Stimulus or stimu-lend? - Barokong - Teknoiot

28 May 2020

Stimulus or stimu-lend? - Barokong

Jason Furman wants stimulus:

Congress should pass a simple one-time payment of $1,000 to every adult who is a U.S. citizen or a taxpaying U.S. resident, and $500 to every child who meets the same criteria.
Here's a better idea. The IRS should allow anyone to borrow up to $10,000 against future tax payments, with interest. The IRS has an excellent collection mechanism.

The medicine should fit the disease. Jason's logic seems to be good old aggregate demand -- the answer is the same, only the questions change.

As I think about a pandemic, shutting down the economy is most likely to cause liquidity problems. The key is to keep businesses alive and not force them to formally fire people, so they're ready to start up again. My version put more money in the place where it's really needed,  measured by people's  willingness to pay it back.

If you believe money  doesn't grow on trees, deficits must eventually be repaid, and that money should go where it is needed, this seems like a better idea.

Update: Paul Kupiec advances a similar idea

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