Beyond the CARES
Act
With more confirmed coronavirus cases
than any other nation and a record
3.3 million unemployment claims filed last week, the American economy is in free
fall. But as Congress passes the largest stimulus package in US
history—$2 trillion, or about 10 percent of GDP—experts
are warning that
it won’t be enough. “We have long known that 40 percent of Americans
cannot afford an unexpected $400 expense. Now we are beginning to
understand exactly what that means,” Roosevelt President & CEO
Felicia Wong and Roosevelt Director of Progressive Thought Mike
Konczal write for the Boston Review. “The
current rescue package, at its best, is designed to stabilize. Our
long-term goal must go well beyond that, building a more resilient
economy.” Read
on.
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What’s in the bill:
The CARES (Coronavirus Aid, Relief, and Economic Security)
Act comprises
direct payments to Americans, expanded unemployment
insurance, funds for the health care system and state and local
governments, and loans for small businesses. It also establishes a
Pandemic Response Accountability Committee and bans
stock buybacks for companies during the time that
they’re receiving government assistance—and for an additional year for
companies receiving government loans.
-
What’s not in
the bill: “The very term ‘stimulus’ is indicative that people
don’t understand the nature of this downturn,” Roosevelt Chief
Economist Joseph Stiglitz tells
Foreign Policy. “If workers don’t have
wages, they can’t pay their bills. They’ll be buying food [with
stimulus money], but their balance sheet is still going to be ruined.
The answer is we need no evictions, no foreclosures on all properties,
and the government should guarantee
pay.”
- Another angle: “What has been frustrating is to
see so many ideas—ideas that once seemed impossible to imagine in our
political system—suddenly emerge into the realm of possibility, only
to collapse once they hit the hard reality of a system hostile to
radical change and serious economic reforms,” Konczal writes for
Dissent. “Universal unemployment insurance, a coordinated
national labor policy, and a basic income were all discussed at a
level that was unthinkable a month ago . . . But trying to get them
over the finish line of legislation forced me to see how difficult it
is to carry out serious programs in a system that is innately hostile
to reform and has become less and less responsive to everyday people
in recent decades.” Read
more.
Lessons from World
War II
Senate Majority Leader Mitch McConnell
(R-KY) describes the CARES Act as a “wartime level of investment into
our nation.” In a new paper, Roosevelt Fellow J.W. Mason looks to the
economic mobilization policies of World War II and makes the case that
government can—and should—be doing more in times like these. “Problems
like the climate crisis and future pandemics will involve an economic
restructuring comparable in scale, if not speed, to the mobilization
of World War II,” Mason writes. “. . . when thinking about the role of
the public sector in fostering investment in new industries or
technologies, we should not think of it as merely providing resources.
Additionally, and even more critically, its role is to bear risk and
to solve coordination problems, both of which it can do in a way that
private businesses cannot.” Read
more.
We Need to Cancel
Student
Debt
“The coronavirus pandemic has pushed
the entire country into a massive health and financial crisis. But
well before coronavirus hit the United States, millions of young
Americans were dealing with a crisis of their own: the crushing burden
of student debt,” write Julie Margetta Morgan (Roosevelt Vice
President of Research) and Suzanne Kahn (deputy director of the Great
Democracy Initiative and a Roosevelt Institute expert on education
initiatives) for Teen Vogue. “The short-term stimulus of
canceling monthly payments during this crisis is essential but
insufficient to address the challenges young people face . . . To help
stabilize and grow the economy, a recovery package should bring down
outstanding student debt levels by canceling a portion of student debt
balances over the long term.” Read
on.
- On the Hill: This week, Rep. Ayanna Pressley
(D-MA) introduced the Student
Debt Emergency Relief Act, which both cancels
short-term payments and provides long-term balance reductions. “I’m
hopeful that this bill is a pathway to a national, bipartisan effort
to cancel student loan debt and end the $1.6 trillion student loan
burden that is crippling our economy,” Margetta
Morgan responded.
#ProgressingAhead
Though the
stimulus package may not encompass everything workers, small
businesses, and state and local governments need to recover from this
crisis, the progressive movement continues to fight for structural
change. In a Twitter chat today, Roosevelt
gathered economists, academics, and advocates to discuss how
government can best address both the coronavirus pandemic and the
preexisting challenges it’s exacerbating—from economic insecurity to
racial and gender inequality. For more insight into these
unprecedented times, watch Roosevelt’s
explainer webinar,
coproduced by the Groundwork Collaborative and Washington Center for
Equitable Growth.
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