Here’s a proposal for another kind of stimulus that would do much more good and cost much, much less.
ongress isn’t known for learning from its mistakes. So, it’s not exactly shocking that despite the many failures of their last effort, lawmakers from both parties are pushing for another massive relief bill to stimulate the economy amid COVID-19 and the continued economic fallout.
The GOP has at least expressed a desire to keep the spending package under $1 trillion. (You know, just a measly $7,000 per taxpayer). Meanwhile, the Democrats’ bill comes in at $3 trillion, a whopping $21,000 per taxpayer.
But the truth is we can’t afford either.
The federal government is already set to run an astounding $3.7 trillion deficit this year. The scale of this figure might not be immediately obvious, but consider that at the very peak of the 2008 financial crisis under President Obama we only ran a $1.4 trillion deficit. This will result in future generations, not the septuagenarians in Congress, facing higher taxes, lower economic growth, and reduced opportunity.
Indeed, the already bleak trajectory of our public finance only looks worse now due to the pandemic and Congress’s massive response bills. The federal government is now set to hit a 100 percent ratio between debt and the size of the economy—considered a red flag among economists—this fiscal year.
But what if there was a way to further stimulate the economy without compounding our debt crisis? It won’t satisfy either party’s partisan policy wishlist, but if the federal government really wanted to jump-start the economy without further burdening taxpayers it could do so by abolishing barriers to international trade en masse.
President Trump could start unilaterally by rolling back the tariffs he has imposed on goods such as washing machines, solar panels, aluminum, and steel. According to Tax Foundation estimates, eliminating these tariffs would increase the size of the economy by $58 billion, raise wages, and prevent the destruction of 180,000 jobs. This reform would decrease the federal government’s tax revenue marginally and thus cause some additional debt, but the expense certainly pales in comparison to trillion-dollar stimulus packages.
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