The Thomas Massie option
EDITOR'S NOTE
As we were going over the pitfalls of the PPP (payroll protection program) yesterday, D.G. emailed me, asking:
"Instead of the Fed buying trillions in bonds and Congress/Treasury spending trillions to bail out companies (some of which won't survive anyway), shouldn't we just give the trillions to people?" I wrote back: "You sound like Rep. Massie."
Remember last month, when Massie was "widely blasted" for holding up the $2 trillion relief package that authorized the first $349 billion in small biz PPP help? Now the PPP critics--many of whom would abhor his conservative political views--are proving his very point.
Most of the coverage at the time focused on Massie forcing lawmakers back to D.C. to vote on the bill in person, so his criticisms of the bill itself were largely missed. But I read his thread on Twitter to see what his full objections were. The bill should have been passed sooner, he said; should not have "pork" items like $25 million for the Kennedy Center, which should be redirected to purchase more test kits; the Fed needs to be audited, especially now that it's making direct calls on who gets what; and the $2 trillion stimulus package should go straight to the people instead, for over $13,000 per working person, he said.
Interesting, I thought, so I asked the WSJ's Jerry Seib about it when he was on the show that day. And Jerry made some excellent points. The problem with handing out $13,000 directly, he said, is that this is a business liquidity problem primarily, not a household one. It becomes a household problem only if businesses have to stop paying their workers. Hence the money goes to businesses first, not the other way around.
In fact, Jerry noted, if the $13,000 went to households who literally couldn't spend it on the hardest hit businesses--shops, restaurants, airlines and airports, hotels, etc.--then it would do almost nothing to save the economy or keep it intact throughout the pandemic.
The PPP isn't perfect, but it at least rolled out fairly quickly to get money to hard-hit businesses as soon as possible. The Fed's Main Street lending program--meant to leverage up to $6 trillion into the economy--meanwhile is still not up and running. The Fed has been dutifully taking public comments and, as our Steve Liesman has reported, wants to avoid the mess of the PPP program. Which is great. But can the economy really afford to wait?
Hopefully the Main Street program will be launched any day now. I'm sure it will be also be plagued by problems and criticism.
It's interesting, in fact, to see the juxtaposition of these stories on our homepage right now: on one side, Secretary Mnuchin is blasting the L.A. Lakers for taking a PPP loan, calling it "outrageous." Right next to it are the results of Steve's latest CNBC Fed Survey, in which respondents on average say the Fed will add another $3 trillion to its balance sheet and Congress will need to pass $2 trillion more in relief--and even so, the economy won't be "fully restored" until the middle of 2022.
So which is it? We desperately need to get money into the economy as quickly as possible to avoid a worsening toll, or we need to go slowly to make sure only the true need is being met, even if that need grows because of our delay? Or, was Rep. Massie right?
See you at 1 p.m...
Kelly
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