Thread by @hamandcheese

Because it's all I can think about, I wrote up the five national policy responses to #COVID2019 that I believe should be moved immediately. [thread] medium.com/@hamandcheese/…

Note I'm an economist, not an epidemiologist. I'm writing from the premise that this epidemic is going to get much worse in the weeks and months ahead, but it's not my place to say. I defer to infectious disease experts and so should you.

That said, from a *policy* perspective, the U.S. government’s response to COVID-19 has so far left a lot to be desired. The virus has further cascaded into an economic crisis, raising the risk of a recession—if we're not already in one.

First up: Congress must stay in session and prepare to pass follow-on legislation.

It's understandable that lawmakers, particularly older ones, want to go on recess to self-quarantine.

So why not rescind the House ban on proxy voting? If I can telework so can Congress.

Next, fund paid sick leave for the nearly 30% of workers without it. The easiest way would be through state Unemployment Insurance systems, like we do with Disaster Unemployment Assistance.

If a recession is coming, replenishing state UI reserves will be important anyway.

Third, @realDonaldTrump should declare a national emergency so that @SecAzar can employ HHS's waiver authority in line with the needs of local health care providers. 1135 Waivers can be used to modify Medicare and Medicaid regulations. Drug approvals should be expedited as well.

Forth, the Federal Reserve should move from inflation targeting to a NGDP or price level target.

Macroeconomists call this a "regime change" and it would be far more effective at fighting a potential global recession than tinkering around with QE.
h/t @DavidBeckworth

Fifth, we should supplement monetary policy with targeted fiscal stimulus. First best are automatic stabilizers that scale with the size of the downturn. Next are direct transfers to the most vulnerable, be it through SNAP or by advancing tax credits (not a payroll tax cut!).

A note on fiscal stimulus:

In a normal recession, all that matters is that the money gets spent. With an epidemic, resources should be triaged to compensate those affected and to bolster local health systems. That is why I favor federal grants to states to be quickly disperse.

The response to COVID-19 will largely be state and local, and by taking precautions as individuals. Yet the federal government has many tools at its disposal to limit the virus’s economic impact, accelerate treatments, and provide resources & flexibility those on the front lines.

hat-tips to @balajis @WilliamAEden @Noahpinion @kpomerleau for giving me most of these ideas, and for their stellar coverage of virus 🙂