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THREAD. The economic shock of COVID-19 is the result of public fear of contracting or spreading the virus and government-ordered closures of large sectors of the economy to enforce social distancing requirements and contain the spread of the disease. Stimulus measures won't help.
The economy has essentially been mothballed. It will pick up where it left off once the public health threat subsides and lockdown measures are lifted...if we succeed in preventing the viral contagion to turn into a broader economic contagion. (2)
Following this sudden and steep decline, the recovery still has the potential to be strong, assuming that government policy succeeds in containing the spread of #COVID19 and avoids harmful economic distortions, like wasteful "stimulus" and bad incentives like excessive UI (3).
Once shelter-in-place orders are lifted and healthy people can reasonably go back to work, Congress must step back and allow the private sector to lead the recovery. Stemming the spread of #COVID19 is the most important thing Washington can do to help the economic situation. (4)
Talk of a Phase 4 stimulus does more harm than good. It confuses the American people with mixed messaging concerning an economic stimulus while extraordinary public health efforts that actively depress economic activity remain in effect. We need consistent communication. (5)
Public adherence to enhanced hygiene procedures (wash your hands, do not touch your face), social distancing, and reduced economic and social activity relies on a common understanding of the threats that #COVID19 poses and how current measures are mitigating those threats. (6)
For Congress to engage in premature negotiations to “stimulate” the economy would only add confusion and could hamper the effectiveness of public health efforts if individuals get the wrong impression about exactly which stage of the coronavirus response is in effect. (7)
Public officials should stay focused on pandemic control. They should scratch the itch "to do something" by being of some use to their constituents in helping them understand how to access relief in the #CARESAct (h/t @kevinrkosar) https://www.legbranch.org/every-congressional-office-should-pivot-to-constituent-service-during-covid-19/ (8)
Instead of a stimulus bill, Congress should fix problems introduced in the hastily drafted #CARESAct. The American people are busy fighting the pandemic and preparing for the eventual recovery. They should not need to also fight against easily avoidable policy mistakes. (9)
The greatest failing of the #CARESAct is the additional $600 per week federal unemployment insurance benefit, which makes it possible for a majority of Americans to make more money by becoming unemployed than by remaining employed. (10)
If Congress does not fix this provision, unemployment could end up twice as high as it otherwise would have been, the downturn will inevitably turn into a deeper recession, and the economy will not spring back into action once the temporary health crisis subsides. (11)
Congress must fix this by capping the $600/week added federal benefit so that workers do not receive more than 100 percent of their previous earnings for becoming unemployed. The goal should be to keep workers attached to the labor force; not encourage them to go on UI. (12)
This policy goes directly against the targeted, timely, and temporary measures that keep workers attached to their employers and avert widespread business failures to enable the economy to rebound once the pandemic subsides, which make up the other parts of the #CARESAct (13)
In sum: 1) Congress should focus on pandemic response and relief; 2) Congress must fix harmful policy provisions in the #CARESAct ; 3) Congress should avoid a misguided phase 4 stimulus plan. Read more --> https://www.heritage.org/budget-and-spending/report/congress-should-focus-pandemic-control-and-fix-the-cares-act-economic @Heritage
Thanks to my colleagues @lindseymburke @adamnmichel @parkersheppard @norbertjmichel @paulwinfree @JudeSchwalbach and others not on @Twitter for their help in producing this critical report. @Heritage
