Right now, however, that brighter future seems remote indeed: Conditions for workers and businesses are worsening because of a surge in coronavirus cases since the fall. New claims for unemployment rose by nearly 1 million in the week ending Jan. 9, with the prospect of more layoffs to come.
What the country needs, soon, is a plan to alleviate hardship and support economic activity in the period between the dismal short term and the promising medium term. The proposal President-elect Joe Biden unveiled on Thursday could build that kind of a bridge. At $1.9 trillion, its total price, when combined with the $908 billion already enacted, is high but not excessive. Roughly speaking, $2.8 trillion would close the “output gap” between the level of goods and services the United States would likely produce over the next three years without that much aid and what it would produce with it, based on a framework for evaluating fiscal policy developed by the nonprofit Committee for a Responsible Federal Budget. Equally important, Mr. Biden’s plan emphasizes critical needs: extending unemployment benefits and upping the emergency supplement from $300 per week to $400; money for state and local governments; rental and small-landlord relief; and child care.
At a projected cost of $465 billion, the largest item in Mr. Biden’s plan is an additional $1,400 direct payment to most U.S. households, which would bring the total to $2,000 in combination with the $600 provided in December and, mostly, already distributed. This sets up a potential political struggle between Democratic progressives, who have already asserted that people need even more, a fresh $2,000, and those who argue — correctly, in our view — that many, many households would benefit that do not need the money, and that the funds could be more efficiently spent on other needs. A similar debate over targeting Mr. Biden’s proposed $350 billion in state and local aid seems likely, given that some states, such as California, are flush with funds, while others, such as New York and Louisiana, face pandemic-related red ink.
These issues must be resolved promptly, however, since funding must hit the economy while it can still do the most good. The need for speed is especially true regarding extended unemployment benefits, set to expire in March. Mr. Biden has generously — especially given recent events — extended an olive branch to Republicans and invited them to work on his plan in a bipartisan spirit. And he has leverage, given that some of what he proposes could be accomplished through the simple-majority reconciliation process if it comes to that. The horror of a pro-Trump insurrection on Jan. 6 compounded the nightmare of coronavirus. If the GOP is looking for ways to regain public trust, dealing constructively with Mr. Biden to salve America’s economic wounds would be a place to start.