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Josh Bivens at the Economic Policy Institute writes in Principles for the relief and recovery phase of rebuilding the U.S. economy that “an overwhelmingly policy response” is need to address the shock of the coronavirus pandemic and recession. First stop the economic bleeding and then build a resilient economy:

By “stop the bleeding” we mean using fiscal policy to end the crisis of joblessness and restore the labor market to a reasonable degree of health. Failing to invest enough to sustain a healthy labor market would fatally compromise both the political and the economic ability to structurally reform the economy’s key institutions to create fairer outcomes.

We have seen this failure before, with fiscal recovery efforts following the Great Recession of 2008–2009 that were insufficient and too short-lived. As a result of this austerity, it took a full decade for the labor market to return to even its pre–Great Recession health (which was too modest a benchmark to begin).1 It seems clear that a key reason why the Obama administration was unable to get ambitious reform efforts finished after its first year in office was the continued intense labor market distress.

This memo explains why policymakers need to pass roughly $3 trillion in debt-financed fiscal support now, with the first $2 trillion hitting the economy between now and mid-2022. This amount of upfront stimulus, combined with investments that ensure a very slow phaseout of this fiscal support, are needed to ensure a return to a high-pressure, low-unemployment labor market by mid-2022. Specifically, the memo calls on policymakers to take the following actions:

  • Finance fiscal support with debt […] 
  • Aim for a high-pressure labor market by picking an ambitious unemployment rate target that constitutes labor market health. […]
  • Refuse to accept the self-defeating notion that the COVID-19 shock will leave (or has already left) permanent and unfixable economic scars.[…]
  • Avoid the premature and precipitous withdrawal of fiscal support by ramping up public investments in public goods that are appropriate to debt-finance even during times of full economic health. For the sake of future crises, we should also start building automatic triggers in things like unemployment insurance and aid to state and local governments. […] 
  • Finally, note that this $3 trillion in needed fiscal support is for hitting economic targets. Money is still clearly needed for virus containment and will be needed for rapid vaccine deployment in coming months. Public health measures are the most important part of the response to the pandemic, so whatever money can usefully help on this front should be added on top of this economic package of relief and recovery. […]

THREE OTHER ARTICLES WORTH READING

TOP COMMENTS • RESCUED DIARIES

QUOTATION

“The good hand of God favored our beginnings [by] sweeping away great multitudes of the Natives … that he might make room for us.” ~~William Bradford, a founder and governor of the Plymouth Colony.

TWEET OF THE DAY

“Let’s remember we’re all in this together,” President-elect Joe Biden says as he urges Americans to come together and abide by CDC guidelines this Thanksgiving. https://t.co/Xv7u9PB2rN pic.twitter.com/J7VehMrWYE

— This Week (@ThisWeekABC) November 25, 2020

BLAST FROM THE PAST

At Daily Kos on this date in 2012—There was no ‘war on coal,’ but there should be. Just not on the backs of miners. Delay is denial:

Coal is a disaster for the climate and, although it provides good-paying jobs in areas where there often are no others, it also is a disaster for coal communities and miners themselves. For those reasons, with his last election campaign a success, President Obama should push hard to get regulations in place that work to force an end to most coal mining—a ban on mountain-top removal, regulations that control CO2 emissions of existing plants, more funding for enforcing health and safety regulations while coal is still mined, installing every obstacle the executive branch can come up in the path of soaring U.S. coal exports and negotiating a no-exports pact with the world’s other leading exporters (Russia, Australia, Indonesia). He should also find various innovative means to support and invest in the future of coal miners and other coal-company employees who will lose their livelihood as coal production is cut back.

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