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Many Would Like Direct Payments Included In Next Relief Package

DAVID GREENE, HOST:

So if the federal government wants to spend hundreds of billions of dollars to keep businesses and families afloat, where exactly should that money go? Well, that is the question lawmakers are dealing with in Washington. They're debating a relief package that could be folded into a big spending bill next week. Some want to see another round of direct payments to individuals. But is that the most effective way to cushion the economic blow?

NPR chief economics correspondent Scott Horsley is covering this and joins us this morning. Hey, Scott.

SCOTT HORSLEY, BYLINE: Good morning, David.

GREENE: So who is lobbying for the idea of direct payments to people? And is that camp likely to get its way?

HORSLEY: It's not clear if they're going to get their way. Direct payments were not included in that bipartisan proposal that a group of moderates put out last week. They did include help for small businesses, aid to state and local governments and an extension and increase in unemployment benefits, but no blanket payout to individuals and families. And that omission did draw some criticism from people on the left and the right. For example, Vermont Senator Bernie Sanders says he won't support the measure because it didn't include another round of $1,200 payments. And we heard a similar message from Josh Hawley, a conservative senator from Missouri.

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JOSH HAWLEY: Any COVID relief bill needs to include direct payments to people who are in need - to working families and working individuals. They should be the centerpiece, not an afterthought.

HORSLEY: Hawley told KFVS-TV in Missouri he's pressed that case with President Trump and urged the president to veto any relief bill that doesn't include direct payouts.

GREENE: So is that argument making a difference?

HORSLEY: Well, the president and his team are listening. When Treasury Secretary Steve Mnuchin introduced the administration's proposal this week, it did include direct payments - although just $600 dollars, not $1,200 like back in the spring. Not surprisingly, polls show a lot of bipartisan support for direct payments. It turns out, free money is popular with both Democrats and Republicans.

GREENE: So if there's bipartisan support, what's the holdup? Why not just put us in the relief package? Who's against this?

HORSLEY: Cost, for one thing. The $600 payments in the administration's plan would cost something like $140 billion. And the offset that the administration suggested is to reduce the proposed unemployment benefits. The problem is unemployment benefits deliver a much bigger bang for the buck when it comes to boosting the broader economy. And think about it, David. If somebody is out of work and they get an extra dollar in unemployment benefits, they're pretty sure to go out and spend that money right away, and that helps their landlord, the grocery store, the gas station and the broader economy. Economist Mark Zandi of Moody's Analytics says that's not necessarily true of direct payments that go out widely to people, whether they need the money or not.

MARK ZANDI: The stimulus checks that went out earlier in the year, a large chunk of that ended up in people's checking accounts and, to this day, remains there. They'll spend it, but it'll be spent on the other side of the pandemic when it'll do less good for the economy.

HORSLEY: Aid to state and local governments also provides a lot of bang for the buck. Grants to small businesses - probably less so, but they're almost sure to be part of any relief package. For all the jockeying, Zandi says the most important thing is that lawmakers passed something before they go home for the holidays. You know, while some kinds of relief are more effective than others, no relief is the worst of all.

GREENE: Yeah, I think a lot of people are feeling that and hoping Congress does something at some point really soon. NPR's Scott Horsley - great talking to you, as always. Thanks, Scott.

HORSLEY: Good to be with you, David. Transcript provided by NPR, Copyright NPR.