2020-03-23 Bloomberg Businessweek

a similartimelineofthree-to-five months would be far too

slow,”economistsCarlRiccadonna and Andrew Husby of

BloombergEconomicswroteon March 13.

Oneproblemwithbothkinds of tax cuts is that they’re

toosmallforpeoplewhoarein a pickle and too big for

thosewhodon’tneedhelp.And the businesses in the most

dangerwillbenefittheleast.No one’s going to splurge on

restaurants,airlines,orhotels just because the govern-

mentcutthema check.AlanAuerbach, an economist at

theUniversityofCaliforniaatBerkeley, says one solution

is tobeefupandextendunemployment insurance for peo-

pleworkinginvirus-strickenindustries. While that helps

theworkers,it doesn’thelpthe companies.

Oneout-of-the-boxidea:The federal government

couldgive money directly to com-

paniestomake up for lost revenue.

Intheairline industry, for example,

“Ifdemanddropsby 80 percent,

the government wouldcompen-

satethismissingdemand,ineffect

buying 80 percentofplanetickets

and maintainingsales constant,”

BerkeleyeconomistsEmmanuelSaez

andGabrielZucmanproposedon

March 16 inanarticleonPro-Market,

a UniversityofChicagoBoothSchool

ofBusinessblog.“Businessactivity is

onholdtoday,” they write, “but with

intravenous cash flow, it can be kept

aliveuntilthe health crisis is over.” <BW>

�WithJosh Wingrove, Laura Davison,

andSaleha Mohsin

Bloomberg

Businessweek

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March

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68

DATA:

BUREAU

OF

LABOR

STATISTICS

There’sa rushofinterestinhandingout$1,000toevery

adultAmerican—orsomevariantofthatgambit—tosoften

theeconomicharmoftheCovid-19pandemic.Advocates

ofshoweringmoneyonthepublicincludefiscalconserva-

tivessuchasSenatorMittRomney,theUtahRepublican,

andGregoryMankiw,theHarvardeconomistwhowasa

chiefeconomicadvisertoPresidentGeorgeW.Bush.The

Trumpadministrationwantstosendoutcheckssoon,

amountstobedetermined,aspartofa stimulusthatcould

total$1.3trillion.

Helicoptermoney,socalledbecauseit seemstofallfrom

thesky,getsa lotofdollarsouttoa broadswathofthe

public.(Theassumptionis thattheFederalReservewon’t

counteractthestimulusbysuckingthedollarsbackout

oftheeconomy.)Incontrast,a payroll

taxholiday,whichPresidentTrump

hasadvocated,helpsonlyemployed

peoplewhoincurpayrolltaxes.

But a check from Washington

doesn’tworkasquicklyasa payroll

taxcut,whichcouldtakeeffectasearly

asApril1. Helicoptermoneyis usually

doneviaa taxcreditthat’s“refund-

able,”meaningyougetit evenif you

don’toweincometaxesbecauseyour

incomeis toolow.Thecreditstaketime

toenactandcarryout.“In2008,leg-

islationapprovingthestimuluspassed

inFebruary,whilemostindividuals

receivedchecksamountingto$600

(twicethatforjointfilers)betweenMay

andJuly.Inthecurrentenvironment,

◼ LAST THING

With Bloomberg Opinion

●BUDGET BAND-AID

Average monthly consumer expenditures in the

U.S. in 2018

By Peter Coy

$1,000 Is Not a

Magic Number

Apparelandservices$156 Education$117

$1,000

Housing

$1,674

Transportation

$813

Food

$660

Health care

$414

Entertainment $269

Other

$998