The growing throng of critics who have assailed the Senate's $2.2 trillion spending bill as avarice, insufficient and disappointing have an alternative.
Enter Michigan Congresswoman Rashida Tlaib and the Automatic BOOST to Communities Act, a bill so audacious and unparalleled in scope that one of its primary authors asserts "there is no number that would be meaningful to estimate" its cost.
Details: Tlaib proposes sending a debit card to every single person in the U.S. loaded with $2,000, then reloading that card every month with $1,000 "until one year after the end of the Coronavirus crisis."
- The process would be funded by minting $1 trillion dollar coins.
Why it matters: There is rising opposition to the idea that government debt is harmful, and more support for programs that dedicate government stimulus money to people rather than business. Tlaib's bill currently has very limited support in Congress, but that could change.
- "It seems to me that we’re going through the conventional means at the moment and if that doesn’t work then it will lend to more discussion of these alternative measures," Gennadiy Goldberg, U.S. rates strategist at TD Securities, a primary dealer that does business directly with the Fed, tells Axios.
Between the lines: It would be a "money-financed fiscal program," Rohan Grey, a J.S.D. candidate at Cornell Law School who worked with Tlaib's office to draft the bill, tells Axios.
- That means there would be no government debt issued to pay for the program — the coins are the payment.
Yes, but: Potential harms include runaway inflation, destabilizing the U.S. financial system, displacing the dollar as the world's funding currency, and undermining institutional confidence in the Fed, market analysts say.
- "It’s a fun idea, but it’s a gimmick, not really a reasonable plan for financing the government," Thomas Simons, money market economist at Jefferies & Co., tells Axios.
- "It suggests that the government can just deliver unlimited amounts of cash to anyone who wants it for any reason. That's dangerous."
Yes, but, but: Grey foresees a situation now that could be far worse than the Great Recession — unemployment as high as 20%, wide-ranging and permanent destruction of businesses, mass bankruptcies and more.
The last word: Like many advocates of the Modern Monetary Theory, Grey points to World War II when the U.S. ran up tremendous deficits but also utilized much of the country's available resources, including the lion's share of its human capital, remaking the American economy.
- "We need to make sure we do everything it takes," he says.