Sunday, July 26, 2020

Another Coronavirus relief package is planned with another round of $1200 checks expected.

White House economic advisor Larry Kudlow. CNBC/Getty.

Another Coronavirus relief package is planned and if passed it will result in another round of $1200 checks. CNBC. Republicans in the Senate have finalized the bill and will introduce it tomorrow. The bill is worth $1 trillion and will provide funds for the checks along with funding for additional unemployment benefits, liability protections for businesses, funds for schools to reopen and tax incentives for employers to rehire workers. The package would also extend the federal eviction ban, which doesn't allow evictions from housing that receives federal funds. The unemployment benefit might be a sticking point as Democrats want to reinstate the $600 a week supplement while Republicans want to reduce it to $100 a week and cap unemployment at 70% of lost wages. 

My Comment:
I have little doubt that this plan will pass. The Democrats do not want to be known as the party that prevented a Coronavirus relief bill in an election year. To do so would be awful optics for them and the voters might not forgive them for it. They may extract some concessions, particularly on unemployment benefits, but the bill will pass. 

The $1200 checks are obviously the big news from this. The last round of checks was extremely popular among the people that got them. Not only does a large cash payment help people pay off their bills, it will also be used to make purchases, which could help the economy. 

On a side note, I do have to say that I personally don't need anymore checks. My company has been taking good care of me, giving me several coronavirus related bonuses, hazard pay and wage increases. Giving me another $1200 seems pretty dumb under those circumstances, but I sure as hell am not turning the money down! 

I do have to say that I have some skepticism about the utility of the $1200 from an economic standpoint. For the people getting the checks who are broke it's a godsend, but for everyone else I'm not sure. I personally will probably just leave it sit in the bank as there are few big ticket things I want to buy right now and travel isn't an option either. If everyone does that then the economic benefits won't be there.  

The evictions thing is interesting too. I think no matter what there is going to be a major wave of evictions and all the bans are doing is delaying the inevitable. If people can't pay their rent then they will get kicked out eventually. All delaying that from happening does is hurt the landlords. Yes, many landlords are terrible but they still provide a critical service and they should be allowed to kick out people who don't pay. 

As for unemployment benefits I hope the Republicans stick to their guns. The now expired $600 bonus created some pretty perverse incentives where it was more profitable to remain on unemployment than to get a lower wage job. That worked out great for the people on unemployment but not so well for businesses that needed workers. The new lower rate would still help the unemployed but not so much that they would give up on trying to find a job. 

Still, I do have to say that as far as the GOP is concerned fiscal conservatism is dead. I doubt there is going to be much outcry in the fact that we are spending another $1 trillion dollars. In the past the GOP would have been up in arms about this but people mostly seem to be on board. Part of it is the extreme circumstances we are in but it just goes to show how much the party has changed in recent years. 

Politically this is a win for President Trump. He won big with the checks the last time they got sent out with even demographics that don't usually support him praising him. I saw a lot of young black males on Twitter loving President Trump for this, despite the fact that Congress of both parties had a role in it. Though Twitter shouldn't be taken as proof of anything I do think it shows that this is a winning move for President Trump. 

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