Stimulus Bill Is Fine, But We'll Need More Soon

The Senate has passed a $2 trillion spending bill to fight the economic devastation wrought by the coronavirus pandemic. Though there was much last-minute dickering, the final vote was unanimous, indicating that legislators take the crisis seriously. Now the bill goes to the House, and let's hope it passes quickly. Time is of the essence. With many cities and states under shutdown to stop the spread of the disease, businesses are laying off millions of workers — an unprecedented collapse in employment:

To call the bill a “stimulus” is a little misleading because this is more about direct economic relief. Traditional economic stimulus is done in response to a shortfall of aggregate demand — a situation where people are cutting consumption, usually in response to a financial crisis, and the government wants to get them spending again. But now the economy is being forcibly ground to a halt by necessary pandemic-fighting measures. People can do without restaurant trips and new TV sets for a couple of months, but they still owe rent, debt payments and other bills. Businesses could simply shutter their doors and take a pause for a while, but they also owe monthly payments, so they’re in danger of bankruptcy.