How much help for the economy is too much? There are economists who worry that the American Rescue Plan championed by President Joe Biden and congressional Democrats is too much fuel for an economy expected to recover as the coronavirus pandemic eases, potentially causing inflation.
But help for the poor, both those who already lived paycheck-to-paycheck pre-pandemic, and the newly jobless? It’s hard to imagine that there could be too much help for them in this welcome federal aid package. Further, Treasury Secretary Janet Yellen, who has tracked inflation for much of her career, said this risk could be managed.
Americans hope she is correct. The COVID-19 relief bill, signed into law on Thursday, surely could have been more finely tuned to direct its $1.9 trillion heft more precisely to the people who needed it most.
But the greater danger to rebuilding a healthy economy was not that too much cash might land in healthy spots — the $1,400 direct payments going to individuals not under financial strain — but that all of it would come too late to save businesses and families on the edge.
Compared with the stimulus outlay for the Great Recession, the $1.9 trillion pricetag on this plan is certainly more on the scale of the problem the Biden administration aims to address. It of course includes support for vaccine distribution, but this being a twin crisis of public health and the national economy, both require fulsome reinforcement.
Hawaii is keenly aware of this, having suffered worse economic damage than most other states with a long-term shutdown of tourism. Further, low-wage jobs in the service industry dominate its employment marketplace in a famously high-cost locale. And many of those workers were the first to be thrown into joblessness, and a rapid slide toward poverty.
Fortunately, several aspects of the relief bill are geared to benefit this neediest group, and for them the roughly $6.1 billion coming to Hawaii is a godsend. The real challenge is one of implementation: State, county and federal officials will have to work hard — and fast — to deliver the aid in a way that’s both efficient and constructive.
One could almost hear the great sighs of relief coming from the fifth floor of the state Capitol, where Gov. David Ige was able to announce that his contingency plan for furloughs of public employees was now canceled. That was good news, in that curbing economic activity among a large workforce is something to be avoided, if possible.
But the legislative pledge to make state government more efficient? That is still an imperative.
Consider: The $1.6 billion Hawaii’s state government expects to receive in federal aid covers the projected $1.4 billion budget shortfall, but not those anticipated for the following three years. Yes, the hope is that economic recovery will close the fiscal gap as tax revenues increase, but there are no guarantees.
There is no revolutionary change on the horizon, and some early efforts have stalled. But pilot projects such as Senate Bill 1018, which would reorganize several divisions of the state Health Department, should move forward, now that it’s crossed to the House.
A broader streamlining bill is not advancing but a resolution to direct the Budget and Finance Department to review all state agencies is in the works. Such a review, not done since 2007, is seriously overdue now.
More immediately, there is much in the Rescue Plan that should strengthen the safety net for Hawaii, where it has worn critically thin. The fiscal relief, both for state and county governments, is there to maintain public services, for which there is much pent-up demand. The lack of furloughs should ensure that the government provides them.
Other focal points:
>> The maximum Child Tax Credit will expand from $2,000 to $3,000 and will extend to children up through 17 years old. By providing this added support to families, many of which are digging out from a year of pandemic hardship and debt, it can lift them from poverty and give them a chance to regain their financial footing.
>> Food and nutrition benefit programs also will be bolstered; witnessing the long lines at food bank distributions, that is clearly required.
>> Aid for health insurance will be essential to many families that have lost jobs and need an assist in the short term, as well as expanding access to the Affordable Care Act.
>> There are multiple infusions of funding for education, which must be deployed to provide the remedial help so many students need.
>> There will be another round of Paycheck Protection Program funds that could help save more businesses and nonprofits, both utterly crucial to economic recovery.
Whether the plan succeeds depends entirely on competent execution, as it always does. Government is accountable for that, to be sure.
The people who have suffered through the pain of the past year can take hope, however, that the tools for rebuilding a more sustainable life are at hand, at last.
