Last month, Democratic Senators Kamala Harris, Bernie Sanders, and Ed Markey proposed the Monthly Economic Support Act, a program to provide monthly stimulus payments directly to individuals.
Their proposal would pay up to $10,000 monthly to families earning less than $200,000. Payments would be retroactive to March 2020 and run until three months after the US secretary of health and human services declares the COVID-19 crisis over. Monthly amounts would depend on filing status and number of dependents.
The price tag would be mammoth — up to $5.7 trillion, which is more than twice the combined total US student loan debt and credit card debt and more than a fifth of the near $26 trillion national debt.
Totally missing from the discussion is the burden of repayment that would fall to future generations: They would be saddled with $41,000 of debt for each of today’s households. It’s a good bet that if the heads of these households were offered the same amount as a loan, with the condition that their children and grandchildren repay it, the proposal would get no support. Transparency would kill it in its tracks.
In announcing the legislation, Markey mistakenly likened the plan to the New Deal.
President Roosevelt’s New Deal was largely about the dignity that goes with a useful job. The New Deal’s public works projects reimagined the American landscape. Completing the Hoover Dam engaged thousands of people every day to erect a valuable means of flood control. The Bourne and Sagamore bridges over the Cape Cod Canal employed hundreds of workers from 1933 to 1935. New Deal programs were aimed at using the pride associated with work to lift millions of people out of Depression-era misery.
Today, the circumstances are quite different. Proposed stimulus payments are directed broadly to individuals regardless of whether their finances cratered, or even stumbled, as a result of COVID-19.
With a 13.3 percent federal unemployment rate that is predicted to rise to over 20 percent, more than six times higher than in December, millions of American families face financial crisis. It’s worse in Massachusetts, where unemployment is predicted to rise to near 25 percent.
Families, like those whose livelihoods are dependent on a Brooks Brothers plant in Haverhill that just announced it was closing and laying off more than 400 workers, face intense hardship, with uncertainty of future employment. These workers will not only need money, they will also probably need retraining in new or existing industries that emerge reasonably intact. When factories close in the Northeast, it’s rare for them to reopen. Money spent to keep them open may yield a handsome long-term return.
By definition, stimulus funds targeted to individuals aim to boost consumer spending and trickle up to stabilize the economy. With the high income thresholds for eligibility, it’s questionable how much will go back into the economy, as opposed to getting socked into savings.
Other proposals are more targeted. Among them are US Senator Josh Hawley’s proposal aimed at worker retention. Through employer refundable payroll tax rebates to rehire laid-off workers, the Missouri Republican’s proposal would fund pandemic-affected employers with 80 percent of US median salaries for the crisis’ duration.
Whichever of the many proposed packages ultimately passes — assuming one does — transparency and accountability must play a central part. What were the goals of the first stimulus package — the $2 trillion CARES Act — and were they met? How much went toward consumption and savings, respectively? What lessons were learned and how can they be applied to round two? What controls exist to ensure that funds go to only those who are eligible? How much of a 2035 tax dollar will be spent on stimulus debt and what does that mean for today’s 12-year-olds?
Congress must be on the hook to answer these questions.
We are a nation that believes in helping those in need. We are also a nation that highly values work and the rewards that go with it.
Maintaining our values in times of crisis is what unites us as a people. Funds should support those who need it and will spend it. Doing so transparently is a must to inform the public on what today’s spending means for their long-term stability.
The last thing we want is a new deal that is a raw deal for our kids.
Mary Z. Connaughton is the director of Government Transparency at Pioneer Institute.