One way to fight a coronavirus recession: $1k for every American

> My wife and I have a newborn, which currently isn't very expensive but we all still need to eat

I imagine you would get $3k since there are 3 of you.

$1000 per adult and $500 per kid.

After all, only 40% of Americans are able to cover an unexpected $1000 expense. That's the really sobering number, in my view:

https://www.cnbc.com/2019/01/23/most-americans-dont-have-the...

If we apply this article's suggestions to your situation: 2,500 (2 adults, 1 child) * 12 months is 30,000 /year.

Like you said, too many people live paycheck to paycheck and our minimum wage keeps it that way. You can barely survive on it.

It costs about $75 billion a week to pay the hourly workers of America. We can do that, even if it's only a fraction for the companies that don't have the cash on hand to do it for 4-5 weeks.

Luck may not be the only factor. It sounds like you live responsibly/frugally as well, and reaping the benefit from it now.

People who have money saved will just dip into their savings and keep spending. At a reduced rate, but not at a rate that falls off a cliff.

But people who live paycheck to paycheck will just stop spending. Because they can't spend. And the money they didn't spend means reduced cash flow for someone else. Which means that other person (or business) won't spend.

In many cases, it will be a huge domino effect. Enough people take the paycheck-to-paycheck approach that there are essentially large numbers of people who have been moving synchronously, in lock step with each other. If one stops moving (spending), they all stop.

If spending stops, that means economic activity stops. Which is close to saying the same thing as saying recession.

Putting cash into people's hands counteracts this. The people who operate paycheck-to-paycheck are the main problem area that needs to be addressed to achieve the goal of keeping the gears turning. And when they receive $1K, they will spend every cent immediately, which is exactly what you need them to do. (People with savings aren't the main problem area, but they will also spend some of it.)

Economically, this is going to be very ugly for a lot of people, but putting $1K into people's hands could make it a lot less ugly compared to the alternative of not doing it, and I think that's all this is aiming for.

I take home $465.62 a week so it would be a little over 2 weeks of take home pay for me. I could absolutely use that.

"Annual income twenty pounds, annual expenditure nineteen [pounds] nineteen [shillings] and six [pence], result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."

– David Copperfield, by Charles Dickens

The Fed, which has no legislative oversight on this kind of thing, lowered interest rates to 0% and is buying $700B of treasuries to stabilize the banks. So you know, only twice that much authorized to make things marginally better for banks and the stock market.

So I think maybe pretend that it was actually $2k per person. Other than losing your job this seems like a reasonable amount to hunker down and not eat out or go to events for 6 weeks. But if you lose your job long term... I think the effect is going to be much longer than a few weeks of people working from home.

1k is considerably less than even unemployment, which is also not enough for a huge portion of society. I would say 3k is probably the bare minimum for 1 month of self-isolation. Essentially expanding unemployment (just over 2k) to everyone.

You are way out of band. The average American can't afford an unexpected $500 bill, lives pay-check-to-pay-check and doesn't have education beyond high school. $1k month would be HUGE for the average American.

Most common jobs are truck driving, retail workers, food prep and service.

You probably just live in an echo chamber where most people you live around and associate with are college educated people in professions like IT, Marketing, Accounting, etc.

There are other measures in talks too, like eviction protection during the duration of the outbreak as a state-wide in California. Utility companies have agreed not to shut off power and water for those late on their bills. So $1000 would go a long way keeping people from not starving, and maybe even go further to cover all costs like you mention in your case.

I spend more than $1000/mo in Austin, but my essential costs (rent, food, utilities) have always been <$1000/mo.

$1000 won't cut it for everyone, but it will be enough for a lot of people, and disproportionately enough for people living from paycheck-to-paycheck. They've already had financial pressures to keep their standing expenses low. And keep in mind that this is per adult, not per household.

This is our opportunity to get basic income perpetually.

We should've had it decades ago already.

There are three ways to make it possible: 1) issue government debt to pay for it 2) increase taxes to cover it 3) print money to cover it.

Number 3) will cause significant inflation, so it will effectively be paid for by tax on cash savings. High inflation is really bad, it’s a terrible idea.

1) has the problem of only working temporarily: you cannot indebt yourself indefinitely, at some point the service payments will become simply untenable.

2) is the only one practical, but the only way to make it work in practice is to increase taxes all across the population. In result, this will be $1000 monthly only for the very poor. For people around the median, this will balance out to zero or negative.

So, the only way this destroys debt bubble is by 1), inflation destroying cash debt. This is terrible: businesses will not have access to debt to finance operations, mortgages will not be accessible for people without significant savings to buy houses, etc. All around, a terrible idea.

So, refresh my memory: Was Reagan talking about this? Ford? (People attempted to shoot him twice, but not hit.) Kennedy?

For that matter, has a president ever seriously proposed this?

You sound like you're just making stuff up.

What are you talking about? Unless I'm forgetting someone, there have only been 2 assassinations, and one attempted one that famously failed. Lincoln was assassinated by someone who was mad about the Civil War. Reagan was shot by Sirhan Sirhan, but I doubt that's what you're talking about. Kennedy might be what you're talking about, but there's a lot of theories about what might have motivated that if you believe that it was orchestrated by someone and not the sole work of Oswald, with the biggest one I think being that Kennedy was planning to pull out of Vietnam. Anyway, even if your claim has merit, that's only a single data point.

Why? Because it contains them. Otherwise, where would they be? If they have little interest in holding down a job, they're probably out committing crimes, or sitting in jail for those crimes. So the thinking goes that UBI is a way to contain them without having to jail them.

I don't think this is the right way to think about this problem, but I think it's tempting to think this way.

My objection to it is that it'll be too easy to go after social programs, which for some I assume is the point--"you have the money, you don't need SNAP/Medicare/Social Security/etc". This proposal seems too much like an opportunistic attempt to trial the UBI. It'll be moderately successful on some metric, I'm sure, and that'll be used to push a permanent UBI.

You're right that it'll require a pretty fundamental shift in attitude. Some folks will still think people like that are losers. That's fine. But maybe we'll get to a point where they won't think such people, losers that they may be, are doing anything they're not entitled to be doing. That's the kind of shift in perception that's required to make it work.

We're never going to agree with everyone else's choices. We need to agree that they're entitled to those choices.

The idea is to get money into the hands of people who will actually spend it - the poor will tend to go buy their kid a desperately needed new pair of school shoes, for example, whereas the rich will just throw it in with their other savings. Only one of those stimulates the economy in the short term.

1. The pandemic reveals major holes in the social safety net that people are pretty upset about.

2. One party wants the patch the holes, and they continue to feel that way. The other party regards the holes as grimly necessary to keep people properly motivated, or part of God's divine plan, or impossibly expensive to fix in spite of the fact that less wealthy countries manage it, or something, and they continue to feel that way.

therefore

3. Woo, both sides are equally crazy!!!

This is why we can't have nice things.

That's because the citizens of California send most of their income taxes to the Federal government, where a portion of it is sent to red states to subsidize them. If California somehow seceded tomorrow and that money was sent to Sacramento instead, the state would suddenly have a budget surplus.

* https://tradingeconomics.com/iran/inflation-cpi

Not since at least 1970 AFAICT.

On the other hand, absolutely no-strings-attached money might see you spend it on something that you've needed for a while but haven't been able to afford.

Please explain to me how, in a country where 76% of the population lives paycheck to paycheck, putting more cash in their pocket doesn't stimulate economic activity? When someone loses hours at their job due to no customers coming through, how does making sure that person can still eat not, at bare minimum, ensure they can still eat, not help with economic activity?

> With fed interest rates near-zero people with good credit should already be able to get pretty good short term loans and this will help those without a credit score or with a poor one to be able to meet their obligations.

Oh, cool, we put the fuckers in debt in times of highly uncertain economic horizons, but we'll say it's helping them.

It has an indirect and huge impact on all of us.

For example, if you normally make the median income of $30k, but quarantine put you out of work for 3 months, you’re down to $22,500, your federal tax bill is ~$2700, and so this is most you can get from tax rebate. If you have children, this is even lower.

While I agree that tax rebates are typically correct approach, here it’s not the case: they won’t help much those who most need it, and they’ll help most those who don’t need them at all.

But even if we did provide universal healthcare, people who aren't working run the risk of losing their homes, access to food, and other necessities, so providing universal healthcare would only solve part of the problem that's being proposed.

We get so caught up in keeping benefits away from the wrong people that we end up simply not providing them broadly enough. It's counterproductive.

Sometimes you need to stem the bleeding to buy yourself enough time to fix the underlying problem.

This has been a problem for many years. Why the price of a textbook for a particular course are not paid for via the cost(s) of that particular course is beyond me. I am all for solving this problem, but it is one of many.

The point is it will be going to those who need it. Please don't throw the baby out with the bath water.

Cut out the optional services (streaming services) and fuel (not driving as much, $100/month fuel cost gets reduced to maybe $20 for the isolation month), and it can work in many parts of the country.

It probably wouldn't last long in San Francisco, New York, Seattle, and other high COL areas. And to make it last, you'd need roommates, which creates a hazard with regard to trying to create/enforce social distancing. But not every city or region has crazy high rent. Some places are still sane.

[1] https://www.cnbc.com/amp/2019/01/09/shutdown-highlights-that...

They just got their loan interest rates reduced. All with a nice excuse to cover for it.

You just don't realize you're in the top 10-20% of earners, and the difficulties of those underneath you.

You'd better put it aside and save it, because they're going to raise your taxes by $2000 to pay for it.

Isn't that the same overall effect as a lockdown and a direct cash payment?

Additionally, not everyone in debt got there by way of lack of personal responsibility. One ambulance ride and ER would send many minimum wage earners into debt, even if they were responsible with their earnings.

A solution to recessions is increasing Aggregate Demand. People spending money does just that.

It could take months if not years to do income and asset verification for every american and determine who would qualify

These sorts of micro-management solutions seem like the wrong approach to me. It is very hard to target them to people who really need it. Some people will still have jobs and don't need the assistance, some people can weather a couple of months without income, some people are retired and are living off their savings already, etc.

It seems to me that some sort of unemployment benefit program on steroids would be better. But that doesn't help with people who are self-employed. Perhaps there could be a special program to allow self-employed to take advantage of unemployment programs?

> companies affected

I'm wary of assistance in this area because it is next to impossible to understand all the ramifications of the bailout and businesses are generally better positioned to figure out how to "survive" in the new environment. I'd go back to my first comment above and focus on assisting people not companies.

> supply shock

This one I really wouldn't worry about as the market is going to address these shortages quickly. In fact I'm more worried about the government imposed shutdowns creating problems for companies who are trying to address these shortages (parents not working because they have to stay at home with kids, e.g.).

We've tried this and it's a dumpster fire. The government builds low income housing which is 100% people in poverty and it turns into a slum. The government subsidizes home loans and student loans and it raises the cost of housing and education. The government subsidizes food and then restaurant workers who already have access to food can't use the money to fix their car or whatever it is they really need right now.

People know what they need better than bureaucrats do. If you give them money and they need food, they buy food. If you give them money and they need transportation, they buy transportation. If you give them food and they need transportation, you messed up, which is what consistently happens in practice when you don't give them money.