Thread by @_scottreid

In 2009, when debating whether to prop up the auto sector due to the global banking crisis, Stephen Harper is reported to have told aides that if he was to face the choice of being either Hoover or FDR, he'd choose FDR. He chose well and he did well #cdnpoli #COVIDー19

Today, Trudeau is about to make the same choice. There is no alternative. We'll see the first of many announcements where government will unveil income support to individuals and businesses. Mortgage holidays, enriched tax credits, even direct payments #cdnpoli #COVIDー19

Credit facilities will be extended to SMBs and then large employers. The aim will be to avoid shattering public confidence with wave after wave of layoff announcements. But more will be needed. Measures adopted during 2009 and the 30s may not be enough #cdnpoli #COVIDー19

More creative/extreme policies may be needed because businesses and employers aren't just lacking access to credit. They lack earnings. With the population behind doors, there is no revenue. Easing credit to make payroll won't solve that core problem for most #cdnpoli #COVIDー19

In fact, many SMBs in particular will be reluctant to take up wider credit access because they'll fear assuming greater debt - even on the most favourable terms. Because they don't know when this damned virus will be gone for good and earnings will return #cdnpoli #COVIDー19

This is why direct payments to individuals is so critical. People forced inside to flatten the spread may lose their paycheques - in record, sweeping volumes. Govts must float them. Or the whole engine of society will seize like a motor filled with sand #cdnpoli #COVIDー19

But more than that, gov'ts will need to devise unprecedented policies of filling the earnings gap that businesses will experience. Credit alone won't cut it. If you want businesses to avoid mass layoffs you will need to feed them revenue, not just cheap debt #cdnpoli #COVIDー19

Imagine it. Governments will have to start paying businesses that are not earning what they would have earned in order to keep those businesses from shedding employees at unprecedented rates. This is untraveled public policy terrain #cdnpoli #COVIDー19

Will this raise concerns of moral hazard? Will a multitude of sins be rewarded and bad businesses benefit from such emergency measures? Yes. But it's pick your poison time. Or at least it will be soon. So put in place what controls you can but...act #cdnpoli #COVIDー19

AND it will be pretty damned important that this be done by all - or at least most - major economies, to avoid gov'ts hesitating to act for fear of asymmetrical indebtedness and loss of competitive positive vis a vis others. #cdnpoli #COVIDー19

That's why...again, it's so important that the G20 get activated to begin coordinating similar policies across major economies in all corners of the globe. These uncontemplated policy solutions will need to be taken up collectively to have maximum efficacy #cdnpoli #COVIDー19

Final thought - even as policymakers struggle with decisions like this that no one has been asked to consider before, they've also got to be thinking abt what reintegration and resurrection of normal functioning economies will look like once the virus is beat #cdnpoli #COVIDー19

What that entails is hard to know. But after infection rates and deaths have risen, people may be scared to reintegrate. Gov'ts may have to incentivize a return to normal - as crazy as that also sounds. Once the risk has passed, obviously #cdnpoli #COVIDー19

So spare a thought for Trudeau and Morneau and all policymakers/decisionmakers/aides - they've been thrown an historic policymaking challenge. And today's measures will turn out, I'm betting, to be only the beginning. #cdnpoli #COVIDー19