“A new poll of 1,164 likely voters conducted January 15 to 19 by Vox and Data for Progress (DFP) reveals an oft-ignored truth: Sometimes the reason optimal policy doesn’t happen isn’t because of bad politicians; it’s because voters don’t want it to pass.
In the poll, 60 percent of likely voters said they would support sending a $1,400 one-time payment to most Americans as part of Covid-19 relief. That’s great news — the $1,200 stimulus checks last year were shown to have reduced poverty and helped Americans stay afloat in the first months of the crisis.
But that same number (60 percent) support means-testing the aid, agreeing with the statement: “Checks should be phased out based on income so higher income people receive less money.” The poll, which has a margin of error of 2.9 percentage points, also found that nearly as many likely voters (56 percent) are opposed to sending stimulus checks to undocumented people.
Voters may not fully understand the trade-offs to means-testing and restricting aid to undocumented Americans (namely, that many people experiencing financial difficulties may be left out due to poor targeting). But the stance is consistent with another DFP finding, which Matt Yglesias wrote about for his newsletter Slow Boring, revealing that voters would rather some vaccine doses expire than allow “some people to cut in line.” In essence, that means most voters would rather have more people get Covid-19 and potentially die than have someone get a vaccine dose before they “should.”
Opposition to the wealthy receiving financial assistance from the government and hostility to undocumented immigrants isn’t surprising, but these findings showcase something very important: Voters are so concerned about the perceived “fairness” of the economic response that it could hamstring optimal policymaking.”
“America is in a crisis, and it’s a trade-off between speed and accuracy. Yes, some people who get the money may save it, they may not be financially harmed by the pandemic, and it may feel unfair, but it’s better that everyone struggling gets the money as quickly as possible than we slow down the process over a flawed conception of justice.”
“Proponents of means-testing may point to recent data that stimulus checks to Americans earning over $75,000 don’t benefit the economy — in essence arguing it’s a waste of government spending. However, as Matthews pointed out, the simple fix to this would be to just tax rich people more later to recoup the costs instead of wasting time during a pandemic trying to design the optimal program. Additionally, we only have this data in hindsight — at the time, it wasn’t obvious where the dividing line between “affected by the pandemic” and “unaffected” was.”
“One silver lining in the poll is the finding that 51 percent of likely voters are in favor of automatic stabilizers that “automatically trigger more spending on programs like unemployment insurance or SNAP if the economy experiences a contraction.” It’s something Biden has signaled his support for and that could help the nation avoid wasting precious time the next time there’s a recession.”
“Regal Cinemas announced in early October that it will temporarily close all 536 of its U.S. locations as the COVID-19 pandemic continues to keep customers away. This move affects about 40,000 employees across the country. Yet nobody in Congress is talking about a bailout for theaters.
Now compare that with the airline industry.
In April, Congress passed a $50 billion bailout for the airlines, including $25 billion in subsidized loans and another $25 billion meant to keep most airline workers employed until the end of September. As predicted, since consumers were not yet ready to fly, this taxpayer-funded band-aid only postponed the inevitable.”
“Some companies are taking a different approach to retaining their employees. Southwest Airlines, for example, is asking its labor unions to accept pay cuts through the end of 2021 to prevent furloughs and layoffs. Singapore Airlines has done the same.
Airlines also have access to capital markets and have many durable assets they can sell or use as collateral to secure additional financing, even during a crisis. And even without sacrificing these lucrative assets, airlines can turn to their credit-card-issuing partners for liquidity, as they have in response to past financial challenges.
Sadly, as long as demand for air travel remains deflated, there will be no way for airlines to avoid slimming down their payrolls. Subsidies provided under the cover of payroll programs are not necessary to protect an industry that can, and perhaps should, pursue restructuring through bankruptcy. Airlines can continue to fly safely during this process as a judge imposes a stay on creditors’ claims and gives the carriers breathing room until consumers are ready to come back.
Unlike special favors granted by Congress, the bankruptcy process is equitable. It shifts the cost of the crisis onto airline investors, who make good returns during good times in exchange for shouldering the decreased value of their investments during bad times, instead of taxpayers. Without another bailout, the skies that the airlines fly will be fair as well as friendly.”
“The whole “airborne” debate can get very complicated and technical, but the basic issue is simple: Indoor dining is very unsafe. And the outdoor dining that’s been used as a substitute is running out of steam as weather gets cooler across much of the country. For health reasons, we need fewer customers at these businesses. For economic reasons, we need them to survive. The fix is a huge bailout.”
“Let’s remind everyone why we shouldn’t bail out airlines. Yes, the coronavirus crisis is both a public health and an economic tragedy. But this doesn’t justify the government granting special privileges to private firms, at least not without those firms first taking other available steps to potentially avoid the need for a bailout.
There are other options they could pursue.
First, the airlines still have plenty of access to private capital markets. They own significant amounts of durable assets that they can sell or use as collateral to get additional financing. Indeed, they’ve been able to secure substantial private capital since the beginning of the pandemic.
Second, if private financing fails, some airlines can and should do what they’ve done in the past when in such a predicament: declare bankruptcy. Past bankruptcies tell us that airlines can continue flying safely even during a bankruptcy, so there’s no systemic risk posed to the economy at large.
To be sure, bankruptcy would mean that, for the time being, airlines may fly on more limited routes. But that shouldn’t be a problem in light of a collapse in demand, which won’t be resolved as long as Americans remain wary of flying.
There’s no easy solution during this pandemic. Many people and businesses have no options at all. But an airline bailout would bring about more negative consequences. The first is that it’s a huge expense for taxpayers to shoulder with no promise for a solid return. We’ve already bailed out the airlines, and all this past coddling has done is to postpone the inevitable layoffs of its excess employees.
Analysts don’t think air travel will return to prepandemic levels for several years—some say up to seven. Let’s assume that it takes five years for air travel to return to its previous level. That would require taxpayers to extend up to $320 billion in bailout funds to the airlines.”
“A report from the National League of Cities in May revealed that the states weren’t very good at getting the money to local governments. Also, a new dataset collected by the Department of the Treasury Office of Inspector General that looks at how much the state and local governments have spent of their coronavirus relief bill funds as of June 30 shows that they have spent much less than you might think.
Some states have spent virtually none of the money allocated by Uncle Sam.
South Carolina, for example, has yet to use its $2 billion in relief. Michigan, which is asking for a bailout, spent only 3 percent of the more than $3 billion it received. New Jersey is also asking for a bailout, yet it has distributed a measly 2.1 percent of its federal funds so far.
The states demanding bailouts may likely argue that what they really need is more flexibility in order to be able to use federal funds to address their revenue shortfalls. As matters stand right now, states must use the bailout money on coronavirus-related expenditures. So, when those actual expenditures are lower than the allocated funds, they can’t spend them.
The flexibility argument doesn’t hold water, in my opinion. It’s one thing for state and local governments to ask the federal government for help to cover expenditures they couldn’t foresee, such as those related to the pandemic. But they shouldn’t be asking federal taxpayers to pay for their routine expenditures, especially when these governments have failed to plan appropriately for revenue shortfalls that inevitably occur, as they’re bound to encounter emergencies. Governments should prepare for them. They should cut spending and, if that’s not enough, they should turn to their own citizens for the funds needed to cover non-coronavirus expenditures. Those funds could be obtained through higher taxes or spending cuts elsewhere. Their routine spending should come from their taxes.
State and local governments are always eager to have the federal government solve their financial problems for them. But they will continue to have financial difficulties as long as Uncle Sam continues to cave. The first step toward having healthier and more responsible state and local governments would be no bailout.”
“The Maine lobster industry, which has been battered for years as a result of the Trump administration’s trade war with China, got some good news Wednesday. The president unexpectedly announced that the lobster industry will be eligible for bailout funds that had previously only been given to farmers and ranchers.
Trump being Trump, he portrayed this not as what it is — a course correction aimed to belatedly limit the collateral damage of his own policy ideas — but rather as an effort to rescue coastal Maine from the depredations of the Obama administration which he claimed “destroyed the lobster and fishing industry in Maine.””
“Maine fishing actually prospered a great deal during the Obama years. It was a generally rough period for the Maine economy, especially inland, due to both the overall weakness in the American labor market and a specific structural decline in demand for paper. But the lobster industry did very well thanks to a combination of what seems to be an increase in lobster catches induced by climate change and strong demand from Asia.”
“The origins of this week’s lobster policy announcement lie in taxes that Trump initially imposed years ago on goods imported from China. Those higher taxes did not generate the policy concessions Trump was looking for, so they led to higher and more wide-ranging taxes on Chinese imports over the years.
China retaliated against these moves by reducing imports of a range of American-made products, largely agricultural, which created a political problem for Trump because rural voters are one of his important constituents. The tariffs also raised consumer prices in the United States by something like $57 billion per year, according to the conservative American Action Forum. But Trump never expressed much concern about the impact on consumer prices, insisting (falsely) that the economic cost of the taxes fell entirely on Chinese producers.”
“Governing requires setting priorities, and that’s never more important than during a crisis. Members of Congress have a political incentive to spend and spend and spend, but there simply isn’t enough money to go around—in fact, we passed that point a long time ago.
“I do believe it makes sense for the government to provide support to businesses and families that can’t make it through this,” Sen. Rand Paul (R–Ky.), who voted against this week’s coronavirus bill, said Tuesday on the Senate floor. “I don’t want to see this massive accumulation of debt destroy this great country.”
Lawmakers would do well to keep one eye on the mounting debt as they consider their next steps.”
“There’s consensus in Congress that another relief bill is needed, and Democrats have been talking about either extending the extra $600 a week in federal aid or adding more weeks before an individual would be kicked off regular UI benefits (without the extra $600 per week), according to a senior Democratic aide.
But the problems that currently exist have led unemployment experts like Stettner and Evermore to say that Congress also needs to fund the system itself, by helping states add more employees and get better technology to help connect people to the benefits they so badly need.”