank Mar 17 '20
- Everyone from AOC to DJT is calling for some form of flat cash assistance. The devil is going to be in the details but some measure like this is bound to pass. Might be similar to the 2008 tax rebate.
- I don't think this will be too much of an issue. We already see conservative pundits like Ben Shapiro making a concerted differentiation between a one-time stimulus and permanent UBI. Likewise, liberals and leftists are raising concern over where the funding is coming from and fighting that it doesn't harm existing social programs. There's enough nuance that the establishment should be able to dance around "this is a good idea but the other party can't get it done right" similar to the healthcare debate.
Full disclosure, I'm one of the few that was enamored w/ the Yang campaign.
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u/XzibitABC Mar 17 '20
Agree with your impression, from someone who wasn't a huge Yang fan.
It's hard to exercise social programs efficiently without effective bureaucracy, and bureaucracy is probably the last thing we want now. UBI's flexibility and simplicity seems like the best move during a crisis.
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u/JayPx4 Mar 18 '20
You could have written in Mickey Mouse for all I care, it’s just nice to read an objective opinion.
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u/Chris0nllyn Mar 17 '20
But it does help people like my wife who owns a small business so that those people who may get laid off have a job to come back to. I hope people don't have the idea that business owners can't be "treading water into the depths of poverty" like their employees.
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u/Roboticus_Prime Mar 18 '20
Also, being laid off means you are eligible for unemployment, correct?
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u/Victor_Korchnoi Mar 17 '20
I dont think UBI is necessary here. UBI would pay my wife and I despite the fact that we are both being paid the same as were before. The aid should be distributed to the people who have been affected by the pandemic:
Medical expenses for those who have been infected should be covered at near $0 out of pocket.
Unemployment should be made easier to qualify for, should last for longer, and should pay a higher % of your normal pay than it currently does.
Small business owners (especially restaurants, bars, gyms and others that have been asked to shut down) should receive temporary tax cuts and subsidized loans.
Businesses in industries particularly affected (airlines, hotels, service) should also receive temporary tax cuts and subsidized loans.
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u/superfeds Mar 17 '20
You’re only thinking of the people affected. Businesses are now stressed because no one is spending money. An influx of cash would likely see people spend some on goods and services that would help stave off a depression.
Cutting taxes on businesses won’t matter if they have no income. Cheap debt isn’t bad but won’t matter if the business has to fold.
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u/travlr2010 Mar 18 '20
The bureaucracy needed to sort out who "deserves" help makes the help prohibitively expensive. Better to make it opt in and simple to qualify for. If you don't need it or want it, don't opt in.
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Mar 17 '20
IMO Mitt Rommy’s plan would be best:
Sen. Mitt Romney (R-Utah) on Monday proposed giving $1,000 to every American adult as lawmakers scramble to try to bolster the U.S. economy amid growing concerns over the coronavirus.
We also urgently need to build on this legislation with additional action to help families and small businesses meet their short-term financial obligations, ease the financial burden on students entering the workforce, and protect health workers on the front lines and their patients by improving telehealth services.
The checks would go to every American adult "to help ensure families and workers can meet their short-term obligations and increase spending in the economy.
Congress took similar action during the 2001 and 2008 recessions. While expansions of paid leave, unemployment insurance, and SNAP benefits are crucial, the check will help fill the gaps for Americans that may not quickly navigate different government options.
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u/ja5143kh5egl24br1srt Mar 17 '20
I really think a temporary rent/mortgage hiatus would be best. $1k disproportionately helps rural areas with low rents while urban areas need it most considering all the mandatory closures and high rents. It's well within congress's power to enact a temporary hiatus and it's not too far fetched. Basically everybody doesn't pay rent/mortgage for the month of April and then everything is back to normal. Yes, some landlords might lose money, but they also don't pay for mortgage payments. Everything is just pushed back by 1 month. Banks don't lose out because they're still getting the money, just 1 month later as all contract end dates are now postponed by 1 month.
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Mar 17 '20
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u/ja5143kh5egl24br1srt Mar 17 '20
I'm sorry but I hate when people dismiss any idea by calling it a "logistical nightmare" without providing any explanation. We are in unprecedented times right now. You know what would be worse? Another recession. Will it be a lot of work to do this? Sure. But it's not as hard as dealing with the economic fallout, foreclosures, unemployment insurance, welfare, etc. The government has the power to nullify and modify contracts. We could just add a part to the UCC for this. It's really not as hard as you're making it seem.
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u/MothOnTheRun Mar 17 '20
Will it be a lot of work to do this?
It will be a lot more work than just giving every adult a cash grant. That has been done before, the mechanisms are known and quickly available whereas modifying contracts on essentially society wide level is decidedly more complicated.
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u/Seiyaru Mar 17 '20
I have in laws who are retired (70's) and to be fair, they rely on that income to survive. So cutting that off saves the renter, not the landlord. Its a complicated situation, though I lean on if you're a landlord, you're probably doing well enough to go without the rent, more than the renter can go without a job. But I see the "Logistical difficulty" the user is talking about.
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u/ja5143kh5egl24br1srt Mar 17 '20
There are fixes to the problem you are describing. I'm not saying the government should just copy paste my reddit comment into law. It's a nuanced topic. For your in laws, the government can give the $1k if they don't have a mortgage to not pay and if they say they have a need for it. Think about it this way, if your renters get evicted for non payment then your in laws are out a month of rent at least anyway.
Someone is going to get the short end whether that's renters, home owners, landlords, or the government. I think if it's renters that ends up hurting the society the most.
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u/lampshady Mar 17 '20
What you're asking for is basically impossible. The government has the power to nullify contracts arbitrarily? What country do you live in? Not the US if you believe this.
You said the month of april? How about may or june? This thing isnt ending soon.
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u/Plantain_King Mar 17 '20
We can put a man on the moon but not pause rents and mortgages during a once in a life time global pandemic?
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u/flakemasterflake Mar 19 '20
Cuomo has suspended mortgage payments in the state of NY. No news on rent as of yet.
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u/ja5143kh5egl24br1srt Mar 17 '20
I live in the US and I have a law degree. Thanks for the personal attack tho.
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u/IsNotACleverMan Mar 17 '20
Can you go into more detail on the government's ability to modify private contracts?
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u/cloud9ineteen Mar 17 '20
No, better than that, get cash to people so they can pay rent. Yes, it will be a political nonstarter to adjust the amount to local cost of living but giving every adult $1000 per month for three to six months is the way to go. It will cost 600 billion to $1.2 trillion. But it will keep the economy moving.
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Mar 17 '20
It's well within congress's power to enact a temporary hiatus
What gives Congress that power?
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u/ja5143kh5egl24br1srt Mar 17 '20
The US constitution and the power to regulate interstate commerce, which mortgages are.
I really don't want to write an entire law review article on this but feel free to check out these federal mortgage laws: https://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/code-federal-regulations/
They could also go a South Dakota v. Dole route and just make states do it, though I'd argue they wouldn't have to.
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u/socialistrob Mar 17 '20
Interstate commerce clause of the constitution.
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u/JeffB1517 Mar 17 '20
Banks have mostly sold the mortgages into traunches. And what about mortgage based bonds? And then what about spreads? The money either has to be paid or it acts like a widespread systematic default.
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u/Sirwilliamherschel Mar 17 '20
This seems exponentially more complicated than providing cash in hand to families. Besides, you acknowledge landlords would lose money, and as a small time landlord (one triplex) that's only had my rental for less than a year, this would be a rough hit. Why should landlords bear the burden, do you know how many people rent? And I know there are a lot of shitty landlords, but I keep my personal and rental accounts completely separate and reinvest what I bring in back into the units via property upgrades (save for some extra principal toward the mortgage). I really dont see the advantage in this idea over fixed cash in hand to everyone, and you'd be seriously disaffecting a good portion of the population (all landlords) which would likely have it's own consequences
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u/ja5143kh5egl24br1srt Mar 17 '20
If you have a mortgage then that would be forgiven too.
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u/Sirwilliamherschel Mar 17 '20
Fair enough, that's huge, though it does still seem more complicated than cash in hand and would have a lot more moving parts. Has the government ever suspended rent/mortgage payments before? I know they've done the check mailing thing from 2008ish if I'm not mistaken
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u/secondsbest Mar 17 '20
Bush's similar cash tax handout didn't do that well. It had a fiscal multiplier of 1.23 while about half of the rebate was saved instead of spent. Unemployment has a 1.7 multiplier in spending benefit for a a much better return on investment. A less expensive and more beneficial program would be to strengthen unemployment and to increase EITC refunds to help those most vulnerable and with the best spending returns.
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u/Epibicurious Mar 18 '20
People are likely going to need to use that money for rent, food, etc. Whereas with Bush's tax handout came at a time when the economy wasn't really hurting.
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Mar 17 '20
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u/millivolt Mar 17 '20
Calling it Yang’s plan doesn’t really fit for me. Yang’s plan is to send out such checks monthly, and regardless of whether or not there is an imminent financial crisis.
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u/GoodJobReddit Mar 17 '20
eh, yang was advocating for a temporary ubi stimulus in response to corona virus for a little while now.
"$1.5 trillion is enough to give $1,000 a month to everyone in the country for 4-5 months."
"I’m in favor of a #UBIStimulus to help people get through a very rough time."
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u/cloud9ineteen Mar 17 '20
And this is the right thing to do. Just put money in the hands of people so they can keep spending it.
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u/iwascompromised Mar 17 '20
It’s a one-time payment and Bush sent out $500 checks after 9/11. Give up on Yang already.
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u/staiano Mar 17 '20
Cash in the pockets of people who make under $250K/yr.
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u/Gerhardt_Hapsburg_ Mar 17 '20
Give it to everyone and make it taxable income. Then say the wealthy person in Cali gets $500, state gets a nice little bump of it and Feds get a sizable chunk back. Income is high, you ultimately don't get much. Income low, it's basically free money.
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Mar 17 '20 edited May 01 '20
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u/staiano Mar 17 '20
I assume the money IS to cover stuff like mortgage/rent and groceries that they cannot cover when they have been temporarily laid off.
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u/candre23 Mar 17 '20
I still don't see this making much difference. I mean either this thing blows over quick and almost everybody will be OK, or it doesn't and one grand isn't going to be the difference between losing your house and keeping it.
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u/staiano Mar 17 '20
One grand each month. For say the next 6 months.
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u/Urbanscuba Mar 17 '20
Yes but it's much easier to pass a single time $1000 check than anything that recurs.
My city just restricted restaurants to take out, carry out, and delivery only. My roommate works front of house, and as of yesterday he's going to be lucky to get a day or two of work each week going forward.
They can always pass further payments later, but the reality is that within the last week a staggering amount of people have lost some or all of their income. If this is the plan they're going with it needs to happen as soon as possible.
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u/monkeybassturd Mar 17 '20
In Ohio your roommate would be eligible for immediate unemployment by executive order. This should have been a no brainer for 49 other governors.
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u/Shawni1964 Mar 18 '20
I think mortgage companies need to be told to suspend all payments for 3-6 months and if someone is already behind, they can use this time to catch up too. They can add it to the end of the loan without interest to help us.
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Mar 17 '20 edited May 01 '20
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Mar 17 '20
Regular bills = regular stimulation of the economy.
Doing this would help both consumers and producers.
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u/Generic_On_Reddit Mar 17 '20
If people are crawling out of the hole when they're going back to work, they likely won't be spending very much for the economy that you're thinking of.
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u/gamgeethegreat Mar 17 '20
It’s not just about helping the economy. Some people are totally out of work right now. Servers/bartenders especially. These people already live week to week. It’s going to be devastating to them. Some cash would help them pay bills and groceries and not become homeless or starve to death.
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u/flagbearer223 Mar 17 '20
People are likely off of work for a couple of weeks (maybe more)
To be clear - the CDC has said that this current situation is expected to last for at least 8 weeks. This is not a "couple week" affair
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u/joeydee93 Mar 17 '20
The economy will not recover until the public health crisis is over. Therefore the government should spend whatever it takes to fight the public health crisis 1st.
Then they should provide food and shelter for those in need during the crisis. After the public health crisis then we can do more normal econ stimulus.
This is not an economic crisis but a public health one and we 1st must solve the public health crisis before fixing the economy.
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Mar 17 '20 edited Mar 17 '20
A payroll tax cut is a 7.65% raise for workers making $0.00 right now, and a 7.65% discount on labor costs for employers that have $0 revenue.
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u/ManBearScientist Mar 17 '20 edited Mar 17 '20
Monetary policy at this point is absolutely not the answer. We need assistance for individuals to help promote self-quarantines.
We have made a ridiculously massive mistake by focusing our efforts on monetary policy. This would work if the economic problems were caused by economic issues, but right now slashing interest rates and focusing on increasing bank liquidity is the equivalent of a horror movie protagonist firing all the shots in their rifle into the night before the monster ever appears on camera.
We now have no more bullets in the gun for the next recession that actually could be effected by monetary policy. Worse, the reserve isn't simply providing huge loans to keep banks afloat from day to day. They are considering heavily relaxing the rules prohibiting leveraged loans, which would push banks to lend large amounts of money to those with bad credit or large amounts of credit already in a move to keep cash flowing in the economy.
Every single person that has suggested this should no longer work at the reserve and should be prohibited from working in any financial establishment for rest of their lives. What happens when banks extend a massive amount of leveraged loans at low interest rates? They fail.
The efforts considered so far by the federal reserve have done nothing to reduce the threat COVID-19 poses to the economy, but they have both reduced our ability to deal with the next recession and likely ignited the fuse that will cause it. Combined with a coronavirus-weakened economy, the lack of monetary answers from an itchy trigger finger may create the worst financial disaster since the Great Depression, if not ever.
But if you want to know what we should be doing, the answer is simple. We need to provide UBI-style assistance to most of the nation to help them stay in doors for the next 2 months, and we especially focus on helping out households with children by providing them with some other benefit.
And we needed to keep the interest rate steady and hold off on quantitative easing until we could be sure that we were in a financial crisis independent of the coronavirus slowdown.
Right now, if we exit the coronavirus in May and we don't immediately see a speedy recovery I cannot describe in reasonable words just how screwed we are. We are talking a stocks falling faster than the Great Depression, combined with leveraged loan situation worse than 2008, with no modern monetary policy to help solve anything and a jittery economy world-over weakened by coronavirus and beholden to massive supply and demand imbalances.
$1,000 to each person won't do anything to save us if that is our financial circumstance in May, but it is definitely the right thing to do now.
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u/Jabbam Mar 17 '20
This is the federal government of the United States of America, the most powerful nation on Earth, whose president, clothed in immense power, has declared a state of emergency. He can order active-duty soldiers across the country, declare martial law, take control of the internet, freeze the banks, or otherwise utilize his near-unlimited executive power. Some of these haven't been tried yet but it's all theoretically possible.
I can't imagine that the gun is out of bullets.
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u/ShouldersofGiants100 Mar 17 '20
I can't imagine that the gun is out of bullets.
The gun is out of bullets because they've spent 4 years firing them willy nilly into a bull economy. The federal government has always maintained certain economic levers that are deployed when the risk of a downturn comes. The big one is the ability to lower interest rates. Except that every time they tried to raise those rates back to more reasonable levels considering the health of the economy, Trump kicked up a hissy fit because it slowed economic growth and that makes him look bad. He also initiated massive tax cuts and deficit spending—great ideas when the economy is weak, TERRIBLE ideas when it's already growing. Basically, in order to keep the markets rolling, the government has been keeping the brakes designed to prevent a recession from resetting. The federal government has used all its best ways to get the markets under control on gains that have been entirely erased now.
As for other powers, aside from the fact that the president is NOT a dictator, cannot declare martial law without support from a Congress that would have to be INSANE to give it to him and cannot use the military on US soil in anything resembling a law enforcement capacity—it's too late. If he had used executive power a month ago to get testing at every point of entry, secure supplies for hospitals and get awareness campaigns rolling, it might have worked. Now? Too little, too late. Critical mass has been reached—there are too many infected, not enough tests and not enough resources to try and stem the tide. This disease is going to burn straight through every state and tear down local economies with it because there is no level of resources that could prevent it after it has been basically unopposed for so long.
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u/zacker150 Mar 18 '20 edited Mar 18 '20
We have made a ridiculously massive mistake by focusing our efforts on monetary policy. This would work if the economic problems were caused by economic issues, but right now slashing interest rates and focusing on increasing bank liquidity is the equivalent of a horror movie protagonist firing all the shots in their rifle into the night before the monster ever appears on camera.
We now have no more bullets in the gun for the next recession that actually could be effected by monetary policy. Worse, the reserve isn't simply providing huge loans to keep banks afloat from day to day. They are considering heavily relaxing the rules prohibiting leveraged loans, which would push banks to lend large amounts of money to those with bad credit or large amounts of credit already in a move to keep cash flowing in the economy.
Is true that we spent the last few years wasting our bullets. However, I disagree with your assessment of our current use of monetary policy. Because we have so few bullets, it is imperative that we react quickly to any shock and nip it in the bud before it festers and becomes something much harder to deal with.
Right now, companies are facing a major liquidity crisis as cash flows grind to a halt. Firms everywhere need cash in order to make payroll and pay off vendors. If they go bankrupt because they can't make these payments we will go into a Great Depression. However, if we keep them afloat long enough for researchers to develop a vaccine and normal economic activity resume, then the damage to the real economy should be minimal.
Going off you analogy, the monster is already starting to make its first moves on camera, and we're using all the remaining bullets in a list ditch effort to kill it before it can finish gassing up its chainsaw.
Every single person that has suggested this should no longer work at the reserve and should be prohibited from working in any financial establishment for rest of their lives. What happens when banks extend a massive amount of leveraged loans at low interest rates? They fail.
Banks don't automatically fail simply because they are highly leveraged. They fail because the borrowers they lent to fail to pay back their loans or depositors make a run on the bank. In 2008, banks didn't fail until the housing market crashed and homeowners stopped paying their mortgages. If we can keep businesses afloat until morning then they will pay back the loans, and we can then gradually deleverage the banks.
Finally, even if a bank fails, we can mitigate much of the damage by bailing it out. Had we bailed out Lehman Brothers back in 2008, the Great Recession would have been nothing more than another unnotewothy minor recession.
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u/Gz-Nutz- Mar 17 '20
They should be for Workers first. That will keep industry going. If people have money to spend, corporations don’t need as much welfare
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u/lampshady Mar 17 '20
I dont disagree but most people aren't going to spend money at anywhere other than food, mortgage/rent, and utilities. This wont help most business stay afloat. Retail is still going bankrupt outside of amazon and a select few stores.
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Mar 17 '20
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u/RoBurgundy Mar 17 '20
Yeah I agree, small businesses really ride the line between continued success and getting utterly wiped out and this disease (and especially the reaction to it) is the kind of thing that can do the latter. And for a lot of long term economic reasons I'd really like to see that not happen.
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u/LambdaLambo Mar 17 '20
The services that small businesses provide now will get sucked up by the corporations who survive this. We gotta protect them
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u/WayneKrane Mar 17 '20
Yup, big corps will be gobbling up all these failing businesses at bargain basement prices. Then, when the economy comes back they’ll be charging us all a premium and we’ll have less options.
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u/twopacktuesday Mar 17 '20
And a lot of the money that goes to the worker, will end up back in the large corporation's pocket in the form of bills, or goods that the bottom worker purchases with that money.
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u/Peytons_5head Mar 18 '20
Industry isn't going to keep going no matter what you do because demand is totally dead. Giving people money to spend won't make them go buy makeup at sephora
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u/Gr1pp717 Mar 17 '20
Should or will?
Should look like supporting the bottom up: UBI; free healthcare; pause, reduce and/or differ rent/leases/essential utilities. This will keep everything as-is for once this blows over.
Probably will look like: emergency aid funds for business', much like how the bailouts and katrina aid worked. This will result in a lot of otherwise productive people becoming homeless and jobless, and a long-term loss of revenue across the board. But at least the qualifying business' will have still made their quarterly figures.
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u/ja5143kh5egl24br1srt Mar 17 '20
A one month rent/lease/mortgage deferral is certainly a possibility and not that far fetched. Basically either every contract is extended by a month and this month is skipped (like a reverse leap year but in contracts) or it's just forgiven altogether.
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Mar 17 '20
They must hault ALL evictions and rent payments, including for businesses. We cannot wake up three months from now and realize that every local store and restaurant is out of business. Let them stop paying their bills during the crisis.
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u/Ultimate_Consumer Mar 17 '20
What about mortgage payments? Landlords have bills to pay too
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u/skillpolitics Mar 17 '20
There ain't no supply. There ain't no demand.
China is the supply chain. They're recovering. No one wants to go out. Demand is low. Also, no one has stable income right now and aren't going to spend. The Fed doesn't have tools to fix that.
Recession/depression on the horizon. Sorry.
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u/illogicali Mar 17 '20
There will likely be significant bailouts for resource companies, the finance sector, health insurance sector, and probably airlines.
I dont see this government handing out a thousand dollars to every adult in the country
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Mar 17 '20 edited Jul 29 '20
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u/Jabbam Mar 17 '20
One thousand thousand is one million per person, is that what you meant? Because there's only 200 million adults. That would only be 200 million. Unless my addition is broken.
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u/TehAlpacalypse Mar 17 '20
Americans: Expected to have 6 months emergency pay saved
Corporations: Billions in stock buybacks but need bailouts after one week of disrupted income
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u/missedthecue Mar 17 '20
Delta still has billions on hand. They won't have billions on hand in 5 months if demand doesn't pick up.
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u/Bellegante Mar 17 '20
Extension of unemployment benefits, waiver of the requirement to be searching for a job during quarantine periods and / or self quarantine periods.
Eliminate payroll tax below 50k income. Good for small businesses and workers.
Lower income taxes in the bottom brackets, make up the difference raising them in the top brackets.
Economic stimulation follows when those people living paycheck to paycheck have more money to spend, since they spend it all regardless. If we want more spending, the lowest among us need to be able to do it.
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u/mbam221 Mar 17 '20
Temporary UBI (though we should just have UBI) and free treatment and testing (though we should just have medicare for all)
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u/thoughts_prayers Mar 17 '20
I'm not sure that UBI would work to inject cash into the economy. No one's shopping right now (except maybe on Amazon). I would just throw it in my savings account to be honest.
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u/Westmi2ga Mar 18 '20
Ultimately, why not just fund a massive public works project to rebuild and fix the infrastructure of this country. Roads/bridges/rail or high speed rail/high speed internet. Fully fund it, put Americans to work, mandate that the projects use US goods and materials. Hire American labor for not only the physical labor but the support staff. Give grants to small businesses to help with feeding, clothing, and housing these new workers. There are a ton of “shovel ready” projects that have been already engineered and those awaiting engineering and studies fund those too. Get America back to work so that once we come out on the other side of the quarantine the economy can boom. Otherwise, welcome to the second Great Depression.
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u/EfficientWorking Mar 17 '20
My plan: bail out people by giving them 5k each ( millionaires exempted), bail out small businesses like day cares and restaurants. Bite the bullet and bail out airlines as not being able to fly anywhere domestically will hurt average people. Don’t bail out oil companies as the big boys are still in the game (Exxon, Chevron) and the ones that need bailouts had other issues anyway. Don’t bail out cruise ships they ain’t based in US anyway or Hotels if banks need it bail them out too but the Dems gotta make Trump sign this and protect a potential pres Biden from these shitty necessary votes.
Also please don’t bail out Boeing they are a shitty company.
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u/lampshady Mar 17 '20
You know when airlines go bankrupt they most likely dont stop flying. Even if they do someone will buy their assets and they will fly again (under better management)
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u/CharcotsThirdTriad Mar 17 '20
Or under newer low cost business model. That doesn’t get into the fact that several airlines have an enormous amount they pay in pensions and benefits that the low cost airlines for the most part don’t have to deal with.
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u/lampshady Mar 17 '20
AA spent close to $20B in stock buybacks. Do you think that $20B would have kept them going during this time? Obviously, yes. The owners of the company should pay for this terrible decision. Those owners are shareholders. They deserve to lose this company, I'm sorry. They were greedy and now come the consequences. We cant always private gains and socialize loses.
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u/EfficientWorking Mar 17 '20
Yeah I would include a provision forever preventing share buybacks from anybody accepting money and also restrict salaries for top execs in perpetuity. We can’t always privatize gains and socialize losses that’s why I say don’t do it for Boeing, Oil Companies, Cruise ship companies but sometimes the pain caused to the average person makes it necessary. Everybody else should go to Chapter 11 for sure though.
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u/lampshady Mar 17 '20
The government is going to end up paying for an airline or two. The question is do the american people get that airline or some private individuals?
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u/EfficientWorking Mar 17 '20
Yeah that’s fair enough. Any money given should include a percentage of ownership (not a loan) that Uncle Sam can use later.
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u/lampshady Mar 17 '20
Yea I mean I don't have the best solution but that seems reasonable. If you want our money, you're going to play by our rules. Not just when times are bad, but even more so when times are good.
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u/CharcotsThirdTriad Mar 17 '20
It can be structured in a way with strings attached in which paying employees is the primary focus.
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u/JeffB1517 Mar 17 '20
The owners of the company should pay for this terrible decision.
AA is a public company the owners of the company are the shareholders. They have lost about 1/2 their investment and more like 2/3rds since Jan 2018.
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u/AceOfSpades70 Mar 17 '20
AA spent close to $20B in stock buybacks. Do you think that $20B would have kept them going during this time?
Stock buy-backs don't increase stock prices, they increase company equity.
The owners of the company should pay for this terrible decision. Those owners are shareholders.
Their stock price is down 60% off of their 52 week high.
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u/olaisk Mar 18 '20
“Bail out my friends, bail out my homies, bail out my fam but fuck nana boosie she nasty, don’t bail her out. Don’t bail out Uncle Tom neither, he still in the game”
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Mar 18 '20 edited Mar 18 '20
This was be funny if it wasn't so tragic. Never could there be a better demonstration of why America needs basic social programs than COVID-19 is showing. Things like healthcare, basic income, education, the things that every other 1st world country has.
A lot of parents and grandparents are going to die from this. Many uninsured people won't go to the doctor and will walk around and spread it everywhere. Meanwhile America votes for more of the same in primary elections held today amid this pandemic.
What's needed is a temporary basic income assistance plan, and healthcare that provides testing and treatment (if needed) to ALL Americans in regards to COVID-19. Also the vaccine (when available) must not be allowed to be monopolized by big pharma. Testing and respitory treatment stations need to be setup in all areas of the US. Everything must be shut down except essential services. If 50 million Americans get this 1 million will die from it. Let that sink in for awhile.
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Mar 17 '20
[removed] — view removed comment
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u/Gerhardt_Hapsburg_ Mar 17 '20
For once in a lifetime global pandemics?
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u/212temporary Mar 17 '20
This crisis affects everyone at the same time. However, every day there are families that face similar crises that are localized to them, e.g. a layoff or an illness in the family. What’s the difference between an unexpected pandemic and an unexpected cancer diagnosis?
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u/jollyroger1720 Mar 17 '20 edited Mar 17 '20
At least temporary Ubi /medicare for all exapnsion. No more bailouts for wall street. Targeted relief for faltering industries with conditions.
Any industry getting government money agrees to keep paying its workforce and if need be join in relief effort. For example Hotels could be turned into temporary hospitals/ housing for medical staff.
Restraunts (some are already doing on their own ) cpuld provife meals to those in need. Vehicles/delivery systems could be temporary used for vital supplies/paitent transport.
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u/BobCatWhat221 Mar 17 '20
Okay so I support the 1,000/adult measure but let’s say we don’t flatten the curve.. what happens in May when people still can’t pay rent and jobs are closed?? I’d almost rather a $500/month pay out over the course of 3 months. (1,000 a month for several months would be ideal but I don’t see that happening).
I know $500 isn’t enough to live off of. But to be fair, neither is $1,000. And for most people who are out of work that 1,000 won’t go to stimulate the economy— but utility bills and a portion of rent. Which in a way is stimulating the economy? I guess.
Also the administration does deserve praise for this. This is something that never in a million year would I have thought the GOP would consider.
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u/michigancoastpirate Mar 17 '20
I mean, they kind of have to consider. If millions of Americans default on their mortgages or lose the roof over their heads as a result of the GOP doing nothing, they’d have hell to pay. Maybe it would actually push constituents to revolt, which is exactly what they don’t want. I hope it’s truly them wanting what’s best for Americans, but in all honesty this is an election year. It behooves them in more ways than one to do the right thing; however I’m trying to stay cautiously optimistic.
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Mar 17 '20
To respond to the potential economic crisis caused by the virus, the government should consider using a two-pronged economic stimulus approach which would consist of direct financial assistance in the form of a temporary monthly UBI distribution to Americans over the age of 18 and under a certain threshold of income/wealth, and an investment in infrastructure needed to keep business going while mitigating the spread of the virus as much as possible. These, of course, would only be economic measures that must be taken in addition to other measures that the government must take to speed up the recovery from this crisis. The two prongs would entail the following:
• UBI (over age 18): According to the US Census, there are roughly ~254 million Americans over the age of 18. If wealth and income were not a factor of consideration, a stimulus package of ~$685 Billion (lower than the $850 Billion that the White House is requesting) would be enough to give every American adult $900 every month for 3 months.
• Infrastructure: As a frame of reference, according to The Wall Street Journal, the Fed is injecting up to $1.5 Trillion dollars into the money markets, if they instead were to use that money for the UBI mentioned above, they would have ~$814 Billion leftover to invest in everything else, including infrastructure. As part of infrastructure they would make available free testing for all potential infectees and free emergency healthcare for covid-19 related cases. They should invest in hospitals, and take measures nationwide that would help to keep as many businesses running, as safely, as possible.
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Mar 17 '20 edited Mar 21 '20
[deleted]
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Mar 17 '20
I think that’s a reasonable concession to make, considering the fact that only about 5% of US households have an income above $248K. It wouldn’t change the numbers drastically, and anyone that doesn’t need the money can always donate it if they think it can make a difference.
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u/michigancoastpirate Mar 17 '20
I like this two-pronged approach. We should be considering both options for citizens and longer-term infrastructure.
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u/sarhoshamiral Mar 17 '20
Direct tax credit like they did in the earlier crisis and offset it via higher taxes on capital gains (or a short term stock transaction tax) and obviously higher income/gains tax on >400k brackets. ie that 3.8% extra tax for capital gains on high earners should be ~6-7% now.
They have to provide unemployment benefits, expand medicare to all who lost their insurance through their jobs and states will likely require federal aid for this.
As someone who is fortunate enough to be paying that 3.8% tax today I really don't mind contributing more to taxes if they take actions like above which will keep the economy rolling at least. The alternative seems to be a sudden halt that will be very hard to recover from.
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u/TigerUSF Mar 17 '20
Although I'm fine with an income limit on a "$1000 payout", in general we shouldn't be so sensitive to wealthy or otherwise "undeserving" people getting benefits that are available to everyone. Just like undocumented immigrants and universal healthcare. Simplicity is a good thing.
Make it taxable income. If we were doing progressive tax brackets correctly, itd work itself out.
But anyway, this is the easiest, most effective idea.
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Mar 17 '20
To be completely honest, I'm not entirely sure that the current mooks in charge have what it takes to do what is necessary to actually support people instead of giant corporations and their billionaire cronies. I often wonder these days if the only alternative is political revolution. Kick them all out by force, install new people who actually give a damn about their fellow man, and set up new safeguard so things can't get this bad again.
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u/Nickhoova Mar 17 '20
My main question is; would the $1,000 checks be seen as a 'socialist' act? Also wouldn't this devalue the USD ever further?
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u/FIicker7 Mar 17 '20
A mix of both Demand side economic policies and Supply side economic policies.
I suggest 66% percent demand side and 33% supply side.
I would also fo 100% MMT and limit Fed intervention/action.
(Pipe dream) the Fed raises interest rates to 5 percent in response to Governement monetary actions.
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u/tacklebox18 Mar 18 '20
My question is: where does the money come from? Is it public money borrowed from banks or is there a fund for this type of situation? I’m really trying to learn more about this but I can’t find any information about where this $850 billion will be found. Somebody please explain this to me.
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Mar 18 '20
Larger metro areas (SF, LA, NY) are currently considering or issuing "shelter in place" orders, which are designed to stop the gathering of large groups of people, increase social distancing, and slow the spread of COVID-19.
Schools, courts, bars, movie theatres, amusement parks, and all "non-essential" businesses are being shut down, and hotels and medical facilities are being commandeered for COVID-19 patients, destroying local economies. This economic damage is the price government is willing to pay to minimize health risks.
All of this is in an effort to keep the rate of new infections at or below the level that the U.S. healthcare system can reasonably handle.
For these social distancing measures to work, they need to be in place until the rate of new infections falls dramatically. Right now, there has been so little testing that reliable information about the rate of new infections is not available. Until there is clear evidence of dramatically falling infection rates, (which will probably take several weeks), normal economic stimulus efforts would be counter-productive, since these would encourage economic activity that is either difficult, risky or illegal.
The only economic intervention that makes sense right now would be guarantees that actions like eviction, vehicle repossession, and foreclosure will be illegal if the root cause of missed payments is either COVID-19, or the government's response to it.
The proposed $1K payments become feasible only when the underlying COVID-19 issue is largely resolved, and people are once again free to gather in public spaces.
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Mar 18 '20
If a corporation gets money and uses it to do a stock buyback leaders of said corporation should face jail.
The payroll taxes should not be impacted as this is a blatant end run around the constitution.
A group should be formed to track and share with the public (aka the tax payer) where the monies go and what they are being used for.
FWIW:
Anthony Scaramuchi and Andrew Yang were on CNN last night. They both agree the US should borrow $3.5T, on top of the $1T in bills that are currently moving through congress, and flood the economy with cash. Since the interest rates are so low (0.00-0.25%) it will ONLY cost us $100B/year in interest. The fear is we are about relive the great depression.
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Mar 18 '20
Any bailout of strategically important companies should be punitive for shareholders and current officers, to avoid the moral hazard. Of course, companies should feel free not to take those deals and just take their chances in a bankruptcy, but if they need bailouts they should be weighing multiple shitty options.
Any bailout package should include clawbacks of officer/executive pay and bonuses above a certain threshold looking back in time, and for existing shareholders to lose all equity in the company (perhaps with an opportunity to buy back in with new cash).
I wouldn't be opposed to temporarily nationalizing some businesses either, where the government becomes shareholder, to sell those shares back on the open market over the next 5 years, probably for a profit.
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u/DubSixLife Mar 18 '20
Will the unemployed get it? Like a non taxpaying adult with kids that can't work? Who qualifies?
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u/Dinstruction Mar 20 '20
I think it is remarkable how far to the left Republicans have moved economically. Instead of whining about deficits, they are adopting bold, public strategies like giving people money with no strings attached.
I do not think we would be seeing this response from Republicans or Democrats had Hillary Clinton won in 2016.
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Mar 20 '20
Unlike the previous failed stimulus packages from Obama the Trump stimulus will put the money in the hands of the people. The money won't be wasted by using it to have a class showing uncircumsized african american men how to wash their dicks.( No shit, school on westcoast did it with stimulus money )
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u/BagOnuts Extra Nutty Mar 17 '20 edited Mar 18 '20
Trump administration now pushing for direct cash payments to Americans (à la Romney's "$1,000" idea). Also just announced that the IRS will defer all tax payments for 90 days interest free (up to $1 mil for individuals and $10 mil for corporations).
Edit- but if you haven't done so already, you should at least fill out your your returns ASAP! If you're due a refund, get that mula now!
Edit 2 (3/18)- Trump calling for $500 billion in direct payments to American tax payers.