The official student newspaper of Vanderbilt University

The Vanderbilt Hustler

The official student newspaper of Vanderbilt University
Since 1888
The official student newspaper of Vanderbilt University

The Vanderbilt Hustler

The official student newspaper of Vanderbilt University
The official student newspaper of Vanderbilt University

The Vanderbilt Hustler

The official student newspaper of Vanderbilt University

SCHULMAN: The Trump administration’s proposals to stimulate the economy run into an obvious problem — social distancing

The policy of sending checks to most Americans is unwise; I’d know. I’m quarantined and can’t spend that money.
Emily Gonçalves
The Office of the University Registrar serves to provide “timely, accurate, and efficient service, and is dedicated to ensuring the integrity, confidentiality, and security of Vanderbilt education records,” per its website.

After a long period of denying reality, the Trump administration is finally taking the coronavirus pandemic seriously. Late last month, the administration began changing its posture, transitioning away from downplaying the scope of the outbreak to taking aggressive action to fight its spread and economic effects. Recently, Trump signed into law an $8.3 billion spending package which ramps up Centers for Disease Control funding, vaccine research and development along with aid to state and local governments. This bill also expands the social safety net, increasing spending on paid sick leave and food stamps. Additionally, Trump’s Treasury Secretary, Steve Mnuchin, has committed to making billions of dollars of cheap loans available to struggling businesses. And most starkly, Trump has been actively pursuing a direct cash infusion for most Americans in the form of a check that could be as large as $2,000 per person. 

In a lot of ways, sending a check to many Americans makes sense. It would allow for those living paycheck-to-paycheck to complete rent and utility payments. It would inject spending money into a contracting economy. It would cover other government obligations, including welfare in the form of food stamps. In short, we have an economy that’s short on cash. Why not just put cash into the system?

There’s a fatal flaw in this demand-side solution. Sure, the federal government has responded to the threat of recession with massive spending aimed at ordinary Americans. After the Great Recession, President Obama, in one of his first major acts as president, signed a massive stimulus package. The administration spent billions of dollars to finance unemployment benefits, education, healthcare and a whole lot more. These hundreds of billions of dollars in spending and tax cuts helped ease the country during the recession and averted middle class wealth loss. But there’s a fundamental difference between then and now. Back then, we had places to spend the money the government gave us. Today? We’ve got nowhere to go.

Take it from me. I’m quarantined. If the government sent me a check or gave me a massive tax break, what would I do with it?

Well, the stock market is tanking, so I wouldn’t invest it. And I can’t go out and spend it—I’m trapped inside. I’d probably save it, leaving the government’s investment in me on my shelf. And while most of y’all aren’t quarantined, if you’re following the instructions of both the scientific community and the White House, you should be practicing social distancing. That means avoiding contact with large groups of people and limiting time outside the house. So even if you could spend your money, you definitely shouldn’t go shopping. And while online shopping may present one outlet for the cash, e-commerce only represents about ten percent of total retail spending; additionally, huge numbers of businesses would be unable to move their sales online.

So what should the Trump administration do? For one thing, it’s already taking steps in the right direction. White House officials are evaluating a trillion dollar bailout package that includes billions of spending on small businesses along with a targeted loan program to the particularly hard-hit airline industry. Such relief draws on the success of bank bailouts during the Great Recession. But if the administration is to be successful with this massive government intervention, it must recognize this reality: the wheels of the economy won’t just start spinning again. 

Throwing money at people won’t make them able to spend it. If you’re trying to prevent the spread of coronavirus, you’re not boosting the economy, in effect wasting vast sums of government money. The Trump administration should instead expand its past increases in the social safety net, including further ramping up food stamps and sick leave. While these measures and other forms of relief won’t save the economy, they allow the poor to pay for food and help the employed middle class pay its bills.

Americans need to be paid for their work. Businesses need bailouts and cheap loans. The economy needs money. But it would be dangerous and wasteful to send out billions of dollars worth of checks to the American people with no guarantee that they’ll use it.

View comments (11)
About the Contributors
Max Schulman, Former Opinion Editor
Max Schulman (‘21) majored in political science in the College of Arts and Science. He previously served as Opinion Editor and Editorial Director for The Hustler. In his spare time, Max enjoys prominently wearing Obama-themed apparel, reluctantly defending Kanye's Twitter and arguing about politics.
Emily Gonçalves, Former Multimedia Director
Emily Gonçalves (‘20) was the Multimedia Director of the Vanderbilt Hustler. She majored in Mathematics and Economics and minored in Latin American Studies. When she’s not taking photos, you can catch this Jersey girl making puns, singing, advocating for girls’ education and drinking lots of chocolate milk and espresso!
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Comments (11)

The Vanderbilt Hustler welcomes and encourages readers to engage with content and express opinions through the comment sections on our website and social media platforms. The Hustler reserves the right to remove comments that contain vulgarity, hate speech, personal attacks or that appear to be spam, commercial promotion or impersonation. The comment sections are moderated by our Editor-in-Chief, Rachael Perrotta, and our Social Media Director, Chloe Postlewaite. You can reach them at [email protected] and [email protected].
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3 years ago

Very disappointed in this article and the fact that The Hustler allowed this to be published. We already attend a University that (at times) wreaks of only showing the upper class narrative, and on behalf of someone whose working-class family will depend on the stimulus check to get by in these troubling times, I am so disappointed. Opinion writing is so necessary and important in this day and age, but something that oozes ignorance and privilege is not. Commodores, let’s be intellectuals who try to examine ALL aspects before reporting — it would do everyone some good 🙂

Econ Guy
3 years ago

“The policy of sending checks to most Americans is unwise; I’d know. I’m quarantined and can’t spend that money.”
LMAO at assuming you have to go outside to spend money. Do you order anything on Amazon? Do you pay for streaming services? Do you pay for rent? Ever ordered Uber Eats?

“And while online shopping may present one outlet for the cash, e-commerce only represents about ten percent of total retail spending; additionally, huge numbers of businesses would be unable to move their sales online.”
Could it not increase? Restaurants are already ramping up take-out orders, stores can deliver and have items ready for pickup. Granted, businesses like movie theaters and gyms will have a harder time.

Honestly, I’m surprised your criticism didn’t mention the inflationary effect of universal basic income. 2/5

3 years ago

Nice article, Schulman!

3 years ago

I’m sorry, but we have something called the internet where you can spend that money. We live in an age where you actually can spend this cash without physically leaving the house, and it has been that way for almost two decades lol

3 years ago

Everything about this is wrong

Anonymous Jim
3 years ago

Terrible. Awful, poorly informed, poorly researched take. Seems to demonstrate a total ignorance of the economy on both micro and macro levels. The Hustler has to stop publishing these garbage, flashy opinions just to get clicks. Well researched, well reasoned, well written articles, not this sludge.

3 years ago

Have you ever heard of bills? I mean let’s be real you probably have never even done your own laundry with a take like this.

Embarrassed Vandy Student
3 years ago

You do realize that multiple studies report that nearly half of Americans live paycheck-to-paycheck? During especially dire times, like last year’s government shutdown, that percentage has even shot up to 78%. Is now the time to be questioning how this money can be used?

Expanding welfare programs takes time, and like a commenter already said, different people need the funds for different things. There are working people who can barely afford to support themselves and their families when they ARE working. Now that everyone’s practicing social distancing, are we really going to act like medical bills, utility payments, groceries, and rent suddenly don’t become a problem?

I wish I were in a position so privileged that these weren’t the first things that came to my mind. Not everyone is in the position to put an extra $2,000 on the shelf just because they can’t use it in the stock market or to buy themselves some nice, unnecessary things.

Whew…ignorance is a disease, get well soon!

Randy Lahey
3 years ago

“Oh no I’ll have to save my free $2000 for later.”

Brandy Bonczek
3 years ago

“What would I do with it?” is the statement that epitomizes the fact that this article is oozing with privilege. This measure is not intended to simply boost the economy. You are looking at these funds from an economic standpoint, and not from a human standpoint. This money is intended for exactly the purposes that you quickly gloss over in this article: paying rent, buying groceries, paying bills.

While that may not be a concern to you personally, that is the far larger concern for most Americans than boosting the economy. Those who are experiencing layoffs, whose jobs have cut hours or closed down without pay, who do not have paid sick leave, and who still have monthly financial obligations, despite the hand-wave way in which you breezed past them straight to the economy, those people will need to spend that money just to survive. Increasing social safety nets as you have suggested is great and all, but that runs into the issue of the time it takes to apply, have the applications processed and approved, or even denied, before gaining access to resources that can be used for a very specific need. These wait times are long on a good day. Especially in a time when unemployment offices are already showing us that the flood of people seeking help will create longer wait times than usual at such social safety nets, this is not a catch-all solution.

People will need money with more expediency than that, and further, they will need more control over what they spend it on. One person may need help with rent, while another may have student loan payments looming, while another needs to pay for medical care. If you have the privilege to not have to worry about meeting your basic needs of food, shelter, healthcare, etc., good for you. But you need to recognize that the majority of Americans who received this check would not be lamenting that they can’t go see a movie or eat at a restaurant right now. They would feel the relief of knowing that they, and potentially their families, won’t be homeless and hungry in the midst of this pandemic, a fear that someone who asks “what would I do with [this money]?” would never understand.

Vandy Student
3 years ago

This article is surprisingly short-sighted. Just because a financially stable college student doesn’t know what he’d do with an extra $1,000-2,000 doesn’t change the fact that UBI more than any other plan solves the problems of the millions of Americans living paycheck to paycheck about to get evicted next month. I am all for the small business bailouts, but universal basic income is a necessity to keep the economy afloat for the next few months to protect the millions of people that are unemployed or about to get kicked out of their homes