The risks of doing too little to support families and the economy during a #coronavirus recession far outweigh the risks of doing too much.
My statement with @GreensteinCBPP, @neeratanden & @FeliciaWongRI, via @Medium
A thread. 1/n
My statement with @GreensteinCBPP, @neeratanden & @FeliciaWongRI, via @Medium
A thread. 1/n
With so much economic activity at risk, a recession looms, and this one could rival or even exceed the #GreatRecession of 2008–2009.
The Great Recession was deep and its impact was harsh, but Americans who remained employed continued to spend money at fairly normal levels. 2/
The Great Recession was deep and its impact was harsh, but Americans who remained employed continued to spend money at fairly normal levels. 2/
Today spending is falling as people are asked to stay at home, events are canceled & establishments close. Layoffs are inevitable.
States and localities will face budget shortfalls as shrinking economic activity erodes tax revenues and prompts them to consider budget cuts. 3/
States and localities will face budget shortfalls as shrinking economic activity erodes tax revenues and prompts them to consider budget cuts. 3/
This will slow the economy further and make the hardship more severe.
The impending economic downturn will likely come faster than in 2008 and could be deeper unless the federal government acts swiftly and decisively to cushion the blow. 4/
The impending economic downturn will likely come faster than in 2008 and could be deeper unless the federal government acts swiftly and decisively to cushion the blow. 4/
Given the magnitude of the crisis, now is *not* the time for policymakers to worry about raising deficits and debt as they consider what steps to take.
Policymakers of both parties should set aside those concerns and not let them impede the vigorous response that we need. 5/
Policymakers of both parties should set aside those concerns and not let them impede the vigorous response that we need. 5/
That’s true for several reasons:
1. Swift & bold action that mitigates the severity of the coming recession will pay off over the long run.
Every dollar spent quickly now reduces the severity of the coming economic crisis, putting us on the road to recovery that much sooner 6/
1. Swift & bold action that mitigates the severity of the coming recession will pay off over the long run.
Every dollar spent quickly now reduces the severity of the coming economic crisis, putting us on the road to recovery that much sooner 6/
2. Doing too little or acting too slowly is far riskier than doing too much.
Policymakers must craft fiscal policy responses that are bold and will remain in place until economic conditions improve and trigger an end to those measures. 7/
Policymakers must craft fiscal policy responses that are bold and will remain in place until economic conditions improve and trigger an end to those measures. 7/
3. Financial markets evidently believe deficits and debt aren’t hurting the economy now and don’t require immediate corrective action.
They are in effect willing to pay the federal government to borrow money and impose little or no fiscal cost. 8/
They are in effect willing to pay the federal government to borrow money and impose little or no fiscal cost. 8/
We face a once-in-a-generation—hopefully once-in-a-lifetime—crisis.
Deficits and debt pose no comparable risk. Policymakers should set aside their concerns about red ink and deliver the response the crisis demands.
/end
medium.com/@heatherboushe…
Deficits and debt pose no comparable risk. Policymakers should set aside their concerns about red ink and deliver the response the crisis demands.
/end
medium.com/@heatherboushe…
