Can anyone explain this?

amother

Sun, May 17 2020, 8:44 pm

Why are people receiving an extra $600 a week if it comes out to more than their actual salary? Wouldn’t it make more sense to give extra unemployment to those who have been making more money and are now unemployed, so only receive a percentage of their salary? How does it make any sense that some people are actually making money off of this while others can’t pay their bills? I can’t figure out how this makes any sense economically. People are going to go into foreclosure etc and others are getting money they never earned. This equals an economic disaster.

amother

Aubergine

Sun, May 17 2020, 10:12 pm

Normally when people are unemployed they get a certain percentage of their previous salary and they are incentivized to find employment. The reason why the government is throwing an extra $600 a week to so many people is for 2 reasons:

1. The lending business would collapse without the extra $600. Mortgages, car loan, credit cards, and student loans all anticipate there will always be a small percentage of people who will default. During a recession that percentage is higher. When Covid-19 hit suddenly and tens of millions of people lost their income, had the government not stepped in and made so many people whole again (even more than whole in some instances) there would have been a systemic collapse as millions potentially might have defaulted on their mortgages and other loans. The banking system is not equipped for an event like this.

2. when money needs to be sent out suddenly to save an economy from complete collapse, there's no time to vet properly. The government is fully aware there is a gaping flaw in the system. The alternative would be for tens of millions of people to send in a recent pay stub and recent bank statement. These statements would be reviewed to determine eligibility. Those eligible wouldn't receive there money for at least several months. By that time they'd have missed multiple payments on the loans. That can't happen.