Breaking: $600 Stimulus checks deal in the US

[KonstantinosM]

Really underwhelming but what can you do. This is such a crummy deal that I don't know if I really care.

Also there's provisions that were added in there to appease the republican donors, aka some tax loopholes.

For those living outside the US $600 dollars here don't cover living expenses for 2 weeks and a lot of people were practically forced out of work due to their place of work being shut down by the government.

Edit: it's not really "breaking:" I just found out late.

[Gyfts]

I've seen liberals and conservatives upset about this and I'm not sure why. $600 was offered PER WEEK for months in addition to the normal unemployment insurance people got, meaning you would get your normal fraction of salary from unemployment + 600 bucks no questions asked. That works out to $15/hr for 40 hours of work per week. Then, on top of this, they gave $1200 in stimulus months ago on top of the unemployment bonus. Even now, they added $300 per week in additional unemployment insurance if you are still unemployed. It's like people don't understand that the government can't just foot the bill for Americans out of work for 9 entire months. At some point, that's on you for not getting a different job in another field. Having the fed print money like it grows on trees is going to make the inflation rate go out of control. I'm more concerned that people seem to be ignoring the growing debt of the world's largest economy.

Enough of government backed monopoly money. Open up the economy entirely, let people work.

[coins4commies]

that explanation would be fine if they weren't giving out 80% of the money to companies.  Its a 900billion dollar price tag and you are splitting hairs about 200 billion portion. Meanwhile, mid-working class folks who aren't unemployed get nothing and foot the entire bill as usual.

[KonstantinosM]

I've seen liberals and conservatives upset about this and I'm not sure why. $600 was offered PER WEEK for months in addition to the normal unemployment insurance people got, meaning you would get your normal fraction of salary from unemployment + 600 bucks no questions asked. That works out to $15/hr for 40 hours of work per week. Then, on top of this, they gave $1200 in stimulus months ago on top of the unemployment bonus. Even now, they added $300 per week in additional unemployment insurance if you are still unemployed. It's like people don't understand that the government can't just foot the bill for Americans out of work for 9 entire months. At some point, that's on you for not getting a different job in another field. Having the fed print money like it grows on trees is going to make the inflation rate go out of control. I'm more concerned that people seem to be ignoring the growing debt of the world's largest economy.

Enough of government backed monopoly money. Open up the economy entirely, let people work.

There's probably a lot of people who didn't qualify for unemployment, either because it run out or because they simply got their hours cut back or because they didn't have a job, but would have gotten a job if the shutdowns hadn't happened.

For this large segment of society, they only got the 1200 check and lost 9 months of potential work.

For the people who didn't file taxes the previous year they didn't even get that, I sympathize with them even though I do file taxes every year.


So basically 9 months of forced shutdowns and a minimum of $0 dollars in help for some, $1200 for most. And now another $600.

With a lot more money given to already profitable corporations and extra tax loopholes for the rich.

That money doesn't even cover a small fraction of rent.

[theymos]

The bill was 5000+ pages long, so I'm most worried that there was something nasty hidden in there which hasn't even been found yet by the public.

I'm opposed to all of this, though I think that direct aid is the best thing that the government can do if they're going to do anything. The bailouts keeping alive industries that should die or reform are the worst, like the massive airline bailouts in both relief bills, or even PPP. For the CARES act, it would've been better to just send everyone making below <middle class income> a check for about $8000 than have all of the various bailout programs. Let businesses that haven't saved and can't get private loans go bankrupt; let their employees find somewhere more economically-useful to work.

With the Fed creating unprecedented amounts of reserves and this unprecedented fiscal spending aimed largely at lower-income people, I could definitely see price inflation finally appear, which people aren't really expecting after so long a period of low inflation. And even more than price inflation, we'll probably see continued asset-price-inflation in all assets: stocks, real estate, BTC, etc.

For those living outside the US $600 dollars here don't cover living expenses for 2 weeks

It depends on the area. In some places, it might last a couple of months, especially if you're already using SNAP, housing assistance programs, etc.

[KonstantinosM]

With the Fed creating unprecedented amounts of reserves and this unprecedented fiscal spending aimed largely at lower-income people, I could definitely see price inflation finally appear, which people aren't really expecting after so long a period of low inflation. And even more than price inflation, we'll probably see continued asset-price-inflation in all assets: stocks, real estate, BTC, etc.

Maybe not as much, since the majority don't really have much to spend anyway.

 A lot of the money will go back to the banks and the corporations one way or another.*

It's really a broken system, maybe inflation doesn't show up in the most obvious places (price of milk and foodstuffs) but in the value of housing and taxes, education, healthcare, cost of transportation and services.

This opens a whole can of worms that can easily escape the topic, and knowing myself I'll be terribly wrong on most anything I opine on the issues themselves.


*That's because people have to pay landlords and credit card bills and car insurance. Landlords have to pay mortgages and food is sold and made by corporations and companies which are largely owned by the rich. The way we measure inflation is twisted, and bitcoin is a better system because it doesn't allow the government to create more and give it directly to the rich.

The rich can use that money to buy the important pieces of land and capital at the most strategic times and then use it for rent seeking so the rich stay rich and the rest get poorer. They can use the money to buy up hospitals and ambulances and property and then charge people whatever they want for these services. They can monopolize car insurance, and since we don't have money to self-insure they drain our assets that way as well. It's not capitalism, it's a disgusting rent-seeking society. It's a system of control against most people, not by design just by consequence.

[squatz1]

I've seen liberals and conservatives upset about this and I'm not sure why. $600 was offered PER WEEK for months in addition to the normal unemployment insurance people got, meaning you would get your normal fraction of salary from unemployment + 600 bucks no questions asked. That works out to $15/hr for 40 hours of work per week. Then, on top of this, they gave $1200 in stimulus months ago on top of the unemployment bonus. Even now, they added $300 per week in additional unemployment insurance if you are still unemployed. It's like people don't understand that the government can't just foot the bill for Americans out of work for 9 entire months. At some point, that's on you for not getting a different job in another field. Having the fed print money like it grows on trees is going to make the inflation rate go out of control. I'm more concerned that people seem to be ignoring the growing debt of the world's largest economy.

Enough of government backed monopoly money. Open up the economy entirely, let people work.

I'm personally upset about this, but for a whole other reason all together.

The reason is that 950B from this stimulus package will go to tons of different agencies to handle different things and not much will get back into the hands of regular everyday Americans. The most effective form of stimulus is direct payments, not crazy formula programs that will slowly trickle down to people if you make sure to apply or whatever whatever whatever.

Unemployment is great and all, but it'll only help you if you are literally unemployed. If you have less hours or a less pay, then you MAY qualify for unemployment though you may not as well. Some states are stingy then others when it comes to qualifying. The only way you're able to get all of that federal unemployment money is from qualifying for state benefits.

Airlines are going to get about $15B from this package, which is great and all, but I hope they're also forced to reemploy the workers that they laid off if they're going to be given a ton of federal money.

[PrimeNumber7]

$600

I think based on the timing, for those who have $600 in the bank, most of this stimulus money will be spent by consumers. Based on the savings rate earlier this year, most of the $1200 stimulus money was put into savings and paid down debt.

Consumer spending was down in November, which may signal a slow Christmas shopping season this year. If there is too much inventory left over after Christmas, production of goods would have to go way down to avoid inventory glut, triggering a recession.

[squatz1]

$600

I think based on the timing, for those who have $600 in the bank, most of this stimulus money will be spent by consumers. Based on the savings rate earlier this year, most of the $1200 stimulus money was put into savings and paid down debt.

Consumer spending was down in November, which may signal a slow Christmas shopping season this year. If there is too much inventory left over after Christmas, production of goods would have to go way down to avoid inventory glut, triggering a recession.

Trump has signaled that he is not going to sign the bill in its current form, which has the $600 stimulus checks and is demanding the checks be increased to $2000 a person.

Not sure why this wasn't something that the WH was negotiating for before, or if Trump just wanted some of the media power, would make sense if that was the case.

Kind of a weird way of using the bully pulpit, as he could've just used it BEFORE negotiations were done and assembled his supporters to force the GOP to do that.

[Gyfts]

There's probably a lot of people who didn't qualify for unemployment, either because it run out or because they simply got their hours cut back or because they didn't have a job, but would have gotten a job if the shutdowns hadn't happened.

For this large segment of society, they only got the 1200 check and lost 9 months of potential work.

For the people who didn't file taxes the previous year they didn't even get that, I sympathize with them even though I do file taxes every year.

I'm sure that was the case for some people. It's usually how the game goes. These government sponsored programs won't always be 100% effective. I just don't think the solution is more unconditional checks.

I'm personally upset about this, but for a whole other reason all together.

The reason is that 950B from this stimulus package will go to tons of different agencies to handle different things and not much will get back into the hands of regular everyday Americans. The most effective form of stimulus is direct payments, not crazy formula programs that will slowly trickle down to people if you make sure to apply or whatever whatever whatever.

Unemployment is great and all, but it'll only help you if you are literally unemployed. If you have less hours or a less pay, then you MAY qualify for unemployment though you may not as well. Some states are stingy then others when it comes to qualifying. The only way you're able to get all of that federal unemployment money is from qualifying for state benefits.

Airlines are going to get about $15B from this package, which is great and all, but I hope they're also forced to reemploy the workers that they laid off if they're going to be given a ton of federal money.

The small business loans are disgraceful. Like setting money on fire. Let's send money to movie theatres, a dying industry that will never recover. Great idea!

[DaveF]

The small business loans are disgraceful. Like setting money on fire. Let's send money to movie theatres, a dying industry that will never recover. Great idea!

And quite a few other business types too. There are some industries that are slowing dying and although it's not good for the people working there or for investors keeping them propped up with cheap / free money just hurts other businesses that are waiting in the wings to take over.

The issue is how do you do it:
There are probably a lot more independent motorcycle repair shops in the south then the north. Just due to the riding season. Where would you draw the line for funding?
Same with some other things. Using your example movie theaters in densely populated locations are still going to do much better then ones in more rural areas. Where do you draw the line on population density for taking care of them.

I really don't think there is a good clean answer.

-Dave

[squatz1]

The small business loans are disgraceful. Like setting money on fire. Let's send money to movie theatres, a dying industry that will never recover. Great idea!

And quite a few other business types too. There are some industries that are slowing dying and although it's not good for the people working there or for investors keeping them propped up with cheap / free money just hurts other businesses that are waiting in the wings to take over.

The issue is how do you do it:
There are probably a lot more independent motorcycle repair shops in the south then the north. Just due to the riding season. Where would you draw the line for funding?
Same with some other things. Using your example movie theaters in densely populated locations are still going to do much better then ones in more rural areas. Where do you draw the line on population density for taking care of them.

I really don't think there is a good clean answer.

-Dave

The business loans / free money (depending on if you keep your employees employed) were a great idea in the beginning of the pandemic. At the time there wasn't TIME to sift through who actually is not making as much money before because that would have held up a lot of people from being employed and put more of a strain on the unemployment system. In my mind, PPP worked.

The next round of PPP is going to be for businesses that show a certain percentage lost during the quarters that the pandemic has occurred in. It's much more selective, and that MAKES SENSE. As you can actually prove something like that now.

There really isn't a clean answer for any of this, but what can ya do?

[PrimeNumber7]

$600

I think based on the timing, for those who have $600 in the bank, most of this stimulus money will be spent by consumers. Based on the savings rate earlier this year, most of the $1200 stimulus money was put into savings and paid down debt.

Consumer spending was down in November, which may signal a slow Christmas shopping season this year. If there is too much inventory left over after Christmas, production of goods would have to go way down to avoid inventory glut, triggering a recession.

Trump has signaled that he is not going to sign the bill in its current form, which has the $600 stimulus checks and is demanding the checks be increased to $2000 a person.

Not sure why this wasn't something that the WH was negotiating for before, or if Trump just wanted some of the media power, would make sense if that was the case.

Kind of a weird way of using the bully pulpit, as he could've just used it BEFORE negotiations were done and assembled his supporters to force the GOP to do that.

I don't think the WH was part of the recent negotiations (he has limited ability to negotiate considering he is leaving office in a month). After the details of the bill were made public, there was backlash to some of the provisions in the bill, and there appears to be bi-partisan support for the changes Trump is asking for, including in Democrat leadership. I would expect Trump to get what he wants without giving major concessions.

The small business loans are disgraceful. Like setting money on fire. Let's send money to movie theatres, a dying industry that will never recover. Great idea!

I have mixed feelings about the PPP loans. They were intended to keep employees on the payroll who otherwise would have been laid off. This meant that employers would not have to layoff, and subsequently rehire many of the same workers once the economy opened back up. It was intended to be a form of unemployment payments to workers via their employers. Unfortunately, many PPP loans were abused, and many businesses got them that didn't need them. It also gave political cover to local officials to impose lockdowns when they were really not necessary that early in the pandemic.

[squatz1]

$600

I think based on the timing, for those who have $600 in the bank, most of this stimulus money will be spent by consumers. Based on the savings rate earlier this year, most of the $1200 stimulus money was put into savings and paid down debt.

Consumer spending was down in November, which may signal a slow Christmas shopping season this year. If there is too much inventory left over after Christmas, production of goods would have to go way down to avoid inventory glut, triggering a recession.

Trump has signaled that he is not going to sign the bill in its current form, which has the $600 stimulus checks and is demanding the checks be increased to $2000 a person.

Not sure why this wasn't something that the WH was negotiating for before, or if Trump just wanted some of the media power, would make sense if that was the case.

Kind of a weird way of using the bully pulpit, as he could've just used it BEFORE negotiations were done and assembled his supporters to force the GOP to do that.

I don't think the WH was part of the recent negotiations (he has limited ability to negotiate considering he is leaving office in a month). After the details of the bill were made public, there was backlash to some of the provisions in the bill, and there appears to be bi-partisan support for the changes Trump is asking for, including in Democrat leadership. I would expect Trump to get what he wants without giving major concessions.

The small business loans are disgraceful. Like setting money on fire. Let's send money to movie theatres, a dying industry that will never recover. Great idea!

I have mixed feelings about the PPP loans. They were intended to keep employees on the payroll who otherwise would have been laid off. This meant that employers would not have to layoff, and subsequently rehire many of the same workers once the economy opened back up. It was intended to be a form of unemployment payments to workers via their employers. Unfortunately, many PPP loans were abused, and many businesses got them that didn't need them. It also gave political cover to local officials to impose lockdowns when they were really not necessary that early in the pandemic.

Fair point about the WH not having much negotiating power given the fact that they're on the way out. Never thought about that point. Though you'd think that the Trump admin would've at least put some public pressure on this if they knew that this is what Republican / Dem plans were at.

Trump usually isn't too shy with his usage of his twitter, ya know?

But onto the PPP stuff, I think it's fine. It should've ensured a bit better that people who really didn't need it -- like Kanye getting a few million from it -- and others shouldn't have gotten it. Highly doubt they were going to have to fire their employees anyway.

Then again, more bureaucratic mess is never good. Should've been all in on stimulus payments instead of $600. Would've been better for the economy and allowed less government bullshit.

[PrimeNumber7]

Fair point about the WH not having much negotiating power given the fact that they're on the way out. Never thought about that point. Though you'd think that the Trump admin would've at least put some public pressure on this if they knew that this is what Republican / Dem plans were at.

Trump usually isn't too shy with his usage of his twitter, ya know?

But onto the PPP stuff, I think it's fine. It should've ensured a bit better that people who really didn't need it -- like Kanye getting a few million from it -- and others shouldn't have gotten it. Highly doubt they were going to have to fire their employees anyway.

Then again, more bureaucratic mess is never good. Should've been all in on stimulus payments instead of $600. Would've been better for the economy and allowed less government bullshit.

I suspect this is part of Trump's long-term strategy in the event that he decides to run again in 2024. Trump can be seen as sticking up for Americans in trying to get them a bigger stimulus check and trying to get the pork that will go to special interests removed. My guess is this will result in a higher price tag, which goes against conservative principles, but this should expand Trump's overall support.

The threshold for being eligible for PPP loans was very low. Part of this was so the money could get out the door to businesses as quickly as possible. The program itself was also negotiated quickly, which added to the mess. I suspect the panic in our country (and the world) in March/April was the result of Chinese propaganda and the amplification of fear-based social media posts via the Chinese government. IMO if the stimulus in the spring, along with the early response was thought-out much more methodically, we would be in a much better position today.

Putting all the money towards direct stimulus payments will result in many people receiving money they have nothing to do with, and some people not receiving enough money to make ends meet while spending on only the basic necessities. There should be some amount of targeted stimulus for the needy, such as modest unemployment insurance payments (UI should never exceed the amounts an employee received while working, except in extreme edge cases).

[squatz1]

Fair point about the WH not having much negotiating power given the fact that they're on the way out. Never thought about that point. Though you'd think that the Trump admin would've at least put some public pressure on this if they knew that this is what Republican / Dem plans were at.

Trump usually isn't too shy with his usage of his twitter, ya know?

But onto the PPP stuff, I think it's fine. It should've ensured a bit better that people who really didn't need it -- like Kanye getting a few million from it -- and others shouldn't have gotten it. Highly doubt they were going to have to fire their employees anyway.

Then again, more bureaucratic mess is never good. Should've been all in on stimulus payments instead of $600. Would've been better for the economy and allowed less government bullshit.

I suspect this is part of Trump's long-term strategy in the event that he decides to run again in 2024. Trump can be seen as sticking up for Americans in trying to get them a bigger stimulus check and trying to get the pork that will go to special interests removed. My guess is this will result in a higher price tag, which goes against conservative principles, but this should expand Trump's overall support.

The threshold for being eligible for PPP loans was very low. Part of this was so the money could get out the door to businesses as quickly as possible. The program itself was also negotiated quickly, which added to the mess. I suspect the panic in our country (and the world) in March/April was the result of Chinese propaganda and the amplification of fear-based social media posts via the Chinese government. IMO if the stimulus in the spring, along with the early response was thought-out much more methodically, we would be in a much better position today.

Putting all the money towards direct stimulus payments will result in many people receiving money they have nothing to do with, and some people not receiving enough money to make ends meet while spending on only the basic necessities. There should be some amount of targeted stimulus for the needy, such as modest unemployment insurance payments (UI should never exceed the amounts an employee received while working, except in extreme edge cases).

Not sure if this is really part of his long term strategy or if this is just a way to push attention away from the fact that he is pardoning tons of people that are associated with him. Or it could be a way to continue to raise money on the election fraud issue and continue his grip on the party. I only say this because any reporting I've seen says Trump is most likely not going to run in 2024.

But in regards to all of the stimulus early on in the pandemic, yes it was quickly pushed out the door which was the reason for them not being tons of rules surrounding who was eligible for it. I still think they should've done a better job to ensure that huge companies couldn't be classified as small businesses, but yeah.

I may have misspoke/mistyped -- I'm fine with unemployment, and PPP (in a system where you can better pick out companies who lost revenue and need it, which is being used now), but I wanted more money to go towards stimulus payments for people. That's the way you ensure that the most money is going to go directly back into the economy.

PPP was used to make the banking industry tons of money, as they got billions in filing fees. Unemployment is a very flawed system which is rigid in its eligibility which each state controls. Plus these two systems require a LOT of hoops to jump through on the regulatory / bureaucracy level. Stimulus payments are easy.

[theymos]

I have mixed feelings about the PPP loans. They were intended to keep employees on the payroll who otherwise would have been laid off. This meant that employers would not have to layoff, and subsequently rehire many of the same workers once the economy opened back up. It was intended to be a form of unemployment payments to workers via their employers. Unfortunately, many PPP loans were abused, and many businesses got them that didn't need them. It also gave political cover to local officials to impose lockdowns when they were really not necessary that early in the pandemic.

PPP, direct bailouts, etc. just prop up businesses that should fail. Theaters and airlines are probably going to be less popular going forward: they should have fewer employees, and they should probably cut their operations overall, at least temporarily. If they think that continuing to operate will be useful, then:
 - They should've been saving for these sorts of emergencies. If they haven't, then they're bad businessmen and they should be replaced in the economy by more competent businessmen.
 - They should be able to get private loans from someone who agrees that the business can survive. If there is no one willing to lend, then the company is too risky, and that means something.
 - Public companies should be able to issue more stock, to be bought up by people who think that the industry and company will recover. If there is nobody willing to invest, then the company is clearly unlikely to be profitable anytime in the next ~5 years at least, and it would be better for it to be liquidated and for its resources to go elsewhere.

But instead, airlines for example are getting a bailout on the condition that they re-hire their employees for a few more months, even though the airlines admit that they will furlough these employees again if they don't get even more stimulus, and they admit that they don't anticipate this situation changing for years. And airlines wasted tons of cash buying back stock over the past several years. So billions of dollars in resources will be tied up in businesses uselessly operating at above-needed capacity, while these businesses were recklessly not saving for this sort of eventuality. People will be paid to do a job that isn't particularly useful to the world right now, and may never become as useful as it once was.

If there was no government support whatsoever, then businesses run by idiots would go bankrupt, which is good. Businesses that have no long-term potential for actually contributing to the economy and therefore making a profit wouldn't be able to get loans or investment, and they'd go bankrupt, which is good. People who worked for these businesses would either go work for a more competent company which could use their labor more effectively, or they'd go do something else that is more useful in the current environment. For example, maybe airline employees could get training in administering vaccines, or providing childcare, or working at a shipping company, or doing some sort of virtual work: all in high demand now. Or they could start their own business: maybe some airline employees could come together and make a company specializing in private flights, which have been massively more in demand lately due to COVID. When people are unemployed, they go find useful (=profitable) things to do, and that's how the economy adapts and grows. Economic growth doesn't happen magically at an average 2% rate or whatever, as a fixed economic law, but due to the combined effects of millions of little bits of personal innovation/adaptation, which can be as simple as the decision of a furloughed theater employee (less useful) to become a grocery checker (more useful), for example.

This reorientation of the economy in the face of changing conditions is how you ensure long-term economic growth. Artificially propping up the status quo is less painful in the short-term, but it prevents the economy from adapting, weighing down growth in the long-term. This economic scarring can last decades. It also rewards idiot executives and investors (eg. airline executives and shareholders who promoted buybacks instead of investment/preparation), who are often higher-income. It's like learning that you have early-stage, treatable cancer, but just deciding to take ever-more-powerful painkillers rather than undergoing chemotherapy: it's more pleasant in the short-term, but long-term, it's a very bad idea.

Now, if you think that some sort of help needs to be provided to low-income people hurt by the economy collapsing around them, then do that directly. I can't find the quote right now, but I think Milton Friedman said something like, "If the problem is that poor people don't have enough money, then just give them money." If you're worried that airline employees, theater workers, etc. are going to be fired en masse, give $20k to every person in an affected industry with an income less than $100k, or something like that. Let the airlines and theaters fail, and let the workers go do something else more useful. The idea of helping workers by propping up failing businesses (ie. using the businesses as middlemen) just drags down long-term economic growth while helping the rich executives and investors who in part contributed to the problems.

If you're a Republican who voted for the past relief bills, then it would've made more sense from your ideological perspective to instead do something like a very large one-time check for people making under <some amount>, plus a very large increase in the earned income tax credit (for everyone, not just people with kids) which would last at least 3 years, and no business bailouts. The actual past relief bills were results of economic ignorance combined with various political realities such as the need to appease tons of special interests.

[PrimeNumber7]

I have mixed feelings about the PPP loans. They were intended to keep employees on the payroll who otherwise would have been laid off. This meant that employers would not have to layoff, and subsequently rehire many of the same workers once the economy opened back up. It was intended to be a form of unemployment payments to workers via their employers. Unfortunately, many PPP loans were abused, and many businesses got them that didn't need them. It also gave political cover to local officials to impose lockdowns when they were really not necessary that early in the pandemic.

PPP, direct bailouts, etc. just prop up businesses that should fail. Theaters and airlines are probably going to be less popular going forward: they should have fewer employees, and they should probably cut their operations overall, at least temporarily. If they think that continuing to operate will be useful, then:
 - They should've been saving for these sorts of emergencies. If they haven't, then they're bad businessmen and they should be replaced in the economy by more competent businessmen.
 - They should be able to get private loans from someone who agrees that the business can survive. If there is no one willing to lend, then the company is too risky, and that means something.
 - Public companies should be able to issue more stock, to be bought up by people who think that the industry and company will recover. If there is nobody willing to invest, then the company is clearly unlikely to be profitable anytime in the next ~5 years at least, and it would be better for it to be liquidated and for its resources to go elsewhere.

I would find it more likely that there is pent up demand for airline travel that will come once populations are vaccinated in larger numbers. Airlines have cut their schedules by over 50%, sometimes more.

It is not typical for businesses to save 'for a rainy day' as people should. Money that a business makes is generally either reinvested into the business, returned to shareholders, or in some cases stockpiled to be used for acquisitions. For the airlines, they did raise money via the debt markets at the start of the pandemic, but they could not keep their employees on their payroll and still meet their obligations to shareholders.

The airline bailout basically guarantees that their employees will stay employed by the airline, even if there is no available work. This means the airline can immediately call their employees back to work once there is sufficient demand. My guess is the airline employees are working enough such that they will not need to be retrained once airline demand goes back to where it was. If the employees were furloughed, some would not be willing to come back once demand picks returns to normal, and those that do come back would need to go through training again, which would delay their availability to perform actual work. The world is not experiencing a worker shortage currently, so one airline employee doing something productive would mean that one non-airline employee is not doing something productive.

I would note that the airline industry is getting a (second) bailout, but the hotel industry is not. The airline industry is very important to our national security. The airlines give us the ability to move both people and goods throughout the country. There is also a lot of economic activity that is possible because of airline travel. Without airlines, our economy suffers.

If there was no government support whatsoever, then businesses run by idiots would go bankrupt, which is good. Businesses that have no long-term potential for actually contributing to the economy and therefore making a profit wouldn't be able to get loans or investment, and they'd go bankrupt, which is good. People who worked for these businesses would either go work for a more competent company which could use their labor more effectively, or they'd go do something else that is more useful in the current environment. For example, maybe airline employees could get training in administering vaccines, or providing childcare, or working at a shipping company, or doing some sort of virtual work: all in high demand now.

You make a fair point with regards to repurposing some of the airline employees to something that is in demand currently. I don't think the skills for airline employees are transferrable to the healthcare industry, and I believe the airlines have repurposed some of their planes to help with shipping medical supplies, PPE, and vaccines.

You are correct, without government support, businesses that are run poorly would go out of business, and this is good. Also, without government support, businesses also might take certain risks that is likely to spread the Coronavirus to both employees and the public, including the vulnerable, and this may result in hospitals being overwhelmed/overcapacity. I think the lockdowns were unnecessary and handled poorly, but I also don't think it would have been good public policy to encourage people to be congregating. People should have been able to make their own personal decisions regarding if they will stay home, but they should not have been forced to make the decision between risking spreading the virus, and making ends meet, especially in the spring when much about the virus was unknown.

This reorientation of the economy in the face of changing conditions is how you ensure long-term economic growth.

My assumption is the changed conditions are temporary and will change back once the coronavirus is under control. If too many people go into industries that are temporarily in demand today due to the virus, there will be shortages once things get back to normal. I don't know when things will be back to normal, but I would anticipate that airline demand will be something closer to 2019 demand by this summer, depending on the speed of the vaccine rollout. Same with other businesses that are receiving PPP loans.

If you're a Republican who voted for the past relief bills, then it would've made more sense from your ideological perspective to instead do something like a very large one-time check for people making under <some amount>, plus a very large increase in the earned income tax credit (for everyone, not just people with kids) which would last at least 3 years, and no business bailouts. The actual past relief bills were results of economic ignorance combined with various political realities such as the need to appease tons of special interests.

I believe we are in a 1 in 100-year pandemic/event, or possibly even rarer. I am willing to make exceptions to my normal beliefs in order to handle such an unusual event. My belief is that in 6 months or so, there will be economic demand similar to the economic demand in 2019. If too many workers are doing things that do not reflect 2019 demand, there will be shortages (and higher inflation) of goods and services.

The PPP loans, were given to businesses, but the ultimate beneficiary was the businesses' employees (if the loans were taken as the spirit of the program intended). The benefit to the businesses was that they would not need to have the expense of hiring and training new employees once economic demand gets back to normal.

[DaveF]

there is pent up demand for airline travel that will come once populations are vaccinated in larger numbers. Airlines have cut their schedules by over 50%, sometimes more.

I agree more or less with everything else in your reply but this line and I think it's going to be the same with a lot of other travel related industries.

Yes on the vacation / leisure side will get back to normal probably late 2021. Just till people get on a bit more solid financial ground.

But a lot of businesses have come to the realization that cooperate travel was not as necessary as they thought.
Zoom / Skype or even 1 person going to a meeting instead of 3. That is going to be the long term pain of airlines.

If I am going from NY to Vegas for BlackHat  / DefCon this summer I will probably do the same thing I do most years....find the cheapest flights.

If say Ubiquiti wants to send people from NY to Vegas for the same conventions they as a large company will do what most large places do. Pick the time & date and then find a
flight and the cost is the cost. But since they now know that many things can be done virtually They send 3 people instead of 5.
That's 2 fewer seats sold, that's 2 fewer Uber rides to and from the airport, that's 1 or 2 fewer rooms booked at the hotels. etc.
And the problem for larger airlines is that a large amount of their profits come from corporate travel.

If I can't find a flight / hotel in the price I want, I might not go. Many people do that. It's a vacation, if you don't have kids that you are taking to Disney you can be a lot more flexible of where you travel to. I have taken many trips over the years that were places I wanted to go but were lower on the list just due to price.  
Yeah, I know 1st world problems....

-Dave

[philipma1957]

Nice thread.  I was thinking about Andy Yang wanting to give every adult American 1000 a month as base income.

I was thinking that this year millions of Americans got 2400 or 3000 a month in unemployment checks.

Then it was dropped to 1200 or 1500 a month. So Andy Yang was not that far off with his idea.

As for forcing people back to work.

Worst death year ever was or is 2020 3.2 million died of any cause.

Next worst was 2019 with 2.8 million.

So looks like covid-19 took out an extra 400,000 people.

The vaccine is around the corner.

So I am thinking unemployment back up to 450 from 4 months.  A 2,000 check for all adults with a small income now and in 2 months.

The nation goes back to normal May or June.


Capitalism is not a good plan for pandemics.

It relies on churning money to skim off a profit.

i.e.  your restaurant churns 3 million a year.  you the owner makes 300k.

You pay 100k in taxes
You spend 100k to live.
You save 100k to retire

Pandemic comes you try to carry that restaurant and burn 2 million in saves all your fund for retirement.

Keep it open
keep it open

you add to the 400k extra deaths.

Reality the right choice for above if you had 2 million in savings was to close it and retire early.

I know multiple successful restaurant people that had the choice above.  Some bailed asap others stuck it out. Every one that has tried to keep going regrets what they did.