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McConnell totally misunderstands the problem; thinks this is about stimulus, not support as the virus rages. So no deal on unemployment benefits any time soon, with extra benefits going away for many THIS WEEKEND 1/ https://www.foxnews.com/politics/mcconnell-says-economy-needs-another-shot-of-adrenaline-says-he-supports-another-round-of-coronavirus-stimulus-checks
The scale of this unforced error is stunning. In May Pandemic Unemployment Compensation — the extra $600/week, which is what is disappearing — was more than 4% of GDP. Snatching that away will impose huge hardship 2/
And the unemployed, especially this time around, have little in the way of savings. They'll be forced to slash spending, delivering a huge dose of austerity to the economy as a whole. Sending checks to people who still have jobs won't have anything like the same impact 3/
For the nerds: the marginal propensity to consume out of income is much higher for UI beneficiaries than for the rest, hence a much bigger multiplier 4/
This policy failure could easily deliver a negative shock of several percent of GDP. And it's not just Trump's fault; Senate Rs share much of the blame 5/
