Huge spending on public health is also sensible under the circumstances. The federal government should pick up the tab for state and local spending on the crisis response — including on staffing health facilities, testing for the coronavirus and equipment to keep workers safe — and it should encourage public health officials to pull out all the stops.
Limiting the spread of the virus is the best way to minimize economic damage, not to mention meet the government’s basic responsibility to prevent people from becoming seriously ill or dying. And every dollar spent on public health provides just as much of an economic boost as would spending on anything else.
One item that’s not on this list, however, is a broad-based tax cut, Washington’s preferred cure for all economic ailments. Mr. Trump said Monday that his administration planned to propose a reduction in the federal payroll tax, which is paid by a broader range of workers than the income tax. But there is good reason to worry about the public-health effects of encouraging people to go out and spend more money. The government needs to focus on limiting the spread of the virus by encouraging sick leaves, quarantines and other measures that can be described as taxes on economic activity. It makes little sense to enact a countervailing tax cut.
The time to stimulate the economy is after the danger is under control.
Once the danger has passed, the best way to get things moving again would be for Mr. Trump to follow through on his longstanding promise to deliver a significant increase in federal spending on the nation’s decrepit infrastructure: lead water pipes, an overwhelmed electric grid, unreliable public transportation systems.
Homeowners are rushing to take advantage of low interest rates by refinancing mortgage loans. The federal government is in a position to take advantage, too. Investors are accepting yields of around 1 percent on 30-year Treasury bonds — meaning that the government’s annual borrowing cost would be lower than the current rate of inflation.
The technical term for this phenomenon is “free money.”
An infrastructure package won’t deliver an immediate jolt to the economy. It takes time to plan projects. But that’s exactly what the situation requires. We’re in this mess because our policymakers failed to plan for the future. They have a chance to profit from that painful experience by borrowing now, and then putting the money to good use.
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