Political squabbling jeopardizes the digital dollar, and the economy
Once or twice in the past I’ve used PayThink to applaud congressional efforts to introduce a digital dollar to speed up relief payments. But now, I'm beginning to wonder if lawmakers can launch a decentralized payment system when they are incapable of negotiating a financial stimulus bill in the middle of an economic meltdown.
Maybe after the November elections, they can revisit the digital dollar. Until then, it appears we must resign ourselves to watching politicians engage in theatrics while the U.S. economy tanks.
The latest Labor Department employment report brought some welcome news: Americans filing new unemployment claims last week numbered less than 1.2 million instead of the 1.4 million analysts were anticipating.
What a difference 200,000 working Americans can make. That amount may seem trivial against a backdrop of record unemployment numbers, but it was enough of a rush for investors to help markets briefly rally.
But good news doesn’t last long these days. The week closed with word that lawmakers — after two weeks of heated discussions — were still unable to bridge the gap between the Democrats’ proposed $3 trillion COVID-19 economic relief package and the GOP’s $1 trillion counteroffer. This stalemate inspired President Trump to simply bypass Congress and sign an executive order and three memoranda which he promises will “take care of pretty much this entire situation.”
Which is how things work in the Beltway now. Trump’s new orders read like a menu of economic quick fixes. Most of them are carryovers from the CARES Act. There is a promise of a second stimulus check, extensions of previous eviction protection, and student loan deferments. He has called for deferred payroll taxes (something even some Republicans are pushing back on since it defunds Social Security and Medicare). Most important, he addressed what appears to be the major sticking point for Congress: How much is the federal government willing to invest in the next round of enhanced unemployment payouts? In Trump’s newly signed orders, he put the price at $400 a week, but he also expects cash-strapped states to shoulder 25% of the new payments.
Naturally, Democrats denounced Trump’s orders as unworkable and shortsighted. More troubling, constitutional scholars, Democrats and even some Republicans said the executive orders amount to presidential overreach and won’t stand up under legal scrutiny — guaranteeing the president’s Hail Mary pass will be tied up in the courts for months to come.
Unfazed, Trump’s economic adviser, Larry Kudlow, confidently made the rounds the following Sunday morning assuring TV pundits “it will work out beautifully.”
In the meantime, Congress — the body that is supposed to be patching together a workable stimulus package to address a genuine economic crisis — appears paralyzed by protracted political theatrics.
Keep in mind: As of the end of July, the U.S. economy experienced its worst economic quarter in history. And, for the 19th straight week, at least 1 million Americans applied for unemployment benefits. That's one in six Americans who are out of work.
So, while lawmakers fiddle, the U.S. economy is fading. According to a new Census Bureau report, nearly 30 million Americans don’t have enough food to feed their families. And almost 25 million say they are unsure how they will cover next month’s rent. (A separate study, released earlier this summer, predicted COVID-19-related evictions could mean as many as 23 million renters will soon be on the street.)
These numbers underscore a simple fact: Any temporary pause in evictions — authored by either Trump or Congress — would only forestall an inevitable flood of homelessness. That’s because none of the solutions proposed by Trump, the Democrats or the GOP address a longer-simmering problem: Even before COVID-19 upended the economy, most American renters lived in a cloud of financial instability.
A 2018 study confirmed this. U.S. renters earn far less ($40,500) than the national average ($63,000). They also carry more consumer debt, own fewer assets and have less money put away for emergencies. These last three findings can be attributed in part to the fact that since 2001, year-over-year rent increases have significantly outpaced renter income.
Knowing this to be the case, it’s hard to take the president or lawmakers on either side of the aisle seriously as they argue — with a straight face — about exactly how much in emergency unemployment relief — $200? $400? $600? — goes from being a lifeline to a “disincentive” enabling people to stay home rather than work?