Summers: Trump’s $2,000 Stimulus Checks Are a Big Mistake

Date: 2020-12-28 19:45:44

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Former U.S. Treasury Secretary Larry Summers wrote for Bloomberg Opinion that $2,000 stimulus checks would be a bad idea, saying:

The attack I made on Bloomberg Television on the idea of universal $2,000 checks as a Covid-19 response has lit up the Twittersphere, so I think it worthwhile to be clear about what I am arguing.

Certainly, I am not opposing stimulus or favoring austerity. For years I have been making the secular stagnation case for more expansionary fiscal policy, and I have often remarked over the last couple of months that “not passing fiscal stimulus is like not wearing a mask at a large indoor gathering — an insane risk.” And both in the immediate term, and on a permanent basis, I am all for strengthening the social safety net with measures such as enlarged Supplemental Nutrition Assistance Program benefits or an expanded Earned Income Tax Credit or child tax credit.

There can be no argument that the stimulus bill Congress passed should be implemented immediately, even though it is too late and too little. As I have observed, it fails to support the states and localities as they try to rehire teachers and health-care workers. It does too little to accelerate the availability of the testing necessary to put Covid-19 in the rearview mirror. And its one-month extension of the eviction moratorium and 11-week extension of unemployment insurance are clearly far too short-term.

The issue is whether spending about $600 billion on a one-time tax credit that would be worth $8,000 to a family of four and reach more than 85 percent of taxpayers makes good economic sense. Victims of Covid-19 disruption can and should receive generous targeted support, as should the poor.

He joined Quicktake Monday to explain why direct payments appeal to politicians but might not make sense for the economy.

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