Saving Our Economy: Are Taxpayers Getting Their Money’s Worth? By Adam Michel IfCongressdeterminesmoreaidfor individualsisnecessary,itshouldbetargeted tothosewhoneeditmost

Saving Our Economy:

Are Taxpayers Getting Their Money’s Worth?

byADAM N. MICHEL

Congress has authorized more than $3.6 trillion of to retool for the post-crisis economy. relief spending for individuals, businesses, and state Following state reopenings, employment bounced governments. About half has been spentas of the beginning back faster than most economists thought possible. In May of June. and June, U.S. businesses brought back 7.3 million jobs,

Much of the aid to date served as a floor for the making up about a quarter of lost employment. economy to rest on while “non-essential” functions closed Amid continued public health uncertainties, it may or operated at reduced capacity. The be necessary for Congress to new aid and assistance available provide more gradual off-ramps through existing programs, such to new and expanded programs, as unemployment insurance, serve like unemployment, but safely as temporary measures to allow reopening commercial society must public health officials to control the continue to be the focus. coronavirus pandemic. As the economy transitions

The economic recovery will from the safety net that allowed ultimately be dictated by our ability states to shutter large swaths of and willingness to return to work, their economies, many will call which necessitates an appropriately for new policies designed to restart scaled reopening and public ailing industries and jumpstart cooperation with health measures. employment. Past attempts at The trillions in pandemic spending economic stimulus show that have direct and immediate benefits governments can’t spend their way to the recipients, but federal aid into economic recovery. cannot keep a shuttered economy Adam Michel Stimulus spending is more than on life support forever. The just a waste of taxpayer dollars; spending will ultimately distort incentives, which could be costly during the recovery. The economic recovery will ultimately be stimulus destroys jobs and shrinks private sector growth. The 2009 stimulus channeled over $500

To keep people connected to dictated by our ability million to Solyndra, only to have their employers and businesses afloat, Congress created several new programs, including the popular and willingness to return to work. the solar manufacturer go bankrupt. Smaller projects, like a Nevada biomass electricity plant, shut its Paycheck Protection Program, a doors after federal funding stopped, loan program for small businesses and the “cash for clunkers” program, 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. benefits, through the end of July it’s more profitable not to The Great Recession policies demonstrated the inability workthan to work for as many as3 in 4 workers. of government spending programs to boost private activity

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. the recession and delaying the recovery by slowing workers Spending authorized by Congress to date is projected 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.