The federal government is responding to the financial stresses caused by the coronavirus by doing what it does best: It’s throwing lots of money at the problem, and a Press Herald editorial advocates even more for states (“Our View: Federal aid needed on the state and local level,” May 17).

One of the consequences of this spend-like-crazy-and-don’t-ask-any-questions approach is that too much of the spending so far has been indiscriminate and counterproductive. The bulk of the $1,200 one time payments to individuals went to those who have continued to work and receive regular incomes. The $600-per-week addition to regular unemployment benefits means that some recipients earn more by staying at home instead of returning to work. Millions of dollars of forgivable loans have gone to businesses with other financial resources.

“State and local governments did not spend their way into this crisis,” the Editorial Board writes, but in many cases they did with overly generous pension and health care commitments. Federal help to offset the loss of revenue is one thing; bailing states out of the consequences of irresponsible budgeting is another.

There is a current notion that the federal government can spend and borrow endlessly without adverse consequences. This fantasy requires the critical assumption that interest rates and inflation will remain low indefinitely. But the gargantuan expansion in federal debt is setting the stage for increases in both. If this happens, we are likely to wish that there had been less haste, more assessment and a few more questions.


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