Saving Our Economy:
Are Taxpayers Getting Their Money’s Worth? by ADAM N. MICHEL Congress has authorized more than $3.6 trillion of to retool for the post-crisis economy. Following state reopenings, employment bounced relief spending for individuals, businesses, and state governments. About half has been spent as of the beginning back faster than most economists thought possible. In May and June, U.S. businesses brought back 7.3 million jobs, of June. Much of the aid to date served as a floor for the making up about a quarter of lost employment. Amid continued public health uncertainties, it may economy to rest on while “non-essential” functions closed be necessary for Congress to or operated at reduced capacity. The provide more gradual off-ramps new aid and assistance available to new and expanded programs, through existing programs, such like unemployment, but safely as unemployment insurance, serve reopening commercial society must as temporary measures to allow continue to be the focus. public health officials to control the As the economy transitions coronavirus pandemic. from the safety net that allowed The economic recovery will states to shutter large swaths of ultimately be dictated by our ability their economies, many will call and willingness to return to work, for new policies designed to restart which necessitates an appropriately ailing industries and jumpstart scaled reopening and public employment. Past attempts at cooperation with health measures. economic stimulus show that The trillions in pandemic spending governments can’t spend their way have direct and immediate benefits into economic recovery. to the recipients, but federal aid Stimulus spending is more than cannot keep a shuttered economy Adam Michel just a waste of taxpayer dollars; on life support forever. The stimulus destroys jobs and shrinks spending will ultimately distort The economic recovery private sector growth. The 2009 incentives, which could be costly will ultimately be stimulus channeled over $500 during the recovery. million to Solyndra, only to have To keep people connected to dictated by our ability the solar manufacturer go bankrupt. their employers and businesses and willingness to Smaller projects, like a Nevada afloat, Congress created several new return to work. biomass electricity plant, shut its programs, including the popular doors after federal funding stopped, Paycheck Protection Program, a and the “cash for clunkers” program, loan program for small businesses to keep their payrolls up. However, workers face different to subsidized new vehicle purchases, simply changed when incentives. Under Congress’s expanded unemployment people bought cars, not how many they purchased. The Great Recession policies demonstrated the inability benefits, through the end of July it’s more profitable not to of government spending programs to boost private activity work than to work for as many as 3 in 4 workers. If extended, the additional $600 weekly unemployment or increase total output. The private sector, not Washington, benefit could create a more sluggish labor market, deepening must lead the economic recovery. Spending authorized by Congress to date is projected the recession and delaying the recovery by slowing workers return to employment. Businesses receiving loans and to increase debt-to-GDP levels above 100 percent by the other government subsidies, such as direct grants to the end of 2020. Higher levels of public spending and debt can airline industry and other loans to businesses, will face crowd out private investment directly, and if spending isn’t new government restrictions and public pressure against quickly brought under control, it means tax increases on changing employment levels or other decisions necessary every American are around the corner. 18
RIPON FORUM August 2020
