Kemp’s fiscal economist: Congress wasted a lot of money in coronavirus relief package

Georgia’s fiscal economist said Congress wound up “wasting a lot of money” in the $2 trillion coronavirus relief package it passed last week.

Jeffrey Dorfman, a University of Georgia economist who was named the state economist by Gov. Brian Kemp last year, said during a Georgia Public Broadcasting interview that if he had to grade Congress, “I would guess they probably didn't do very well.

“Congress doesn't usually do very well, but they're being pretty responsive. They're trying. And I think most of the stuff we need is in there.”

During the GPB interview, Dorfman outlined some of things the plan - signed by President Trump on Friday -  has that are designed to help businesses, workers and the economy in general.

But he added, “I think we’re wasting a lot of money on stuff we didn’t need in there.”

Dorfman said the “smart thing” to do is make sure workers continue to get paid during business shutdowns caused by the coronavirus pandemic.

“I would have funneled pretty much all the money to businesses in exchange for them maintaining their payrolls.”

In some countries, governments are agreeing to cover most of the cost of salaries of workers, provided that companies refrain from layoffs. Some economists think that could lead to a faster restart once businesses reopen.

Congress went with direct payments.

A key element of the relief plan is that individuals who earn $75,000 in adjusted gross income or less would get direct payments of $1,200 each, with married couples earning up to $150,000 receiving $2,400 -- and an additional $500 per each child.

The payment would scale down by income, phasing out entirely at $99,000 for singles and $198,000 for couples without children.

“We’re sending these payments out to people that are both losing their jobs and not losing their jobs,” Dorfman said. “If you still have your jobs and you work for small businesses, they get this loan. They maintain payroll. Why are we sending you a couple of thousand dollar checks then? You haven't lost any money.”

Dorfman said because the federal government is not set up to respond to targeted needs - such as those who have been laid off  vs those working from home -  “the only choice we have is to essentially waste money in order to get the money to the people who need it.

“We can't separate out those who need the help, those who don't. And the easiest thing is pretty much sending everybody money.”

The package also will send billions to states to help them deal with the pandemic, including funding to prop up budgets that might otherwise be overwhelmed by both increased spending and massive declines in tax collections due to businesses closing.

Dorfman was long a critic of government spending and regulation policies before he became the state’s fiscal economist, generally taking a free market, libertarian perspective in columns for Forbes business magazine.

At a forum in January, Georgia House Minority Caucus Chairman James Beverly, D-Macon,  described him as someone who “doesn’t really believe in the government at all.”

But that same month Dorfman gave legislative budget-writers a fairly straight-forward view of the state’s outlook and said the Republican-dominated Legislature’s call to cut the state income tax rate for the second time since 2018 would do little to boost economic activity.