With COVID-19 still wreaking economic havoc, both parties want to enact a new federal rescue package before they face voters in the fall. But Congress and the White House must avoid the mistakes they made in the $2 trillion CARES Act, enacted in March.
There is no question more federal help is needed. Continued public-health restrictions, as well as reluctance to shop or dine out, keep many people from working, even as they are eager to get back. Fear of travel, and closed borders, keep the tourist industry dead.
As a pandemic has turned into a recession, white-collar people have lost their jobs, too. People who fear losing their job — which is almost everyone by this point — have cut back on spending.
The CARES Act has done much good in alleviating the pain. In late June, 14.1 million people, or more than 11 percent of the private-economy workforce, were receiving extraordinary unemployment benefits, including $600 a week from the feds in addition to the average $400 from state governments.
Extra $1,200 stimulus checks helped tens of millions of people pay the bills. And the $521 billion Paycheck Protection Program has helped companies keep 51.1 million people employed, even if some of these workers have seen job cuts only delayed, not avoided, as the slowdown has continued beyond the program’s initial eight-week scope (now extended to 24 weeks).
But the unemployment aid was too broad. With the extra $600 a week in unemployment benefits, 40 percent of recipients are making more now than they did at their jobs. And the benefits were targeted to a fast recovery, when it’s clear COVID isn’t going anywhere soon. In an attempt to stimulate the economy, Congress sent $1,200 checks to tens of millions of people who didn’t need the money.
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