If Congress really wants to help Americans struggling in the pandemic, we need a new TARP | Mike Connolly

By Mike Connolly

Right now, the vast majority of Americans are making a pretty simple request of their federal government: give us $2,000. No ifs, ands, or buts.

Direct deposit. Check. A sack of quarters. It doesn’t matter. Most Americans believe that their government has the capacity to help, has promised to do so, and that these are times when for many, help is desperately needed.

Under the circumstances, it’s a pretty reasonable request. But why stop there?

When I worked at the Pennsylvania Treasury Department, every single day of the pandemic, someone would reach out to us in desperate need.

Most days it was a lot more than one. They were waiting on unemployment. They were behind on rent. Many of them would tell us about running low on food, or how they had maxed out their credit cards, or had borrowed from family they now felt ashamed to look in the eye.

Many of them just wanted someone to respond with genuine empathy. Many of them thought that because we were the Commonwealth’s Treasury, we should be able to cut them a check for what they were waiting on. I always wished we could. Unfortunately, Pennsylvania’s Treasury can’t make payments on its own without any legal authority or appropriation to do so.

Weed, ethics and a natural gas tax: Gov. Tom Wolf’s 2021 plan for Pennsylvania, explained

No state treasury has anywhere near the power of the federal treasury. And right now, our federal treasury has the ability to borrow truly astonishing sums at rock bottom interest rates.

It currently costs the federal government roughly 1 percent in interest to borrow money for the next 10 years. This reflects the fact that, even in light of unparalleled government deficits related to the COVID-19 pandemic, the demand for investors to push money into the safety of U.S. government debt remains high.

But in the midst of the more abstract numbers of U.S. government borrowing and debt, the real numbers faced by most Americans are far grimmer.

For those of us lucky enough to have survived the pandemic thus far, 24 million Americans report not having enough to eat. The global job loss toll is already estimated to be four times higher than the 2009 financial crisis.

Up to 20 million Americans are behind on rent, even if they hold the uncertain protections of eviction moratoriums or a few lenient landlords.

And it’s not exactly as if most Americans were doing well before the pandemic began. Far too many families are currently reliant on using credit cards, with an average interest rate of nearly 15%. Americans are vastly under-prepared in saving for retirement, savings which many families have not only stopped being able to contribute to but have also resorted into tapping for highly-penalized withdraws or loans.

So, while we push for solutions and try to comprehend the sheer scale of what’s needed in further response, let’s ask a simple question: if the American government can still borrow huge sums at just 1 percent interest rates, why can’t Americans simply borrow what they need from their own government for the same?

‘This couldn’t come at a better time’: Philly launches grant program for gyms, restaurants hit by pandemic

There are absolutely fundamental questions about fairness that can and should be answered, like whether it is just for billionaires to leave the pandemic far richer than they began it, or whether companies should use pandemic profits to buy back their own stock to boost their price.

But while money and all its forms can be an abstraction, hunger is awfully real. Exposure to the winter cold is real. The consequences of bankruptcy are very real.

While multi-millionaires such as U.S. Sen. Pat Toomey shed crocodile tears for the poor, unfortunate American debt, actual Americans are suffering and deserve the unemployment compensation they are owed, and the $2,000 they have been promised.

And we should give it to them.

But if Sen. Toomey and others really care—as they would have you believe—about both Americans and the long-term generational debt of their government, why not make additional relief available as a low-interest, large-scale loan?

Similar to the Troubled Asset Relief Program of the Great Recession, it’s not only possible that the U.S. government would break even over the life of the program, but could end up making a small profit. By tapping into the massive borrowing capacity only it possesses, our government could extend loans to suffering Americans for up to ten or even twenty thousand dollars. Such loans could be collateralized against any future tax refunds a person may otherwise receive until the debt is repaid, or any other form of cash assistance.

Rather than relying solely on indirect aid through things like a limited Paycheck Protection Program, we could make huge cash infusions available directly to those who need it now, while keeping further long-term debt under control.

We could help fewer Americans become caught in high-interest debt spirals, not to mention keep them fed and secure through what our failed government responses have proven will be an unending pandemic through much of 2021.

And we can finally show struggling Americans that the power of our federal finances isn’t just for bailing out big banks or offering token assistance after more than a year of hell.

Opinion contributor Mike Connolly is the principal of Salthill Communications, and former Deputy State Treasurer for Communications under Treasurer Joe Torsella. He served two tours in Iraq as an Infantryman, and can be found on Twitter: @MD_Connolly. His work appears biweekly.