GOP THREAT TO SCRUB UNEMPLOYMENT CHECKS A DISASTER

Business Insider opinion contributor Neil Dutta warned US President Donald Trump and his Republicans allies like Senate Majority Leader Mitch McConnell that gutting unemployment benefit checks on July 20, 2020 “would cause a major demand shock and seriously harm the US economy as it tries to emerge from the coronavirus pandemic.”

In his article “The GOP threats to end the pandemic boost to unemployment checks would cause a disaster for the US economy” published by Business Insider on May 24, 2020 (May 25, 2020 in Manila), Dutta, the head of economics at Renaissance Macro Research, said “lawmakers across the federal, state, and local levels ought to be commended for quickly responding to the economic damage wrought by the coronavirus pandemic and measures taken to slow the spread of the virus, but it is important for policymakers to not rest on their laurels. To be sure, the news in recent weeks has been encouraging. The pace of testing has increased and the rate of positives has come down. US equity markets have advanced. There are tentative signs that a recovery is underway. But it appears some policymakers have lost their appetite for more action to support the economy.”

Dutta warns that Trump and his allies are declaring victory too soon and expecting the reopening of the economy to drive a robust labor market recovery. “The risk of too much stimulus is negligible — especially with negative real interest rates as far as the eye can see. But there is plenty of obvious risk in waiting to see how economic conditions unfold and doing too little to lift the economy. Now isn't the time to hesitate. Nowhere is this risk greater than if lawmakers allow the enhanced unemployment insurance benefits to lapse in July.”

Other critics have said the benefits are actually less than what workers should be entitled to, given the dislocation caused by the lockdown, the general malaise of the market and the failure of the Trump administration to remedy the COVID-19 pandemic. #COVID19