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Congress and the Trump administration must act swiftly to send a lifeline to citizens and an economy reeling from the ravages of the coronavirus. The aid will come as welcome relief to many Americans, but lawmakers can’t allow this unprecedented spending all to sit on the nation’s credit card.
The $2 trillion stimulus package — the third round of virus aid from the federal government and by far the largest — as of late Wednesday was on hold but passage is expected and would further add to America’s huge deficit. We’ve already reached a $1 trillion budget shortfall. And our national debt is rushing toward the $24 trillion mark. The Congressional Budget Office in 2019 warned that unless major tax and spending changes are made, that federal debt was on an “unsustainable” course.
That reality isn’t going away.
The latest 1,000-page aid deal reached in the Senate is slightly better than a House version that included a host of unrelated, pet spending projects.
More than anything, Democrats have taken their most egregious requests and toned them down. Still included is funding for the National Endowment for the Arts and National Endowment for the Humanities; the Kennedy Center for the Performing Arts in Washington, D.C.; loans for the U.S. Postal Service; and tax provisions that encourage employers to offer employees student debt relief. About $150 billion will head to state and local governments, which will likely go toward bailing out underfunded employee pensions.
It’s a far cry from the targeted and temporary legislation lawmakers should have pursued.
“This is a less bad version, and it’s reduced in scope, but the nature of the policies is still in there,” says Romina Boccia, a fiscal and economic expert at The Heritage Foundation. “It’s so full of pork-barrel spending it’s appalling.”
The final version will offer the following relief:
—Payments to lower- and middle-income Americans of $1,200 for each adult, as well as $500 for each child.
—About $500 billion, including $50 billion for U.S. airlines, to back loans and assistance to companies, in addition to state and local governments.
—More than $350 billion to small businesses.
—$150 billion for hospitals and other health-care providers for equipment and supplies.
—Unemployment insurance extension to four months, at a higher rate.
The federal government has a vital role to play during emergencies like we’re facing now.
But it should always be mindful of the debt. The gross national debt already exceeds the size of the U.S. economy. A crisis demands discipline and sacrifice. Congress and the president should commit to getting at least half of the stimulus funds from spending cuts.
“Unless Congress acts to reform what’s driving this growing spending, the resulting economic decline, as well as legislative fiscal measures to mitigate the economic damage, will heighten the risks of a public debt crisis,” Boccia recently observed.
These dangerous levels of debt will create uncertainty and have a damaging effect on future growth.
Congress must also learn from this crisis and keep the country prepared for such a pandemic or other wide-scale emergency in the future by leaving space in the budget for these national needs — and not using the funding for more enticing, politically advantageous projects.
Taxpayers should demand it.
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