As Congress scrambles to pass another COVID-19 relief bill, it must decide how best to put money into the hands of people who are suffering from the
As Congress scrambles to pass another COVID-19 relief bill, it must decide how best to put money into the hands of people who are suffering from the economic fallout of the pandemic. The three leading choices appear to be: extending enhanced federal unemployment benefits, expanding refundable tax credits, or another round of direct economic impact payments. A fourth idea, President Trump’s plan for a payroll tax holiday, appears dead. But which is best?
Unemployment benefits. In theory, continuing enhanced jobless benefits is a strong choice. It targets aid to those who need it most—people who lost their jobs. But in practice, distributing money through the unemployment system has problems.
The CARES Act included a temporary $600 per week boost in federal jobless benefits, and there is broad agreement to extend that assistance, though lawmakers are split on how big the enhanced payment should be.
Republicans argue that $600 on top of state unemployment benefits is higher than the pay of many workers, and thus is a disincentive for people to return to work. Democrats say that in much of the country, people either cannot work because of the ongoing pandemic or have no jobs to return to. In this week’s TPC webcast The Prescription, Michigan State University economist Lisa Cook said that, with the pandemic still spreading in many states, her advice is to “keep people at…