The Stimulus Plan That We Need Now

The coronavirus is spreading across our economy every bit as much as it is spreading across our communities. As businesses shutter and travel bans go into effect, a recession is almost certain. To lessen the crash and its very real human impact, Democrats in Congress must take immediate action. There are three essential aspects to the stimulus plan we urgently need right now: It should be bold and equitable, it should automatically renew, and its temporary programs should be able to evolve into more permanent ones.

Each of these would help address the threat that hangs over the economy: that we will repeat the mistakes of the Great Recession. That recession started in December 2007 and technically ended after two years—but 13 years later, we still aren’t sure if unemployment is as low as it would have been had we taken stronger action. We failed in our response then, and in our era of continued low interest rates and weak corporate investment, we could be setting ourselves up to fail in exactly the same way again.

The first way to avoid past errors is to make sure any spending package is big enough to address the scale of the coming downturn. Issuing $2,000 checks to every American would cost upwards of 3 percent of GDP and would be enough to start pushing back a recession. It would also be equitable, reaching all people, unlike a payroll tax cut, which would disproportionately benefit those at the top of the income distribution. The Federal Reserve has acted more quickly this time, lowering interest rates and beginning a purchasing program. To take advantage of these low rates and boost the economy, we also need a major spending package—for example, an infrastructure project designed to mitigate carbon emissions and fossil fuel use—on the order of an additional 4 percent of GDP. Interest rates are projected to be low for many years, and the economic boost from this investment will be necessary to invigorate what is certain to be a slow recovery.