A cost-effective stimulus to mend the effects of a 24 percent drop in GDP would cost no more than $1.3 trillion over a 6-month period. The bill that Congress just approved is much bigger because it allocates resources to people who are not necessarily affected and rescuing businesses, like Boeing, that are in trouble for pre-existing reasons.
President Trump just signed into law the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act. Everybody agrees that some intervention was needed and, while there are many shortcomings, most people agree that this act is better than no act. Yet, how suboptimal is this plan?
To measure the degree of suboptimality, we need to establish a benchmark. At the beginning of 2008, Larry Summers, then only a professor at Harvard, advocated for a fiscal stimulus that was targeted, timely, and temporary (TTT)…
To read the entire article from ProMarket (from the University of Chicago‘s Booth School of Business, click https://promarket.org/the-stimulus-package-is-too-expensive-and-poorly-targeted-the-waste-contained-in-the-cares-act/
