Dennis Jarvis/Creative Commons
Unsanitized-111220
The money cannon. (Approximately.)
First Response
It’s Thursday, and that means weekly first-time unemployment claims were released. They show that, between standard unemployment and the Pandemic Unemployment Assistance (PUA) program for freelancers and gig workers, over 1 million people applied for unemployment benefits for the 34th week in a row, an unprecedented number. Eight months into this crisis, more people are filing for benefits every week than the worst week of the Great Recession. As of last week, 21 million workers are claiming meager unemployment benefits, without any federal enhancement.
About 13 million of these claims are in PUA and PEUC, a CARES Act program that extends benefits for 13 weeks. Both of those expire at the end of the year and cannot be paid out after December 26. Within just a couple months, you could see more than half of the people receiving too-small unemployment benefits right now cut off, with no means of support.
That will come during the darkest moment of the public health crisis. While states continue to resist the obvious, Biden coronavirus task force adviser Dr. Michael Osterholm is calling for a 4-6 week lockdown in advance of any vaccine, which is impossible if millions of people have no money coming in. The public health imperative has to be paired with real economic support for those struggling.
Osterholm said that the government could pay out the lost income from another lockdown, and pay state and local governments for their lost revenue, which must be done anyway to avoid crippling austerity from the existing shortfall. But that’s only possible in a fantasy world where Mitch McConnell or Joe Manchin don’t have firm control of the direction of the Senate. It’s a nightmare scenario for the incoming president, forced to watch either too many deaths or too much economic scarring.
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After some early noises, it doesn’t look like McConnell has any interest in a lame-duck stimulus package. Certainly the Trump White House has checked out, so there’s no pressure from above, and McConnell is still resisting agreeing to anything commensurate to the level of help needed. American statistical illiteracy is really hurting here: McConnell can point to overall jobs reports and aggregate spending numbers while eliding the spikes in food insecurity and long-term joblessness. Even the unemployment numbers are missing people who drop out of the labor force.
Into this mix comes the $4.5 trillion Federal Reserve money cannon authorized in CARES. This has already dropped lavish dividends on the investor class; by creating a backstop for asset prices, the money cannon pushed them upwards. The latest Institute for Policy Studies reporting finds that just the top 644 U.S. billionaires have made $931 billion since roughly the passage of the CARES Act, a figure that more than doubles the $454 billion in public dollars authorized to construct it.
None of that money was actually spent, however; the Fed only made $20 billion or so in loans and hasn’t lost anything. The money cannon expires December 31; the Fed and Treasury could choose to extend it, and the parties are lobbying for their favored position. Republicans want the cannon canceled, figuring it did its job and any further action would substitute for fiscal policy. Democrats want an extension, hoping that a new regime at Treasury and the Fed would use the cannon in creative ways that really does help municipal governments, for example. Wall Street backers are pitching an extension too, but just to keep the cannon parked, in case it’s ever needed again. I covered some of this on Tuesday.
There’s a third way (if you’ll pardon the expression): cancel the cannon but plow the $454 billion into fiscal relief. The cannon can become a “pay-for,” an offset to new spending. Lightly-used credit facilities could be tailored to help state and local governments or small businesses. But you know what could really help them? Fiscal grants! The money cannon could be sliced up, in other words, into money for the people.
This is a significant chunk of funding that can do much more than being parked offshore to give investors confidence. If you use it as a pay-for, you shrink the budgetary cost of stimulus without shrinking the effectiveness. McConnell is willing to do a $500 billion bill, so adding the $454 billion from the cannon would come close to doubling it. And the stronger economy that would result should soothe investors. Nobody really loses here, unless this path isn’t taken and nearly half a trillion in appropriated funds just vanish when there’s severe need in the population.
The Vaccinated Super-Spreader?
When Pfizer announced its positive preliminary results on the coronavirus vaccine trial, it left something out. No, not that its CEO would soon sell 60 percent of his stock holdings in a pre-authorized automatic sale. It left out whether those who receive the vaccine would have infection immunity in addition to disease immunity. If the vaccine prevents someone from suffering the worst symptoms of the virus but does not prevent them from spreading the virus to others, that presents problems, as Peter Coy explains. Those vaccinated would likely drop their guard and stop using masks and other protective measures, and as they come into contact with unvaccinated people, they could infect them.
It’s possible this isn’t a concern at all, for two reasons. One, we don’t know if someone vaccinated would weaken the infection to such a degree that spreading would be scant. Pfizer just hasn’t commented on this. We do know that asymptomatic people can spread the virus, which makes it unlikely that the vaccine would totally sterilize those who get it; however, if they’re not sneezing and coughing, they’re pushing less virus into the air.
Second, this would definitely not be a concern if everyone were vaccinated. The virus would then leap from person to person with no real effect. Getting everyone vaccinated, of course, isn’t realistic, at least not right away. Putting aside the resistance among anti-vaxxers, there won’t be enough vaccine to go around. The possibility that the vaccinated could infect others makes it even more important to maximize the universe of vaccinated people, then. That’s where significant marketing using trusted sources comes in, or paying people to take the vaccine, or some other incentive.
Days Without a Bailout Oversight Chair
230.
Today I Learned
- Nearing a tipping point on hospital capacity in Wisconsin. Elsewhere too. (Milwaukee Journal-Sentinel)
- States have begun to add restrictions but a lot of the infections are already baked in. (New York Times)
- There is no natural herd immunity point, just ask Sweden. (Financial Times)
- Trump’s election night party appears to have been the second White House super-spreader event. (HuffPost)
- It’s dawning on families that they can’t have a normal Thanksgiving under these conditions. (CNBC)
- Good luck with all this, incoming White House chief of staff Ron Klain. (New York Times)
