New post on how to respond to COVID-19 impacts on the economy. We need to fund health needs; fund states’ responses; fix holes in the safety net; fix specific business concerns; & most of all pass automatic stabilizers that kick in if economy deteriorates bit.ly/38lYO1d
First: fund everything needed: testing, vaccines, equipment for medical personnel and first responders. Make sure funding is not the binding constraint on responding the health needs that the virus presents.
Second: help the states. Medical costs will rise, and in particular, Medicaid costs could go up. Congress should increase the federal share of Medicaid costs so states have funds to respond and don’t have to make cutbacks in other areas (schools, public safety, etc)
Third: Fix holes in the safety net. If people are sick, quarantined, or staying home because they may have been exposed, they may not be able to claim unemployment insurance, satisfy work requirements in SNAP. Those should be waived nationally. & SNAP increased if schools close
Fourth: deal with specific bottleneck issues. Supply chains or temporary demand pauses may mean firms need help with loans. Also, Congress could fund sick days for everyone so people don't go to work sick.
Most of all: put in place automatic stabilizers. e.g., pass @Claudia_Sahm 's proposal that checks for ~$500 go out to everyone if the unemployment rate rises half a point. Also, increase SNAP, UI, Federal FMAP share, & infrastructure, if trigger hits.
@Claudia_Sahm We need the first 4 regardless of how big the economic impact is, just to properly respond to the crisis. We should do a big fiscal stimulus if the economy starts to slide, and watching the unemployment rate is the fastest way to judge that.
@Claudia_Sahm By passing the stimulus with triggers NOW, we help restore confidence, as people know if things deteriorate, the government is ready, and let Congress focus on the outbreak if it worsens.
@Claudia_Sahm Last comment: direct checks better than payroll tax cut because they go to everyone, including people that can't work; come in a lump sum, so they are big enough to matter; and support is same for all, not tilted to high income.
