It’s not stimulus, it’s relief

Paul Krugman in the NYT: “While coronavirus relief legislation is often called ‘stimulus,’ that’s not what Biden is trying to do. The economy in 2021 isn’t like the economy in 2009, depressed because there isn’t enough demand; we haven’t fully recovered because we’re still on partial lockdown, with some activities curtailed by the risk of infection.

“The goal of policy in this situation isn’t to pump up spending, getting people to eat out and travel. It is, instead, to help people, businesses and local governments get through the difficult period until widespread vaccination lets us go back to business as usual.

“And we know, as certainly as we know anything in economics, that the economy will be depressed at least into the summer and probably beyond. The last package didn’t provide remotely enough aid to get us through those months. Asking whether that package boosted the economy therefore completely misses the point; it’s obvious that America needs another round of disaster relief.”

One thought on “It’s not stimulus, it’s relief

  1. And it’s sort of surprising that the media don’t get this right. It’s not like they haven’t been told; e.g. Megan McArdle is a conservative and advocated “the government just has to pay for everything until this is over” from the beginning.

    I have a depressing suspicion that the political pressure is to spread the money out, including to a lot of people who aren’t actually hurt. I’ve seen claims in the press that one version of the plan gives money to people who make up to $400k/year. If you underline that the money is relief, it will get focused on people who don’t make much money, and that will be a lot less popular.

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