Since mid-March, COVID-19 has shook the whole world. In the U.S., the virus caused nationwide fear/worry, countless job losses, and lockdowns of all non-essential business. This has lead to an economic growth rate of -5.9% and an unemployment rate of about 10%. The US gov't implemented some aide to citizens such as the CARES act which included a flat $1200 tax credit for individuals.
Yet many Americans were late or even completely missed out on rent payments from April to August. And with the expiration of eviction protection under the CARES act, a potential 40 million renters can be removed from their residence in the coming months. Although we will incur a great cost, I firmly believe the US gov't should extend protections to renters and/or provide another round of stimulus checks to assist the working class. Most of whom were hit more severely by this pandemic.
I would love to hear any thoughts you all have on how we can handle this crisis.
6 comments:
I thought that this was one of the more interesting financial developments of this pandemic. The United States responded quite quickly to the pandemic by releasing the CARES act.
Although the US responded quickly to help citizens, they have received a lot of criticism for the way they helped large corporations with bailouts. I happen to agree with these criticisms of the government and that corporations are not entitled to bailouts from the government.
However, I don't know that another stimulus check is the answer to the economic dilemma. I think that the renter issue in America has been overstated. In an article by BisNow (https://www.bisnow.com/national/news/multifamily/april-multifamily-rent-payments-fall-to-69-but-improvements-expected-as-month-continues-103823), they explain that in April a 1/3 of renters did not pay their rent on time (April 5th). Surely, some of these people were unable to pay their rent because of the pandemic, but the statistics were also distorted because April 5th was a Sunday and checks were unable to be processed.
I think that the best way to help is to offer an extension to unemployment so we can make sure the money goes to who truly needs it. While a stimulus check would help those in need, it would also go to people who don't really need it. Therefore, I think an extension to unemployment would be more helpful to those actually in need.
I think this debate captures the heart of the economic crisis brought by Covid. Because Covid directly leads to an inability to come to work (as workers cannot physically attend work, and most jobs require in-person attendance), the unemployment rate will undoubtedly suffer as long as Covid persists. Because of this, solutions must be tailored around the fact that the unemployment rate will remain high until a vaccine is found. Unfortunately, until there is a vaccine unemployment will remain high and this will affect all aspects of life such as an inability to pay rent, like Kofi mentioned.
I agree with Kofi that a government stimulus check may be the only viable way to stimulate the economy. Because interest rates are already near zero, monetary policy will do little to enhance the financial situation. However, as Chase mentioned, this check needs to be selectively targeted, as not all people have an equal need for money. In my opinion, the flaws in the effectiveness of both monetary and fiscal policy highlight the need for another solution. While it may sound over-simplified, the best way to end the pandemic is to produce a vaccine. Perhaps money spent on a stimulus check would better be used investing in research for a vaccine.
There are in fact a couple of solutions we can look at, I agree with both mentioned by Chase and Max, more so with Max in the sense that the hit the economy has taken will persist as long as the pandemic persists. Sadly, that brings about all sorts of economic issues, one being the current rent crisis. I think that additional assistance from the government is very much needed and necessary in order to help renters, but this issue will probably be ongoing until an effective and long-term solution is found for the root of these economic issues. That being a COVID-19 vaccine because it will somewhat bring back a sense of normalcy in these affected areas of the economy.
As rent payments stack up and renters are still unable to pay, the situation continues to get more dire. I agree with the fact that further stimulus will be needed to ensure renters can make payment, or until a better solution can be developed. One question I have is what effect will this have on smaller landlords who manage only a few properties. I understand many have mortgage payments to make and rent funds those payments. Will this lead to a large amount of foreclosures and seizures by banks?
I agree with you that the US should provide protection to renters or provide another round of stimulus, to those who need it. This goes for rent but I believe it goes even further to just being able to eat and provide for families. This could also just go to those who are unemployed because of corona virus, I know some people who were employed and still making good money who still received stimulus checks when really, they didn't need them. I know this would cause all kinds of debate but it would help and leave money for those who actually need it at this time.
I think the government's response with the CARES Act was very appropriate at that time. If the government extends their protections to renters, I don't think that will be much of a benefit. The best way to support the people who lost their jobs during this pandemic are the ones on unemployment. Therefore, it would be more beneficial to help those people so they can eat and pay their bills. People need to be able to get back onto their feet, so focusing on getting businesses more business so they can hire more and focusing on unemployment would help those people as well. Another round of stimulus checks on top of this would just help to stimulate the economy a little bit faster with the extra spending people wouldn't normally do without it.
Post a Comment