Less tweets, more checks

When you deposit $1200 into the checking account of a person who is struggling to pay their bills and feed their family, a very interesting thing happens – they actually spend that money in the real economy. We saw this happen over the summer, unequivocally. The money moved around.

Tax cuts for the already wealthy do not produce the same effect. We saw this happen during 2018 and 2019, also unequivocally. Within two years of the Tax Cuts and Jobs Act, the yield curve had already inverted. The economy was flatlining under the pressure of rate hikes and trade wars. The money did not move around. At least not as promised.

It went into art collections and ETFs and treasury bonds and luxury high-rise apartment developments on 57th Street. Some of it seeped its way into the already flush private equity and venture capital markets, where it effectively funneled around amongst the 2-and-20 set, boosting valuations for buyouts and startups. The beneficiaries of these boosted valuations had no need to spend this extra money (windfall!) on Main Street so that ends up as contributions to money market funds and treasury bonds too. Tax cuts are nice, but they did not meaningfully increase the economic growth rate, and the cash certainly didn’t circulate where it was needed most.

And now you have 14 million people who are without jobs, through no fault of their own, plus tens of millions of more folks whose uncertain futures are crippling their ability to spend and invest. Low mortgage rates and high stock market values are not a replacement for ready cash.

So maybe let’s stop with the tweets and start directing economic stimulus (rescue) money to the many families who need it now, and will actually spend it now. And if you feel the need to stamp your signature on the checks, well, there is an election coming up, so by all means knock yourself out.