The economy isn’t going to bounce back quickly on its own from the coronavirus pandemic. State reopenings, premature or not, will restore a modicum of economic activity, but it won’t be enough to put many local businesses in the black.

If the virus comes roaring back in states that reopen, it will cause a wave of fear that will depress demand and send some places back into lockdown. Meanwhile, wary consumers are saving their money, which will depress demand. And global trade networks and supply chains will remain in shambles for some time as the pandemic reverberates around the world. Meanwhile, although the pace of unemployment claims has slowed slightly, millions of Americans continue to lose their jobs:

The federal government therefore can’t afford to let up on its attempts to relieve Americans’ pain and preserve as much economic activity as possible. The $2 trillion CARES Act was an encouraging example of bold bipartisan action that addressed many of the country’s most urgent needs back in late March. But as Federal Reserve Chair Jerome Powell emphasized last week and is likely to reiterate in Senate testimony today, the country is overdue for another round of stimulus.

The House of Representatives last week passed its version of that second round, called the HEROES Act. The $3 trillion spending bill is unlikely to make it through the Republican-controlled Senate without substantial changes, but it represents a good opening bid.

The most important element of the House relief plan is money for state and local governments. Although the pandemic has increased their spending needs, many of these governments are limited in their ability to spend by balanced-budget amendments written into state constitutions. Even those that are not typically have to pay much higher interest rates to borrow than the federal government. Thus, it makes financial sense for the federal government to take most of the financial burden off smaller governments.

The House bill does this, with $500 billion for state governments and $375 billion for local governments. The former number lines up with a recent report by the Center on Budget and Policy Priorities, a center-left think tank, which predicts a $500 billion state budget shortfall during the next three years. Those numbers are likely to be reduced in the final bill, and that’s fine; for example, some of the local government spending is redundant because states use some of their budgets to support localities. But robust relief to state and local governments will help avoid one of the biggest mistakes of the Great Recession.


A second important piece of the bill is more funding for test-and-trace efforts. Most of the U.S. still doesn’t have enough testing or contact tracing to suppress future outbreaks of the virus. As a number of economists and public-health experts have pointed out, these suppression capabilities offer the single highest return on investment that government spending can get right now. Test-and-trace systems are the essential tool used by New Zealand, South Korea and other countries that have contained COVID-19. With the threat of the virus in check, economic reopening will be safe from sudden reversals.

When it comes to economic relief for households, though, the House bill could use some improvement. The bill’s main approach is to double down on the strategies in the CARES Act — modest one-time universal payments of $1,200 per person, plus a big extension of supersized unemployment-insurance benefits through the end of the year.

This is a lot of money, which is good. But much more of it should be in the form of universal payments and less in the form of unemployment benefits. The main reason is that many unemployed Americans have had trouble accessing the benefits that the CARES Act allotted to them, and there’s no reason to expect anything different in the coming months. State unemployment systems are not equipped to deal with the number or scale of the requests being made. So far, this has meant that a very large share of unemployed workers — by some estimates, almost half — have either been denied benefits or are still waiting.

This is unacceptable. So far, workers either denied or forced to wait have been spending down their savings, but there’s no way that can continue for the rest of 2020.

If the government wants to both minimize human suffering and cushion the long-term blow to consumer demand, it should shift much of the relief effort away from the unemployment-insurance system and toward universal payments. Instead of a one-time payment of $1,200 per person, the relief bill should include recurring universal payments for the rest of the year. Because these payments are administered through the tax system, they’re much quicker and more reliable than state unemployment checks. Also, because they’re universal instead of based on employment status, these payments are less likely to deter workers from going back to work quickly once the pandemic threat has passed.

The time for worrying about benefit targeting has passed. This depression is going to affect all Americans, and the solution is a relief bill that focuses more on supporting all Americans.