Everyone wants a check from the government, if they think it can be paid for by cutting imaginary government spending on something else. That’s why many people want the government to send every American $2,000, as coronavirus relief. They wrongly think those checks can be paid for merely by cutting kinds of government spending that are, in reality, far too small to cover the cost of the checks (like foreign aid, which accounts for less than 1% of the federal budget).
Those $2,000 checks would be very harmful to the country. They would cost America’s treasury at least $464 billion, increasing our county’s rapidly-rising national debt to levels near where other countries have gone bankrupt. A bigger national debt would burden our economy for years to come; paying more interest on the national debt crowds out private investment, shrinking the economy.
And most Americans don’t need the money. Some Americans lost their jobs due to the coronavirus, and they need help. But most Americans didn’t lose their job during the coronavirus pandemic, or were quickly rehired as the economy bounced back, and thus don’t need the $2,000.
Former Treasury Secretary Lawrence Summers says that because of this, the checks would not be a sensible way of stimulating the economy. Instead, the checks could lead to harmful inflation and overheating of certain sectors of the economy that are currently doing well. As he observes, “Family incomes are not down much from Covid-19, and there is a risk of overheating the economy.” The checks do not make sense from either a liberal or a conservative perspective.
But the idea is so popular that supporting it may have helped Democrats win the recent Georgia senate election, according to a pollster. 75% of voters supported $2,000 checks in Georgia, according to that pollster, the Trafalgar Group. 57% of Americans support such checks nationally, according to Harris-X. As the Trafalgar group noted, Georgia voters liked the idea:
75.3% raise to $2000
7.4% remain $600
9.5% No checks
7.8% No opinion
— Robert C. Cahaly (@RobertCahaly) December 31, 2020
The $2,000 checks were first endorsed by the Democrats who won the Georgia election, and endorsed only later by the Republican Senators they beat in that election. Senate Republican leader Mitch McConnell was earlier skeptical of the checks, calling them “socialism for the rich” because the checks will go to many well-off people who don’t need the money. As he pointed out, the checks would cost an enormous amount, but do nothing for the economy.
But Joe Biden endorsed them as a wedge issue to use in the Georgia election. He said Americans would receive $2,000 in coronavirus relief payments “immediately” if Georgia voted for both Democrats in the US Senate runoffs.He told Georgians “those checks will never get there” if Senators Perdue and Loeffler, the Republican incumbents, were to win.
Why do Americans like the idea of $2,000 checks? They think the federal budget is full of unpopular, easy-to-cut spending that can just be instantly eliminated to pay for checks to Americans, like foreign aid.
Americans commonly believe that 25% of the federal budget is spent on foreign aid. But it isn’t. Foreign aid accounts for less than 1% of the budget — less than $40 billion — so totally eliminating foreign aid wouldn’t cover even a tenth of the cost of $2,000 checks for all Americans.
This reality was lost on President Trump, who advocated the $2,000 checks by suggesting that they could be paid for by cutting spending on foreign aid, such as “$85.5 million for assistance to Cambodia” and “$134 million to Burma.” But these items of foreign aid were tiny compared to the cost of the $2,000 checks, and were found more or less in Trump’s own budget request in 2020. Most of this foreign aid money was requested by the White House itself earlier in the year.
One Congresswoman advocated more checks, by falsely suggesting that the coronavirus relief package contained more money for foreigners than for Americans. That was untrue, because the coronavirus package passed by Congress last month actually contained hundreds of billions of dollars in unemployment benefits and assistance to small businesses, many times more than foreigners get from the U.S. government.
Some liberals like the idea of $2,000 checks, because they think that they can be paid for just by getting rid of unnecessary defense spending. But Congress would never cut defense spending enough to pay for the checks. Commissions that studied Pentagon waste have concluded that about $75 billion could be trimmed from the Defense budget without harming national security. That’s only a sixth of what it would take to pay for $2,000 checks without increasing the budget deficit.
Liberals commonly believe that most of the federal budget is spent on the Pentagon. But it isn’t. Defense spending is only about 15% of the federal budget. To pay for the $2,000 checks just by shrinking the Defense Department, we would have to get rid of most of our troops, and stop buying the weapons they need.