To Help the Economy, Stop the Epidemic’s Spread
Congress is acting fast to respond to the coronavirus epidemic — faster, indeed, than Congress can think. President Trump and Nancy Pelosi agreed on a spending bill that the House passed before anyone knows its cost or has had time to review its provisions. The Senate seems likely to follow suit.
It is important to remember, in evaluating the bill, that it should not be considered as a typical “stimulus” measure to combat a recession. Congress should be focused on four tasks: slowing the spread of the virus, aiding the treatment of those infected, providing relief for those adversely affected by both the virus and the efforts to fight it, and supporting the overall economy. These tasks sometimes overlap and sometimes conflict. In a normal recession, we would want to make sure that legislation does not discourage people from working. This time, at least for the short term and in many instances, we actively desire people not to go to work.
The bipartisan deal includes a provision to fund sick leave, the logic being that people who have the coronavirus should not feel pressure to go to work, and infect others, because they need the money. That logic may be too limited. Quick cash payments to a broader population may prove both easier to administer and more effective, since we do not want people to show symptoms and know they are sick before isolating themselves. They would also do more to compensate those who are going to face hardship as a result of the epidemic.
Increased payments to state health systems are also included. The details matter: We ought not heighten the post-Obamacare Medicaid program’s incentives for states to concentrate on able-bodied people above the poverty line. But in this area too, the basic imperative is clear.
Halting the spread of the virus and providing for treatment are ways to support the economy, albeit indirect ones. The Federal Reserve has more-direct responsibilities. Those should include additional reductions in interest rates, as President Trump has repeatedly urged. Rapidly declining inflation expectations are a sign that economic weakness has gone well beyond supply-chain disruptions. Among the many inversions of the moment is that the legislature is being a bit too hasty while the central bank is too slow.
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