When addressing the costs imposed by the coronavirus pandemic and the sudden shutdown of normal economic life, should Congress send aid directly to all Americans, or should it do something more narrowly targeted? Nancy Pelosi is infuriating progressives because her office is insisting that aid must be more narrowly targeted. Huffington Post reporter Zach Carter has marveled that Nancy Pelosi has positioned herself to the right of Tom Cotton. Pelosi’s not alone. Some conservatives want to make sure that no federal dollars go to people who don’t need them at this time.
I don’t think Right or Left matter much in emergency measures. But trying to finely calibrate financial assistance to Americans at this unprecedented moment is guaranteed to make these measures fail. Time is of the essence. Layoffs are happening at an incredible pace across the service economy. Small-business failures will come just behind them, followed by mortgages going into arrears, evictions, and eventually the failure of financial instruments and institutions next. Congress doesn’t know how to estimate the number of Americans who are going to need assistance shortly.
America’s political institutions have asked for an incredible amount of trust in this temporary shutdown to slow the spread of a pandemic. Americans are, with some exceptions, complying well even as they are plunged into incredible uncertainty about the stability of their own jobs. And so Congress is going to have to trust, in turn, that Americans will means-test themselves.
Yes, some millionaires and even a few billionaires may get these little assistance checks if the government rushes them out. If Congress is really sore about 1 percenters, it can find a way to add a surcharge to income taxes in the future, clawing the money back as revenue.
But as it becomes clear in the weeks ahead how painful these shutdowns will be, I expect that Americans who are retaining their salaries will intelligently donate and redirect universal aid to the needy people and charities that Congress could never design a program of aid to help.
Making the aid universal makes it faster and more effective. Allowing citizens to make millions of separate and decentralized judgments about the needs in their communities will also make the aid more effective overall. This isn’t a normal recession in which firms, entrepreneurs, and workers are alerted to “malinvestment” in the economy and asked to readjust. The service sector doesn’t deserve in any way the pain being inflicted on it. So let’s not try to set rules as if we’re teaching citizens a lesson.