Don’t plan on receiving and cashing a second COVID-19 stimulus check just yet.
A group of 20 fiscal hawks, many of the close advisors to President Trump, sent Trump and Senate Majority Leader Mitch McConnell a scathing letter that said in part: “… runaway government spending is the new virus afflicting (the economy).”
The harshly-worded letter warned that adding trillions to the already bloated federal deficit was “a road to financial ruin.” It is seen as a warning shot across the laps of Republicans up for re-election this year to back off proposals to inject more federal money into a U.S. economy still in need of coronavirus assistance.
Its authors include conservative economists Arthur Laffer and Stephen Moore, former Attorney General Ed Meese, Tea Party Patriots founder Jenny Beth Martin and long-time fiscal hawk Grover Norquist. Their letter said that government spending, including the $600 “bonus check” the federal government adds to state unemployment checks is “inhibiting the fast recovery we want in jobs and incomes.”
“The inside-the-Beltway crowd falsely calls these trillions of dollars a ‘stimulus’ to the economy,” the letter said. “But government can only give money to some people, as Nobel-prize winning economist Milton Friedman taught all of us many years ago, by taking money from others.”
Congress already has authorized more than $3 trillion in COVID-19 relief spending. McConnell wants to limit the next relief bill to $1 trillion, while Trump is pushing for a package closer to $2 trillion. House Democrats already passed a bill asking for a whopping $3.5 trillion.
The Republican group of fiscal conservatives rejects all three.
“To ensure the economic health of our citizens and the financial well-being of our nation now and for years and decades to come, we urge that the multi-trillions of dollars of federal government debt spending in the wake of the CoronaVirus come to a stop,” the letter states. “There is no limit to worthy causes, but there is a limit to other people’s money.”
Signs of a Recovering Economy
The record-setting 17.7% jump in retail sales in May combined with a dip in the unemployment rate to 13.3% are being read by the Republican group as signs the economy is recovering already and doesn’t need any more federal help.
However, there are still 21 million Americans out of work. Many of them have avoided foreclosures or evictions because of temporary laws banning that during the COVID-19 crisis. Those bans expired in many states in June and unless landlords are still in a charitable move, many families could lose their housing.
A survey by the Brookings Institution showed that one in five U.S. households were facing food shortages during the COVID-19 crisis.
Critics also point out that the record jump in retail sales in May (18%) was achieved after most states issued stay-at-home quarantine for residents in April.
Plainly, the White House and Senate Republicans are counting on more encouraging economic signs as states continue to reopen. May’s surprising employment numbers bought some breathing room for deficit hawks, but the events between now and the end of July will play a significant role.
Second Wave of Infections May Require More Stimulus
New cases of COVID-19 have surged in 21 states, with an accompanying spike in hospitalizations. Not all of the rise can be attributed to increases in testing, say medical authorities, giving elected officials pause.
Never mind what White House Economics Advisor Larry Kudlow says about a fresh wave of shutdowns being worse for the nation’s health than coronavirus, decisions about unleashing the economy will fall, as before, on governors.
And with New York Gov. Andrew Cuomo threatening to shutter misbehaving parts of his state — he’s talking to you, New York City Mayor Bill de Blasio — and New Jersey Governor Phil Murphy only now easing the vise on the Garden State, it’s not impossible to imagine at least some states returning to some hybrid form of shelter-in-place.
Never mind about the potential election-year politics of slamming the brakes. That’s a topic for another venue. We’ll simply note that it will be tougher for McConnell to keep his purple-state caucus members in line for a less-generous package if coronavirus appears about to take the economy out at the knees again.
Alternatives If a Second Stimulus Check Doesn’t Happen
In the meantime, if you or your family is concerned about making ends meet until the crisis is over, it might be worth your time to sign up for free credit counseling from a nonprofit agency. You will receive free advice on how to build an affordable budget that reduces your debt during the crisis.
Nonprofit credit counseling agencies have certified credit counselors, who specialize in money management and budgeting. They can examine your financial situation and suggest ways, such as debt management and debt consolidation, that will get you out of debt without having to take out a loan.
Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it in 2012, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering the high finance world of college and professional sports for major publications, including the Associated Press, New York Times and Sports Illustrated. His interest in sports has waned some, but he is as passionate as ever about not reaching for his wallet. Bill can be reached at [email protected].
- Wingrove, J. (2020, June 16) Conservatives Urge Trump, McConnell to Halt New Virus Spending. Retrieved from https://www.bloomberg.com/news/articles/2020-06-16/conservatives-urge-trump-mcconnell-to-halt-new-virus-spending
- NA. (2020, June 5) The Employment Situation – May 2020. Retrieved from https://www.bls.gov/news.release/pdf/empsit.pdf
- Torry, H. , Nassauer, S. (2020, June 16) U.S. Retail Sales Rose Record 18% in May. Retrieved from https://www.wsj.com/articles/shoppers-returned-in-may-likely-spurring-increased-retail-sales-11592299802