(Bloomberg Opinion) -- Congress and the White House are largely in agreement that direct payments to individuals should be a central part of any stimulus, with the latest plan sending out checks of $1,200. They are divided, however, on how those payments should vary by income, family size and potentially other variables.
This is a pointless and time-consuming argument with the U.S. economy hanging in the balance. Washington should simply send equal payments to all Americans now and leave the ideological wrangling for later.
The coronavirus is a unique challenge that will require a multifaceted and evolving government response. Stimulus is only one tool, and it should have a single objective: Cushioning the economy from the generalized fallout of the social-distancing policies necessary to stem the virus.
These policies are producing economy-wide stresses on a scale that may dwarf the Great Recession. So far they have hit the retail, restaurant, travel and hospitality sectors. But financial markets are falling because investors are realizing that the fallout will affect every aspect of the U.S. economy.
That’s why Congress needs act quickly. One portion of the stimulus is rightfully directed at direct relief for households. It is impossible to know ahead of time which households will be affected most by the virus and its fallout, and to what degree. So simple, broad-based relief that sends equal checks to all Americans is the most straightforward and effective way to go.
Of course there are objections to sending checks to affluent households that don’t need them, but these concerns are misguided, for several reasons.
First, deciding who counts as affluent is a contentious question that hinges on age-old arguments about the optimal level of redistribution in society. These questions will not be settled in the next few days, and Congress should not try. Doing so unnecessarily slows down the process and risks more economic suffering.
Second, anyone who receives a check and feels they do not need it is free to donate their check to efforts to fight the outbreak. If millions of Americans donated their checks, it would be possible to target funding in a way that is impossible for the federal government to do. Members of a community know best what their community needs.
To encourage this type of targeted giving, major charitable foundations and wealthy individuals could pledge to match stimulus check donations. That would not only encourage more people to give, but would multiply the effect of targeted giving.
Individuals could be further encouraged to #DonateYourCheck through social media and traditional media — and lawmakers could amplify it. A mass effort like this could produce tens and perhaps hundreds of billions in targeted aid almost immediately.
If this sounds Pollyannaish to you, that’s OK: If mass giving fails to catch on, Congress can always claw back much of the money given to affluent households by making stimulus checks taxable or counting them against other deductions or credits the wealthy might have claimed. After the crisis has passed, there will be plenty of time to debate from whom and how much should be clawed back.
To be clear, even if a #DonateYourCheck movement does arise, it will not be enough to stem the liquidity crisis. Congress will still have to take further action to ensure that the unemployed have sufficient benefits and that businesses have access to credit. When it comes to individual payments, however, Congress should keep it simple, universal and quick. Give the American people the opportunity to show their altruism and wisdom in this time of need.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Karl W. Smith, a former assistant professor of economics at the University of North Carolina and founder of the blog Modeled Behavior, is vice president for federal policy at the Tax Foundation.
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