Proactive policies needed to meet financial impact of coronavirus

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Proactive policies needed to meet financial impact of coronavirus

Fri, 04/17/2020 - 01:35
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Current estimates of the federal government’s aid package to offset the effects of the coronavirus epidemic exceed $1 trillion, significantly more than the $787 billion response to the recession and financial crisis in 2009. Let’s consider some key components to the package. Much attention focuses on making direct payments to individuals. The payments, up to $1,000 per adult, would put about $250 million directly into the hands of the public. The actual size of the payment should be determined by one’s income bracket, thus guaranteeing relatively more money into the pockets of lower income households. Nobel Prize economist Richard Thaler endorsed, unsuccessfully, a similar approach during the Great Recession. Here’s why. Suppose instead the government cuts your annual payroll tax, an idea also floated by the administration. If the cut is for $1,000, when spread across the year, it is hardly noticeable, less than $40 per month. Getting a check (or a loaded debit card) for $1,000…

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