total stimulus
The recent COVID relief bill that passed congress has been reported, variously, as being $2.2 trillion in size, or, in some cases, as being $6 trillion, as part of the money is to be leveraged by borrowing $4 trillion from the federal reserve.  There are various people who want to report a big number — journalists like a big number in a headline because it gets attention, some politicians like it because it looks like they're doing a lot, and some populist opponents of the bill trumpet it as an enormity, another massive debt that we are thrusting on the shoulders of future generations.

I view it as a bunch of numbers that are added together.

There are three different kinds of things in the bill, and I would really like to see them broken out separately.  Now, there are two kinds of people these days: people with more free time than a month ago, and people with less.  I'm in the latter camp, so this will not be particularly researched or detailed, but here's a taxonomy of dollar figures:

•  Actual spending.  This consists of the dollars that are allocated to specific institutions for specific purposes, especially to specific departments of the government.  That "especially" betrays a little bit of fuzziness here, but I would say that money earmarked to Gallaudet counts as spending, and money given to states with no strings attached does not.  That, instead, goes under
•  Cash transfers.  In many contexts transfer payments are treated as negative taxes; if an individual receives $1200 from the government for providing a service and then spends the $1200 at a grocery store, both transactions count toward GDP (the first as "government spending" and the second as "consumption"), but if the individual receives it as a social security payment or as a COVID relief payment, then the transfer itself is not a part of GDP.  It affects the deficit the same, but to the extent that it influences economic decisions, it does so much less directly.  The bill includes the headline transfers to individuals, but also a lot to recently unemployed people through the unemployment insurance system, and also some to states (at least as I understand it).  It does not (again, as I understand it) include cash transfers to businesses, who instead get
•  Loans.  Now, if I give a company a loan that I know I'm never getting back, that's a cash transfer.  Some of the loans to companies can be forgiven; those look like an attempt to give unemployment insurance payments to workers without their having to actually be laid off first.  I'm a bit skeptical of this way of doing things; the unemployment insurance provisions of the bill already ensure that furloughed employees are now eligible for unemployment insurance payments nationwide, which seems to me to be the more natural way to accomplish what this seems to aim to accomplish, which is to maintain spending power for these employees without severing their connection to an employer who, it is hoped, will take them back in a couple of months.  Many of the other loans, however, are straight loans; these may be viewed as grants to the extent that the recipients would have to pay more for them in a free market, but the extent of the grant is much lower than the headline number even by that reckoning, and the loans to financial institutions made in the financial crisis ended up being profitable for the US government and the federal reserve, so that they actually reduced (very slightly!) the national debt.

Finally, I'll note that I've largely joined some prominent economists in avoiding calling it a "stimulus" bill; to the extent that it has similar goals to a stimulus bill, it actually feels more to me like a monetary stimulus than a fiscal stimulus.  The loans in particular have that feel; they're intended not to affect wealth distribution, but to get literal cash to economic agents who suddenly need more cash than they had provisioned for.  This is less true, but still fairly true, of the cash being handed out to individuals; of course, this does involve some wealth redistribution, but the scale of the cash payments is a couple of weeks' spending for many people without savings, or a modest increase in savings for those who suddenly wish they'd been saving more; it is on the scale of short-term spending needs, not on the scale of life-time income or wealth, and is much more attuned to alleviating financing constraints than solvency constraints on economic decision-makers.
- posted by dWj @ 11:53 AM