The end of the job benefits is a major blow to the US economy. There’s no direction at all coming from Washington on this truly hideous situation. The two parties are blaming each other. The economic ramifications could go from bad to worse. America’s mindless political polarization has finally created a real disaster “on principle”.
The Republicans are talking about $200 a week. The Democrats want to continue the existing benefits to the new year. Exactly what happens for American households is anyone’s guess. There is literally no indication what sort of options other than basic unemployment insurance are available.
This is a historic moment. Baffled media coverage is reporting bare bones of the situation. Expect a lot more history, much of it grim, to be made soon.
Immediate economic problems
The instant destruction for the US economy could be truly horrendous. The obvious first hit will be to Main Street. Paying bills and rent may be impossible for millions of people. Buying groceries and daily needs will also obviously be a lot tougher.
The inevitable secondary hit will be to businesses and people who are still employed. No cashflow equates to no jobs for services, trades, and other essentials. Families are particularly likely to take a double hit in terms of child care and core child-raising expenses.
The third, and perhaps near-fatal, hit to the US economy will be the knock-on effect on American corporations and trade. The dollar could crash, making debts a lot more expensive to service. Government debts to foreign loans could be far more costly. This might be a possible fiscal catastrophe in progress if no clear direction is shown from Washington.
Add to this the end of the evictions moratorium, and you have a huge section of the US population in the blender. This sudden, huge, hit will make paying for accommodation extremely difficult for many people.
Is there a rationale?
The reasons for this horrifying blunder vary. One is managing Federal debt, which has ballooned due to the various government spending to fight the pandemic. Another is political; the two parties are fighting an election, and appealing to very different voter groups.
Neither of these reasons stack up at all well in the current national emergency. The sheer economic havoc this sudden lack of money could cause is likely to be far more expensive than a few bucks on the Treasury books.
Many economists have pointed out that governments can simply print money to supply domestic needs. The jobless benefits were definitely costly, but not unbearable. They were sustainable.
The obvious fact is that the pandemic has to run its course and swerving policies in multiple directions can’t help any sort of recovery. The failure to maintain the jobless benefits is an obvious, serious, mistake.
Eventually there will have to be some sort of agreement by Congress. Whatever self-serving logic is involved or whatever ridiculous political spin is required, the nation is now in a potentially deadly situation.
