Stimulus relief

[Lamb]

I don't think that the stimulus package will stop a recession from happening but it will help some people out who are in need as well as businesses. How will you spend your stimulus check if you get one?

 

[tango]

Sending checks so universally isn't likely to help a whole lot until businesses reopen. The people who will struggle to pay utility bills need the money but for many people it won't do much because they can't get out and do anything with it. The biggest problem with everything closing down will relate to knock-on effects and aftershocks, and handing out money like candy isn't likely to do much to stop it.

 

[hedrick]

This isn't a recession. In a recession you can give people money, and hope they'll spend it and spark the economy. But that won't work now, because the problem is that we've shut down the places they would spend it.

We need a replace the income of people who have been laid off, which is being called "unemployment on steroids." Normal unemployment is limited. In this case we need to continue it for the whole time the economy is shut down, which could be a year.

Giving $1000 checks is silly. It's not enough for people who are laid off, and not necessary for the ones who aren't.

We also need to preserve small businesses. Maybe some larger ones, but many of them can survive. Small businesses typically have almost no reserves.

Apparently the current draft has $500 billion which the Treasury dept can decide how to distribute. That's a bad idea no matter what party is in the White House. It invites an administration to give it out in ways that are politically convenient.

 

[NewCreation435]

I don't think that the stimulus package will stop a recession from happening but it will help some people out who are in need as well as businesses. How will you spend your stimulus check if you get one?

I do think by this summer we will be in a recession. I will just pay bills with whatever check we get.

 

[tango]

(In response to hedrick)

Very true. For someone living in NYC a $2000 check will barely cover half a month's rent. For someone living in a more remote area it could be several months' worth of rent.

One other aspect that politicians are historically very bad at considering is moral hazard. When airlines have handed out tens of billions of dollars in dividends and stock buybacks and now complain they don't have any reserves, why should the taxpayer just give them billions of free money? If the government is to provide them money it needs to be in the form of taking ownership of an appropriate proportion of the business, or a clearly defined loan, with terms that prohibit share buybacks, executive bonuses etc until the loan is repaid in full.

The thing that concerns me the most is the long term impact. If businesses, particularly small businesses, are forced to close their doors then sooner or later they have to shut down permanently. WIth businesses closing down all over the place opportunities for employment will be far more limited even after this thing blows over.

I'd also not be surprised to see a huge spike in the suicide rate both during and after this issue, particularly among people who grew businesses from nothing only to lose everything because the state mandated they stop trading, and among people who just made a life transition only to find they lost their job and as a result lost their home because the state mandated their boss close the doors.

 

[hedrick]

No one knows how this is going to end. It's possible that a one-time stimulus might make sense then. But that assumes it ends in a clear way. I'm not so sure it will.

 

[tango]

No one knows how this is going to end. It's possible that a one-time stimulus might make sense then. But that assumes it ends in a clear way. I'm not so sure it will.

That's also very true. To give every person in the US $1,000 would cost in the region of $350bn. If it needs to be done more than once (which it probably will, unless they figure a way to target it) then after three goes you're looking at a cost of $1tn ($1,000,000,000,000 to make it really pop). And even then, unless you're going to throw $1,000/week at everybody you'll still have people in places like NYC unable to even pay rent.

There has been talk of banning evictions but the trouble then is it just passes the problem to landlords. How is a landlord supposed to make mortgage payments if their tenant isn't paying the rent? So the next step is to prohibit the bank from repossessing. All well and good but it doesn't help anyone in the long term because if the tenant's job goes away you just delay the inevitable - the landlord will evict them for non-payment of rent as soon as the ban lifts. Although if it meant banks were more cautious about lending going forward at least some good might come out of it.

Throwing money around like that is hugely inefficient for reasons we've already covered but targeting it is likely to be just as inefficient and probably counterproductive, as it would encourage all sorts of untruthfulness. I can only imagine the screaming if the government were to do something like replace everybody's income as reported on, say, their 2018 tax return even if there were upper limits but at the same time if someone had a business bringing in a substantial income and that income went away overnight because the government ordered them to shut down, it's not inherently unreasonable of them to expect some form of recompense.

 

[psalms 91]

The idiots in Washington cant even get this done it seems

 

[hedrick]

There are disagreements over what should be done. It sounds like the concerns are real.

 

[Lamb]

The idiots in Washington cant even get this done it seems

Isn't Pelosi the one holding it up?

 

[psalms 91]

I would say it iws on both sides, that is McConnels talk but I am sure that there are things they refuse to budge on as well. Personally I think all these clowns and fossils need voted out Republican and Democrat. It is obvoius that they care little for the people they are supposedly serving.

 

[NewCreation435]

Isn't Pelosi the one holding it up?

The House already passed a stimulus bill. I believe it is the Senate that is holding things up

 

[hedrick]

Standard bargaining tactic is to claim the other side is holding up a deal. You have to look at what each is holding out for in order to make that judgement.

 

[tango]

Standard bargaining tactic is to claim the other side is holding up a deal. You have to look at what each is holding out for in order to make that judgement.

Interesting to see how the right-leaning media blames the Democrats while the left-leaning media blames the Republicans. Whodathunkit?

 

[Lamb]

The President has signed the bill and this will help so many people who are in need. I know too many who have been laid off so this gives them a chance to survive.