Discover more from Noahpinion
The U.S. government gave out way more than $600
Complain all you want about where the money is going, but stop saying it's less than it is.
So, a bunch of people are complaining that the new COVID relief package is “just $600”. They’re referring to the one-time $600 checks that the package is sending every American who makes less than $75,000 a year. There are a huge, huge number of people doing this, so I’ll just point out a few:
This is misinformation. It would be great if the $600 checks were larger, but in fact, the bill already has much more than those $600 checks. This should be completely obvious to everyone who sees that it’s a $900 billion package. $600 multiplied by the total number of Americans (~330 million) is only about $200 billion — only about 2/9 of the bill’s total spending. In fact it’s a bit less, since higher-income Americans aren’t getting the checks.
$300/week extra unemployment benefits through mid-March
$284 billion for the Paycheck Protection Program, which lends businesses money and then forgives a big chunk of the loans if the businesses use the money to keep workers on payroll
$82 billion assistance for schools and universities
$68 billion to distribute and buy COVID vaccines for people, and to expand COVID testing
$45 billion for transit, including airlines, mass transit, highways, and Amtrak
$25 billion in rental assistance (comes with an eviction moratorium through January 31st)
$15 billion for child care centers
$13 billion for SNAP (food stamps)
$13 billion for farmers
$7 billion for broadband access
This is a hell of a lot more than $600 checks (and will still be more even if the checks get upped to $2000). Now, you can complain all you want about the way the money is being spent — and we can talk about that in a minute — but first everyone needs to acknowledge that the government is doing a lot more than just those $600 checks. That is a piece of misinformation, and people need to stop saying it.
And folks, while you’re at it, stop saying that the original CARES Act was just a bunch of $1200 checks. Obviously it was also a lot more than that.
And finally, don’t try to weasel out of this by saying “Oh, I said the only stimulus was $600 checks, the rest of this spending isn’t stimulus.” The rest of this spending also stimulates the economy, folks — in fact, direct government spending tends to be a better stimulus than just mailing checks. (Besides, the point of this bill isn’t even stimulus in the first place; it’s getting people through the pandemic. Stimulus is what we worry about after the pandemic is over, and it’s safe for everyone to go back to work.)
OK, so before we talk about how the money is being spent, let’s pause for a second to appreciate the fact the U.S. government has actually dished out a ton of money in this pandemic, and it’s had a huge and positive effect.
The U.S. government has spent a lot on COVID relief
How generous has U.S. COVID relief been relative to other countries? This is hard to compare, because different countries have done COVID relief in different ways. And on top of that, different countries started out the pandemic with different spending programs in place — so for instance if the U.S. buys everyone free vaccines through the relief bill, but vaccines are already free in the UK through their regular health care system, can we really say the U.S. was more generous? Etc. etc.
OK BUT, there are some ways we can compare generosity across countries. And here the U.S. comes out looking pretty damn good.
For example, we can compare how people’s incomes actually went up or down! For example, in Q2, when the first wave of the pandemic struck and the U.S. passed the CARES Act, American incomes did better than almost any other OECD country:
Remember, this measure takes existing social programs into account too. And you can clearly see on the graph that it’s not because the U.S. economy did well; median income rose strongly even as GDP tumbled. The gap between the blue and red bars is bigger than for any country except Canada.
As an actual percent of GDP spent on COVID relief through the end of 2020, the U.S. has been a little above average, lagging behind Japan, Germany, and Sweden, but coming out ahead of Australia, Canada, France, and the UK:
Now let’s talk about how much people actually got. According to a report by McKinsey:
In 2020 alone, governments in the European Union are expected to spend an additional $2,343 per person compared to 2019, while in the United States, spending will be $6,572 higher.
That’s a big difference! They also note that median personal income in the U.S. has risen during the pandemic, and savings have risen as well. In fact, while the CARES Act’s unemployment benefits were still in effect, the poverty rate in the U.S. actually fell!
So however you slice it, the U.S. has spent a lot on COVID relief this year. So let’s not pretend that the U.S. government has been miserly compared to its peers in the face of this pandemic.
That said, there’s plenty to complain about in the way the U.S. has spent this money.
Problems with U.S. COVID relief spending
The biggest problem with U.S. COVID relief spending was its unevenness. Pandemic UI, the best part of the CARES Act, ran out at the end of July, and is only now being partially revived. That led to big gaps in income for a lot of vulnerable Americans. It fell victim to Republican obstructionism and the usual misguided deficit hawkishness.
Another problem was the way Pandemic UI was administered. The whole thing was done through the state unemployment insurance systems, which were totally overloaded. A lot of people had their checks delayed, and some never even got them at all. That’s obviously going to cause justifiable anger, and it’s a good reason to have unemployment benefits administered at the federal level going forward.
A third problem was the way the Paycheck Protection Program money got spent. Some people characterize PPP as a giveaway to business, but that’s only partially true. Remember that the PPP loans are (partially) forgivable only if businesses keep employees on payroll. So a lot of the money gets passed on to workers. In the meantime, keeping businesses alive is generally a good thing, since that way they’ll be able to employ people again very quickly after the pandemic is over.
That said, the PPP money was often administered badly. A lot of the money earmarked for small businesses was given to big businesses instead. Politically well-connected companies got more than their fair share, including Trump cronies. There were other issues as well.
Beyond these problems, you can certainly argue that the government should have spent more on rental assistance, food, or money to the states. Those are perfectly legitimate arguments.
But I think the real reason many people are complaining about the $600 checks — beyond just the fact that they want to bash the Washington establishment — is that they’re realizing that the U.S. welfare state is based on work rather than universalism.
Well, welcome to America.
Universalism vs. Workfare
The U.S. welfare state is mostly about work. This has been true since the New Deal. Social Security benefits depend on how much you earn during your working years. The U.S. health insurance system is largely administered through employers, except for the old and the poor. Unemployment Insurance depends on having had a job. Direct payments like the Earned Income Tax Credit and the Child Tax Credit depend on people working — if you don’t make any money yourself, you don’t get the government cash. And of course there’s the infamous 1996 welfare reform and its work requirements. Many socialists argue for a federal job guarantee.
In other words, the U.S. traditionally expects people to work in order to get government help. It’s not alone in this — the Soviet constitutions of 1918 and 1936 both quoted the biblical aphorism that “He who does not work, neither shall he eat”. U.S. government benefits that don’t depend on work — Medicare, Social Security Disability, and so on — often are targeted toward people who have an obvious reason why they can’t get a job, such as age or disability.
But the pandemic has put a lot more people than usual in direct need of U.S. government help, and many are discovering that they don’t like the idea of workfare. It’s one thing to talk about personal responsibility during normal times (especially if you have a nice job yourself), but does the government really expect people to lift themselves up by their bootstraps in the middle of a goddamn PANDEMIC??
So it’s possible that the anger over the $600 checks indicates a growing rebellion against the whole workfare concept. It may be that in the coming years we’ll see more support for universalist programs like national health insurance and universal basic income.
And maybe that will be a good change. It certainly is something that bears thinking about. But in the meantime, don’t say that the government only gave out $600 checks. Most of the money was spent via the U.S.’ traditional work-centric welfare state, targeting people who lost their jobs or protecting the jobs of people who were still working. That’s the way the U.S. does welfare, and maybe it’ll change in the future, but we should all be able to agree that it’s a hell of a lot better than nothing.
By the way, remember that if you like this blog, you can subscribe here! There’s a free email list and a paid subscription too!