How important have these programs been in keeping the economy afloat?
“It is absolutely nonsensical to cancel your home insurance while your house is already on fire. Perhaps the fire won’t cause enough damage to trigger the insurance payout, but that is a crazy bet.”
So far, these specific programs have been like an unused insurance policy. The programs were designed conservatively, so they have not had much takeup. But that could change if things get worse, or if the programs were redesigned to be more aggressive.
Are they likely to be needed again in the near future?
It is absolutely nonsensical to cancel your home insurance while your house is already on fire. Perhaps the fire won’t cause enough damage to trigger the insurance payout, but that is a crazy bet. I cannot imagine any rational reason to do this in the public interest. If Congress’ clear intent was to end the programs on December 31, that would have been easy to put into the legislation. They did not. Instead, Congress allowed this discretion, and the Treasury Secretary is using the discretion to cancel our insurance policy. Left without any rational explanation for this action, citizens can draw their own conclusions about the motive.
How would you modify these programs to make them more effective?
If the programs were extended past December 31, then I would encourage the framers to make the terms more aggressive but also more tailored to the bad outcomes. There are several ways to do this. One possibility is to try to combine lending from Fed programs with some form of pandemic business-interruption protection.