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The recovery is slowing. The virus is surging. And economists say that if a Congress doesn’t act by the end of the year, it could lead to economic damage that lasts for years.
@jimtankersley & me on the test facing Biden before he even takes office: https://www.nytimes.com/2020/11/14/business/economy/biden-democrats-economic-stimulus.html?referringSource=articleShare
@jimtankersley & me on the test facing Biden before he even takes office: https://www.nytimes.com/2020/11/14/business/economy/biden-democrats-economic-stimulus.html?referringSource=articleShare
The question facing Democrats: Push for a big bill and risk getting nothing, or accept a deal smaller than they think is necessary in order to get aid flowing quickly.
In the latter camp: @jasonfurman, who says, “A meaningful something is a lot better than nothing... Preventing damage to the economy today puts it in a better position a year from now.”
But other such as @WSpriggs see danger in that compromise, recalling when Obama accepted a smaller deal only to see Republicans dismiss it as a failure:
“You will get people saying it didn’t work, so we don’t need to do it again... “You make it harder to go to the well again.”
“You will get people saying it didn’t work, so we don’t need to do it again... “You make it harder to go to the well again.”
Beneath this debate over strategy is another one over how much help the economy needs. Unlike last spring, when economists were nearly unanimous in calling for as much as possible, as quickly as possible, there is now much more disagreement.
On the one hand, unemployment has fallen much faster than expected, and the summer benefits “cliff” didn’t lead to the sharp pullback in activity that some forecasters feared. The economy is resilient!
. @MichaelRStrain: “We have an unemployment rate below 7% right now. That calls for a very different amount of stimulus than if the unemployment rate were in the range of 10%, which is where we all thought it would be.”
On the other hand, those aggregate statistics hide a lot of pain beneath the surface. 3.5 million Americans are long-term unemployed. Whole industries are still shut down. Women are leaving the labor force. The Black unemployment rate is still in double digits.
. @gbenga_ajilore: “To say we don’t need as much aid is ridiculous... What that signals is all we care about is white men and no one else matters.”
Then there is the virus. There’s some reason to think the latest surge won’t be as damaging economically as earlier waves. Businesses have adapted. People have gotten comfortable doing things they wouldn’t do last spring (or are ignoring the risks).
But as the surge worsens, we’re starting to see more restrictions. Powell recently reiterated that the virus itself remains the single greatest threat to the recovery: “People may lose confidence that it is safe to go out.”
One argument for aggressive stimulus is to guard against the risk, even if fairly small, of an outright reversal.
@ChrisVarvares: “You’re never quite sure if you’re near to some kind of tipping point where the stimulus might be just enough to keep you from tipping.”
@ChrisVarvares: “You’re never quite sure if you’re near to some kind of tipping point where the stimulus might be just enough to keep you from tipping.”
But there’s also another argument: that being too cautious now could lead to an unnecessarily slow recovery that takes years to reach Black and Hispanics workers, among others.
The unprecedented stimulus last spring helped prevent the recovery from starting off as a slog. But it could still turn into one.
@KarenDynan:
“We need to recognize that the economy has only done as well as it has because we had such aggressive fiscal stimulus early on.”
@KarenDynan:
“We need to recognize that the economy has only done as well as it has because we had such aggressive fiscal stimulus early on.”
