The U.S. Senate has passed a more than $2 trillion relief package to try to keep the economy afloat during the coronavirus pandemic. WGBH Morning Edition host Joe Mathieu spoke with MIT Professor and economist Jonathan Gruber to discuss the details of the package. The transcript below has been edited for clarity.
Joe Mathieu: I'd like to start with this plan to send $1,200 checks to millions of Americans who make under $75,000 a year. I'm just wondering, in terms of a general concept, the effectiveness of sending checks directly to Americans. Do they put that money to work in the economy?
Jonathan Gruber: Well, you know, it's not ideal. You raise one concern. They might not put the money to work. Remember, we shouldn't really compare this to the Obama stimulus because the idea here is not to stimulate the economy. We should really think of the economy as a patient in a medically induced coma right now. And the idea is, we don't want to shock that patient awake before they're ready. We want to just make sure the patient can survive while they're in the coma.
So you should really think about what the Senate's trying to do in this bill is just making sure the patient can survive the coma and have enough money to get there. And so the idea of these checks is to make sure that everyone has enough money to pay their bills and to get through it. Will that work? Most likely. The problem is for 70 million Americans, they can arrive in a couple of weeks. But the rest of Americans, it could take a couple of months. So by itself, it's not enough to keep us alive in the coma. That's why you have to complement it with the other piece of the Senate bill, which is a large expansion of unemployment insurance benefits, which could happen much more quickly and get money to people as quick as they need it.
Mathieu: We should mention if you do not have a direct deposit setup with the IRS, it could indeed take months before you receive a check. Is that what you're referring to, that lag time?
Gruber: Exactly, about 70 million Americans. It's too late — it's not like you can rush do it now; it's based on last year's taxes. Seventy million Americans have a direct deposit account and they'll get the check within weeks. Others, it could take up to four months.
Fortunately, the Senate bill also features that if you're either renting from a federally guaranteed mortgage holder or if your mortgage is federally guaranteed, there can be no foreclosures or evictions over the next four months as well. So if they're worried about a foreclosure or eviction, they should go online and read about that and see whether their mortgage holder or their landlord's mortgage holder is federally guaranteed.
Mathieu: Another major provision, Jonathan, is the federal government wants to give every person on unemployment because of this virus an extra $600 a week. Some Republicans warned that would incentivize people to try to get laid off because they actually would end up making more money. Is there any merit to that argument? We've heard it before.
Gruber: In normal times, yes. I don't think right now. I've got kids looking for jobs right now. I don't think right now if you have a job, you're going to say, "I'm just [going to] stay home and work it out later." No one's given up jobs that are actually active right now.
So I think this is a classic argument that in what we call a full-employment economy, normal time, it makes some sense; you wouldn't want to pay people more — you wouldn't want to pay people 100 percent of what they need. But this is not normal times, and I think it was incredibly silly to hold up the bill for a whole day about that. It really isn't a big issue.
Mathieu: I'd like to ask you about the oversight component of this, specifically this half-trillion dollar loan fund for large corporations. At one point, President Trump said he would be the point of oversight himself on a personal level. Where did the Senate's bill land on this issue? Is this done properly?
Gruber: I would say this bill landed in a very good place. I should say overall the Senate's bill landed, in many ways, in a surprisingly good place. I think the combination of the universal basic income plus expanded unemployment insurance is a great idea, and the oversight ended up pretty good. It ended up being oversight to the Treasury Department, which is not great given this current Treasury Department, but also a Congressionally appointed board of independent oversight. So actually, I'm pretty pleased with how the oversight there ended up. Chuck Schumer even said there's a provision to make sure none of the funds go to Trump, Pence or administration-owned companies. I'm not sure how effective that will be, but in general, I do like the oversight that's included in this bill.
Mathieu: Is that actually fair? Think what you will about President Trump, but a lot of people work at his properties across the country that are now closed.
Gruber: Yeah, that's a great point. If Trump was overseeing it, it would be fair. Given that it's being overseen by a more neutral board, I agree; you don't want to be in the business of singling out individual businesses. Let's let this expert board figure it out.
Mathieu: Jonathan Gruber, you have a unique perspective on health care and spending on health care, and hospitals across the country are in line to receive billions in additional aid. Much of the complaints from health care workers have centered around shortage of supplies and beds. Will this extra funding help to address that?
Gruber: Yeah, this is probably the biggest weakness in the law, which is, the problem is not hospitals don't have money. Hospitals are complaining about money because they're losing high-profit elective surgeries, but those surgeries are going to come back. It's fine to give hospitals some money, but we really needed the federal government taking charge through its Emergency Authorization Act powers of actually getting private companies to devote themselves to providing that protective personal equipment, or so-called PPE, and ventilators that we need.
Money isn't the issue right now. All the money is going to do is just raise the prices of the limited supply. We need supply. The hospitals do need money, but really in some sense what I would have liked to seen an increase in supply. But also, what about the tens of millions of Americans who are going to lose health insurance, potentially? Fortunately, the ACA exchanges are designed to handle limits. We're actually quite fortunate we have Obamacare in place right now because before Obamacare, if you lost your employer insurance, you were just going uninsured. Today if they lose their insurance, they can go on the state connector — or in any other state their health insurance exchange — and get health insurance. But these exchanges were not quite designed for tens of millions of people coming on at once, so we need financial support to make sure that they work properly.