The difference between relief and stimulus is all the difference

The historical marker is weathered to the point it is mostly gone. And there's not much else to see but a stone chimney.

But any regulars on the Big Rivers trail through Mendota Heights would know that scenic spot overlooking the Minnesota River was Mendota Work Camp No. 1. This is where the Works Progress Administration housed nearly 200 men who worked on roads and quarried limestone near the Mendota Bridge back in the 1930s.

There are other historic reminders around the state of this time when federal programs were all that kept millions from a life of desperation. And the word used to describe the aim of measures like the bill that led to the WPA was always "relief."

No one in the Great Depression year of 1935 seemed to be talking about an economic stimulus. People needed relief.

This was the era when a lot of safety net and social programs got going, Social Security and food stamps among them. That a WPA work camp was even needed says a lot. So many men had left home for good that the agency had to house them someplace to be able to even get them some work.

No one is really talking "relief" as the latest aid legislation is being hashed out in Washington, although there's a lot of relief proposed. But there's also proposal for $1,400 in stimulus checks.

The two previous rounds of those checks went to people making up to $75,000 and couples up to $150,000 before amounts tapered off.

Does a couple making $150,000 really need relief? Why not just help people who really need it, such as the low-paid service workers slammed by the effects of the pandemic?

As for what better-off people do with this money, households making at least $78,000 spent just $45 of the last $600 checks, estimated economists with the research and policy group Opportunity Insights. Since spring, they added, "these households have largely returned to work, and have even accrued additional savings."

Some stimulus.

It remains a great idea to try using stimulus money to get the economy moving in a normal recession, when some sort of shock causes lots of people to stop spending, in turn lowering the incomes and spending of others. The economy of 1935 needed all the stimulus it could get.

But last year when spread of the novel coronavirus developed into a terrible public health crisis, the sharp contraction that followed wasn't a normal recession.

Some economic observers likened it to a medically induced coma, said Mark Wright, economist and research director of the Federal Reserve Bank of Minneapolis. A lot of normal activities had to be put on hold to reduce the threat of the virus.

The Federal Reserve's own quick response included stepping in to stabilize the financial markets while Congress passed the CARES Act, which included enhanced unemployment benefits, forgivable loans for business and the first round of direct payments. When the pandemic didn't wind down but in fact grew much worse, generally those policies have continued.

"They are blunt mechanisms for providing relief, but they did provide relief," Wright said. "That's really been the policy since, and that's really where we are today. I don't think of it as stimulus per se."

One problem with trying much more targeted measures, relief for those most in pain, is that "the more you try to target it, the more you're going to slow it down," Wright said.

Another point he made is that if Congress and the administration really did want to stimulate the economy, spending on roads and bridges is the kind of thing that's much better than just handing out money.

One problem with that approach, though, is that it's not easy to do quickly. That's one of the lessons from 2009 and the Great Recession. Remember the term "shovel ready?" Not that many projects turned out to be genuinely ready for the shovels.

You may wonder how talking about more stimulus gets in the way of making good decisions about who really needs relief.

One reason is that Congress and the new administration may yet decide they need to provide real stimulus, if there are a lot of workers still on the sidelines after the public health crisis finally fades.

The better reason is that, despite consumer spending holding up and the housing market booming, the needs of people clearly affected by the pandemic don't seem to be getting much smaller.

Last week new claims for unemployment insurance declined a bit to 779,000, with hundreds of thousands more filing in programs designed for gig workers and others not eligible for traditional employment insurance. That's more than in the worst week of the Great Recession a dozen years ago — and that's been true now for nearly a year.

And providing relief to those hurting the most can help everybody. If business owners battered by the pandemic can stay afloat until it winds down, for example, they will be around to contribute to a robust economy when it does.

The same goes for workers, who will never make up the lost wages if they just drop out.

It would be easier to get good policies moved along if we were clearer in how we talked about the need. Trouble is, the politics of relief bills might never make them easy to pass. If people making $75,000 a year don't actually get the $1,400 check they were counting on, never mind that they don't need it, they are going to be cranky.

We certainly saw that during the Great Recession, when a $75 billion program was announced to help stressed out mortgage borrowers hold off foreclosure. A landslide of foreclosures is one of the defining features of that terrible economic downturn, but this program didn't end up helping as many underwater homeowners as hoped.

And it triggered a rant from a CNBC reporter on the floor of the Chicago Mercantile Exchange that perfectly captured this notion that America's "losers" shouldn't get help.

It's a safe bet that some guy who didn't get one of those $1,400 checks this year will be on TV (or YouTube or TikTok) ranting about it. Hopefully, this time no one else will be in the picture cheering him on.

lee.schafer@startribune.com 612-673-4302