The Cost of an Unfocused Stimulus

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Good morning. Congress passes a $900 billion stimulus bill that economists call important — and flawed.

For many Americans, the coronavirus recession has done almost no damage to their finances. They still have their jobs, and their expenses have gone down while they’ve been stuck mostly at home. Their homes have not lost value, unlike during the financial crisis of 2007-9. If they are fortunate enough to own stocks, their portfolio is probably worth more than a year ago.

Of course, millions of other Americans are struggling mightily. Nine million fewer people are employed than a year ago. Others are coping with big medical bills. Many small businesses have closed or may soon. State and local governments are planning deep cuts.

The $900 billion stimulus bill that Congress passed last night will provide a lot of help to the economy. But many economists believe that it also has major flaws. Among them: It isn’t especially targeted at the parts of the economy that need help.

A central part of the stimulus are one-time checks that the government will mail to people. Any household with income below $150,000 will likely receive at least $1,200. Families with children will receive more.

Much of that money will go to Americans who are doing just fine and who will save the money they receive, which in turn will do nothing to keep struggling businesses afloat or keep workers employed. Already, the personal savings rate had risen to about 14 percent this fall, from 8 percent at the start of the year.

At the same time, the bill provides only 11 weeks of expanded unemployment insurance. “That’s not enough to bridge us to when a vaccine is widely distributed,” Ernie Tedeschi, a former Treasury Department economist, wrote yesterday. In all, the bill spends less on the expanded jobless benefits than on the stimulus checks.

An even bigger issue is the lack of help for state and local governments. Mitch McConnell, the Senate majority leader, insisted on excluding such aid, saying it would be a bailout for fiscally irresponsible states. Many economists disagree and point to the pandemic’s toll on state budgets.

“Economists are especially concerned that the final deal stripped out new funding for state and local governments, which is likely to lead to more job cuts and higher taxes in parts of the country,” The Washington Post’s Heather Long wrote. Larry Johnson, a county commissioner in the Atlanta area, said, “Congress leaving out local aid is like the Grinch that stole Christmas.”

And Tracy Gordon of the Urban-Brookings Tax Policy Center told Bloomberg CityLab, “I’m incredulous that they’re not providing state and local aid.” Among the likely areas for the cuts that state and local government will have to make: public transportation, police and fire departments, schools and health care programs.

The bottom line: The stimulus plan seems big enough to keep the economy from falling into a new recession early next year. But a different plan could have prevented more economic hardship than this one will.

More on the bill:

It includes a ban on surprise medical bills from doctors who people didn’t realize were outside their insurance networks. “The legislation overcame strong pushback from doctor and hospital groups, which worried new rules would cut into their profits,” The Times’s Sarah Kliff says.

The bill also includes funding for two new Smithsonian museums, one focusing on Latino-Americans and one on women.

David Roberts, author of the Volts newsletter, says journalists have underplayed the fact that Democrats favored a bigger bill that would have helped the economy more while Republicans insisted on a smaller one.

Omar Wasow of Princeton University says it “seems likely” that President Trump would have won re-election if he had agreed to the $2.2 trillion bill Nancy Pelosi was pushing this fall.

THE LATEST NEWS

The Virus

The mutation of the virus found in Britain appears to be up to 70 percent more contagious than earlier strains. This is what scientists know so far.

Viruses often mutate over time, becoming both more contagious and less deadly. Still, the news has spooked many political leaders, and dozens of countries have closed their borders to residents of Britain.

Moderna’s vaccine started arriving at hospitals across the U.S., bringing some hope to rural areas.

After you get the vaccine, which activities can you safely resume? Experts answered.

Politics

Bill Barr, during his final days as attorney general, broke with Trump, saying he did not plan to appoint a special counsel to investigate Hunter Biden, President-elect Joe Biden’s son. Barr also said that Russia had most likely hacked U.S. government agencies.

Vice President-elect Kamala Harris campaigned in Georgia for the Democratic candidates in next month’s Senate runoff elections, while Ivanka Trump, the president’s daughter, campaigned for the Republicans.

It wasn’t only Latino neighborhoods that swung toward Trump this year. Some other heavily immigrant areas — including those with many Asian-Americans — also voted more Republican than in the past, an analysis shows.

Other Big Stories

The Kilauea volcano on Hawaii’s Big Island, one of the most active in the world, erupted on Sunday. The authorities warned residents to shelter from ash driven by the wind.

The Russian hackers who made their way into U.S. government agencies broke into the email system used by the Treasury Department’s most senior leadership. It’s the first detail of how deeply the hacking went into the Trump administration’s networks.

The Justice Department charged a former Libyan intelligence operative in the 1988 explosion of a Pan Am flight over Lockerbie, Scotland — an attack that killed 270 people.

The U.S. Military Academy at West Point is confronting its biggest academic scandal in almost 50 years over allegations that more than 70 cadets cheated on a calculus exam.

Workers removed a statue of the Confederate general Robert E. Lee from the Capitol. A statue of the civil rights leader Barbara Johns will take its place.

Morning Reads

The Future of Shopping: When Eden Chen wants new sneakers, he takes out his smartphone and points it at his feet. He’s one of the growing number of consumers shopping in augmented reality.

“Finding love with Martin was a great joy”: Those were among the words that the former Bloomberg reporter Christie Smythe wrote to a judge about Martin Shkreli, the vilified former pharmaceutical executive whose case she had been covering. Smythe revealed she was in a relationship with Shkreli, who is in prison, in an article in Elle.

From Opinion: Many liberals aren’t speaking honestly about the small risks they’re taking to protect their mental health, Michelle Goldberg argues.

Lives Lived: The job of White House chef was open. Henry Haller, a versatile Swiss-born chef, got the role and would go on to become the longest-tenured executive chef there. He catered to five presidents of varying politics, temperaments and palates. He died at 97.

Subscriber support helps make Times journalism possible. If you’re not already a subscriber, please consider becoming one today.

ARTS AND IDEAS

The year of Telfar

The pandemic has led to a steep drop in sales for much of the fashion industry. Yet the company owned by Telfar Clemens, a Liberian-American designer, is enjoying its best year. He did it largely by leaving the old fashion system behind, as the Times’s fashion critic Vanessa Friedman writes in a profile of him.

Clemens started his unisex line in 2005, years before the concept of genderless dressing took off. The brand’s slogan — “Not for you, for everyone” — and relatively affordable prices embraced a more inclusive approach to fashion.

The company also eschewed other industry traditions, selling the majority of its goods directly to consumers via its website, rather than relying on wholesale orders. These decisions left the company in a better position to endure the pandemic. “When Covid came, rather than knocking us down like everyone else, we just rode that wave,” Clemens told The Times.

The brand also got some high-profile boosts this year. Oprah Winfrey chose its signature shopping bag, also known as the Bushwick Birkin, as one of her “favorite things.” Alexandria Ocasio-Cortez gave the bag a shout-out on Instagram.

Everything Clemens has always stood for, Friedman writes, is everything the fashion world “is now desperate to embrace.”

PLAY, WATCH, EAT

What to Cook

If you’re looking for something sweet, try these peanut butter blossoms.

Coming Soon

The first “Wonder Woman” movie, directed by Patty Jenkins, proved female superheroes could anchor a successful franchise. Ahead of the Dec. 25 release of “Wonder Woman 1984,” The Times interviewed Jenkins about making the sequel.

What to Listen to

From “Wind of Change” to “My Year in Mensa,” this list has the year’s best podcasts.

Virtual Travel

With the help of Celine Dion music, comfort food like a savory tourtière and a virtual tour of a local gallery, you can pretend you’re in Quebec City.

Late Night

We look back at the past year in late-night television.

Now Time to Play

The pangram from yesterday’s Spelling Bee was captivity. Today’s puzzle is above — or you can play online if you have a Games subscription.

Here’s today’s Mini Crossword, and a clue: Flaw on a phone screen (five letters).

Thanks for spending part of your morning with The Times. See you tomorrow. — David

P.S. “Time” — a film about a mother striving to keep her family together while fighting for the release of her incarcerated husband — was named Best Non-Fiction Film by the New York Film Critics Circle and also made Barack Obama’s list of his favorite 2020 films.

You can see today’s print front page here.

Today’s episode of “The Daily” looks at the lives of four complex and vibrant people we lost this year. On the latest episode of “Sway,” a conversation with The Times’s Nicholas Kristof.

Claire Moses, Ian Prasad Philbrick and Sanam Yar contributed to The Morning. You can reach the team at [email protected].

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