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In today’s NYT, @claudiasahm argues for an expanded use of automatic stabilizers as part of any new fiscal package. There seems to be consensus building with @JanetYellen, @BrianDeeseNEC and even the President speaking about stabilizers. Brief thread https://www.nytimes.com/2021/01/21/opinion/biden-stimulus-checks.html?smid=tw-share
Stabilizers make sure there is more support for the economy in bad times and less during good times. We watched support surge, falter, surge again this year. More people in Congress are taking this seriously (e.g. @SenatorBennet and @RepDonBeyer)
One complaint is why take power from Congress (or, why not also automate monetary policy). First, Congress still has power. This just resets the baseline in case they don’t act. Second, getting 12 people to meet/vote (FOMC) is a lot easier than passing a new bill.
Another complaint is why ever turn off support, just make the safety net generous. But, whatever you think the baseline level of support should be, it should be MORE generous in a downturn when it is harder to find work.
Last concern I’ve seen is these things take a long time to map out. Here I’d point out, a lot of the mapping has been done. Recession Ready (book I edited with @RyanDNunn and @HBoushey) has detailed plans. Many have been turned into legislative text.
https://www.hamiltonproject.org/papers/recession_ready_fiscal_policies_to_stabilize_the_american_economy
https://www.hamiltonproject.org/papers/recession_ready_fiscal_policies_to_stabilize_the_american_economy
Some are VERY straightforward. Just keep the 15% SNAP plus up until the unemployment rate falls ( @dwschanz @HilaryHoynes). Waive work requirements too. Very clean and simple. Others take a bit more, but there’s a huge amount already done. We can move this to the finish line.
Here’s an April blog post on all this. You can read much more at the @hamiltonproj website. https://www.hamiltonproject.org/blog/we_need_to_let_economic_data_guide_further_economic_policy_responses_to_covid_19
and of course. Typo in first tweet. As anyone reading this far knows, Claudia is @Claudia_Sahm . Thanks for her tireless work trying to get the word out on the importance of automatic stabilizers.
