There has been a lot of talk now about bailing out the airlines and travel industries. But what about the common man? Will he get a break? The answer may be soon, as one economist is proposing “coronavirus relief” in the form of a subsidy given to people at a rate of a grand per person and $500 per child according to the Wall Street Journal.
President Trump has floated the idea of a payroll-tax cut, but this has significant drawbacks. It would be too slow and dispersed to substantially stimulate the economy, as households would receive only a modest benefit every pay period. The distributional effects are worrisome as well: A one-year payroll tax cut of 2% of income would provide up to a $5,508 tax cut to a high-income couple, only $500 to a single parent getting by on $25,000 a year, and nothing for a worker placed on leave without pay. This isn’t the fairest or most efficient way to increase aggregate demand.
Instead, Congress should pass a simple one-time payment of $1,000 to every adult who is a U.S. citizen or a taxpaying U.S. resident, and $500 to every child who meets the same criteria. This is similar to, but somewhat more generous than, what President Bush did in 2008. Back then, electronic deposits were made available within three months. Some consumers might spend the money right away to meet rent if they lose their regular paycheck; others might have stronger balance sheets and spend the money at whatever uncertain date the virus is contained.
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If this happens, it would be a massive bailout of the American population. It would be 2007, but for people and not corporations.
I’m not saying this is good. It would likley devalue the dollar.
I am saying that one should pay attention to it because if it happens, it will have major political consequences and economic ones too.
This would be fascinating- in a bad way -if it happened, as it would be TARP for the public.