CARES Act: Cushioning the economic harm from COVID-19
Congress and President Trump are committing $2.2 trillion in money that we don’t have to try to prop up the economy during the COVID-19 shutdown.
It’s a necessary evil.
“In the last three weeks we’ve had 16.8 million people file unemployment claims,” said Virginia Tech professor John Bovay. “It would be very, very disruptive to the economy if even more people lose their jobs over the coming weeks and are not able to cover their rent or mortgage. It would mean that their spending would go down and they’d need more aid in the form of SNAP, unemployment insurance benefits, et cetera.”
Bovay explains that these measures, while expensive and extreme, are necessary for the U.S. economy and society to experience a more rapid return to normalcy when the pandemic ends.
“What the CARES Act is trying to do is cushion the harm that has come from this disease and to make it possible for people to resume a relatively normal life after the pandemic is over,” Bovay said. “It allows business to retain their staff – even if their employees aren’t able to work and contribute to the company’s bottom line right now. It enables them to do this without disrupting their operations so that at least when this is over they won’t have to do a search and they won’t have to re-train.”
“It also allows employees to keep their health insurance, which would otherwise be a huge societal cost,” he said. “Additionally, businesses are closing and people’s investment portfolios have shrunk so much that it may not be easy to open new businesses again to replace the ones that have closed.”
“So, doing what we can to make sure that employees either continue to be employed or receive very generous unemployment packages will enable us to resume a more normal pace of life when this is all over.”