We still don't know what the next stimulus package passed by Congress is going to look like and we may not know until the last minute because members of Congress may not know until the last minute, but we do know what the Trump White House wants to see in it.
Trump's top economic adviser, Larry Kudlow, spoke to reporters yesterday afternoon and said the next package should including more stimulus checks for individuals, which is good, but he also called for several measures that are completely nonsensical.
Among other things, Kudlow called for tax holidays on captain gains and payrolls.
While formal talks have not yet begun, Kudlow outlined a “grab bag” of what the next stimulus package might include:
· Payroll tax holiday of a 6.5 percent increase to after-tax wages for people going back to work or working
· Unemployment reforms
· Return-to-work type bonuses of a modest nature
· Extensions to Paycheck Protection Program
· Targeted assistance from direct mail checks to individuals and families
· Capital gains tax holiday
It's not clear what "unemployment reforms" means, but combined with the call for a payroll tax holiday and a return-to-work bonus, I think we can infer that it would mean kicking people off unemployment sooner rather than later.
This list of priorities from Trump's White House does not include an extension of the pandemic unemployment program that's currently providing an extra $600 per week to individuals. That program is supporting up to 3 million jobs alone according to the Congressional Budget Office (CBO).
The Trump regime is populated by supply-side voodoo economists who believe the only thing keeping every single person from immediately going back to work is a lack of will power or incentive, but we know the world is not that simple. For millions of people, it's not even safe to go back to work. And, moreover, the numbers don't add up.
At the beginning of the year when economic activity was relatively normal in Trump's 'great economy,' there were about 7 million job openings in the United States according to the Bureau of Labor Statistics (BLS), but a recession began in February before we shut down any part of the economy and we've lost somewhere in the neighborhood of 45 million jobs since March. Millions of people have returned to the jobs they held before the coronavirus pandemic, but about 30 million people are currently on unemployment and some states are partially shutting down their economies for a second time.
I wouldn't necessary say it would be a bad thing if the next stimulus package included a return-to-work bonus (but not a payroll holiday; that's bad policy), but congressional Democrats should tell Larry Kudlow and the White House to take their holiday for capital gains and shove it. The stock market is already doing well even if no one else is. They don't need a holiday.
A holiday for capital gains would be another tax cut for people who are still the richest people in the world even after a global pandemic temporarily wiped out trillions in equitable value.
Whatever the next stimulus package looks like, I expect it will ultimately be inadequate because congressional Republicans are slow-walking and obstructing our economic response. It will be inadequate because the GOP doesn't want it to be adequate.