One of the largest transfers of wealth from the young to the old in U.S. history came with the government response to the Covid pandemic. It issued a massive $5 trillion in stimulus, and essentially $3 trillion ended up in the hands of the wrong people. That amount could have been $30,000 for every American who reported pandemic wage losses. Huge swaths of America suffered, while the rich got richer.
That $30,000 in the hands of those who needed it the most would have gone much further toward repairing the economy, as more money would have ended up in the economy rather than in the markets. And who better to determine which businesses deserve to survive and are prepared for a new economy than consumers?
In the future, stimulus packages should be limited to supporting people who are food and housing insecure—not Delta Air Lines or your neighbor who owns seven dry cleaners.
But since we’re already $3 trillion in the hole, we need to recover some of those losses. We should impose a one-time wealth tax. A 2% tax on the richest 5% of households would raise up to $1 trillion. (The initial stock market bump triggered by the CARES Act’s passage helped the richest American stock owners accrue an additional $2 trillion.)
If we don’t align financial rewards and penalties with the health of our commonwealth and its citizenry, we are doomed to a pattern of failed responses to crises.
Covid Relief Spending
$3 trillion
Paycheck Protection Program
Tax breaks
Other handouts to the wealthy
What we could have done
$30K to every single one of the 100M Americans who reported pandemic-relatedwage losses in 2020
Sources: appropriations.house.gov, bls.gov.