A Case Against $2,000 Stimulus Checks

Sarah Green Carmichael

03 Jan 2021, 08:22 PM IST

(Bloomberg Opinion) -- Trump’s $2,000 Stimulus Checks Are a Big Mistake — Larry Summers

I am not opposing stimulus or favoring austerity. For years I have been making the secular stagnation case for more expansionary fiscal policy, and I have often remarked over the last couple of months that “not passing fiscal stimulus is like not wearing a mask at a large indoor gathering — an insane risk.” And both in the immediate term, and on a permanent basis, I am all for strengthening the social safety net.
The issue is whether spending about $600 billion on a one-time tax credit that would be worth $8,000 to a family of four and reach more than 85 percent of taxpayers makes good economic sense. There is the possibility of some overheating, particularly if the economy’s potential supply remains constrained by Covid protection measures. I am all for a far more expansive approach to fiscal policy. But that does not mean indiscriminate support for universal giveaways.

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Sarah Green Carmichael is an editor with Bloomberg Opinion. She was previously managing editor of ideas and commentary at Barron’s, and an executive editor at Harvard Business Review, where she hosted the HBR Ideacast.