For those with some time on their hands today (i.e. just about everyone), be sure to check out a pair of articles from experts at the Economic Policy Institute and the Center for Economic and Policy Research.
As EPI’s Josh Bivens notes in “Coronavirus shock will likely claim 3 million jobs by summer: Policy is needed now to curb further losses,” the federal government must push quickly for a “big and fast stimulus to stem job losses and boost recovery”:
After hopefully passing a second round of coronavirus response early this week, Congress must get right back to work passing a macroeconomic stimulus package, one large enough and well-targeted enough to fill in the substantial hole in demand that will be left by the coronavirus economic shock.
Household consumption in coming months will crater as people engage in “social distancing,” but the depth of the decline will depend in part on the fiscal response. Housing, utilities, food, health care, and other consumption possibilities unaffected by social distancing constitute well over a half of all consumption spending. And some of the decline in consumption spending necessitated by social distancing will be substituted by other types of consumption spending: People will spend less in restaurants and more on groceries in coming weeks, for example.
When households’ incomes fall due to job loss during recessions, their spending on items commonly considered necessities—like food and housing—often falls in turn. So even during the period when economic activity in many sectors is being intentionally suppressed to halt the spread of the virus, there is the opportunity to provide households some income support to keep other types of consumption spending from falling….
Besides preserving households’ balance sheets during the downturn, the economic response should preserve state governments’ fiscal capacity as well. State governments will bear a large share of the burden for providing the public health response, and their spending is often quite pro-cyclical due to balanced budget rules—meaning that state spending often collapses just as the economy needs it to be strong. The federal government should take on all state Medicaid spending for the next year to give these governments the capacity to spend as freely as public health demands, and to keep these governments from turning into the anti-stimulus machines they have tended to in past recessions.
And in “Concrete solutions to mitigate the health and economic impacts of the pandemic” a team of economists at CEPR (including the widely respected Dean Baker), offers a 10-part stimulus “to do list” that includes, among other things:
- large and generous aid packages to state governments of at least 10% of their 2020 fiscal year budgets;
- funding free childcare for essential workers;
- mortgage and rent assistance;
- suspension of work requirements for SNAP (Food Stamps) and TANF assistance;
- a significant enhancement of unemployment insurance — both in terms of benefits and eligibility.
The bottom line message: There’s no time to waste if we are to avoid a disaster of the kind the nation experienced at the end of the George W. Bush presidency. Federal leaders should act right away.