facebook linkedin twitter

Experts Lend Advice on COVID Relief Policy for Biden Administration, New Congress

December 4, 2020 by Reece Nations

In a virtual roundtable event co-hosted Tuesday by the Hutchins Center on Fiscal & Monetary Policy and the Peterson Institute for International Economics, economists discussed what economic policies should be prioritized by the in-coming Biden Administration and Congress. 

The panelists who participated in the event, presented by the Brookings Institution, were comprised of fiscal and public policy experts. 

Wendy Edelberg, senior fellow of Economic Studies at Brookings, Douglas Elmendorf, Don K. Price professor of Public Policy and dean of faculty at Harvard University’s Kennedy School and Michael Strain, director and Arthur F. Burns scholar in Political Economy at the American Enterprise Institute, talked about potential fiscal policy for short-term relief. 

Despite stimulative gains following the 2008 economic recession, Elmendorf said subsequent regressions constrained growth in following years. 

“That premature tightening of fiscal policy was one of the greatest mistakes in macroeconomic policy of the past half-century, in my view,” Elmendorf said at the event. “I am afraid that we are on the cusp of making a similar mistake again. We should at this point go fast and go big.” 

Time is an important factor when discussing economic relief solutions, he said. Millions of Americans stand on the precipice of losing unemployment insurance benefits without corrective action taken by the legislature. 

Under the CARES Act, states were given the option to extend unemployment compensation to independent contractors and other laborers that are usually ineligible for unemployment benefits, according to the Department of Labor. Pandemic unemployment insurance provides up to 39 weeks of benefits and the program’s enrollment period ends Dec. 31. 

“There are back-of-the-envelope calculations I’ve seen suggesting that a trillion dollars of fiscal stimulus might be enough,” he said. “Other calculations show — in my view — $2 trillion would be a more appropriate amount of stimulus. The point I want to emphasize is that we’d be much better off airing on the big-side than the small-side of fiscal stimulus.” 

In comparison, the CARES Act allotted $1.8 trillion in direct economic relief to individuals and businesses, according to the Heritage Foundation. Across three separate coronavirus-relief packages passed by Congress and signed into law by President Donald Trump, more than $2 trillion in federal spending has been allotted to COVID-19 relief measures — more than any other stimulus package in United States history. 

Because of the “inexact” nature of macroeconomic forecasting, Elmendorf said large-scale stimulus measures present smaller risks than small-scale measures. If demand for goods and services becomes too high, the Federal Reserve can act to remedy this by raising interest rates or withdrawing from other attempts of economic remedy. 

In contrast, Strain noted smaller-scale economic stimulus measures were more likely to pass through Congress quickly. With the optimal size of any potential coronavirus-relief remaining ambiguous, Strain said lawmakers should come to a compromise that can be enacted with haste. 

“I would rather see something that’s a little bit smaller but that could pass this week or next week, rather than wait for something that’s a little bit bigger but won’t pass until February,” Strain said during the event. “If you look at the output gap, I think a trillion dollars is a reasonable figure for the next round of stimulus. I think Democrats should be willing to take a couple hundred billion dollars less than that, Republicans should be willing to take a couple hundred billion dollars more than that.” 

Although the amount of relief remains a point of contention on Capitol Hill, Edelberg said Congress needs to act soon one way or another. Retaining unemployment benefits established by earlier relief measures needs to be prioritized in any compromise bill passed by the legislature. 

These benefits were provided by a provision of the CARES Act known as the Pandemic Emergency Unemployment Compensation program, according to the Department of Labor. Under this program, states are permitted to extend unemployment benefits by up to 13 weeks if a worker’s regular unemployment compensation benefits were exhausted. 

“I am in a state of near-panic about the lapsing of unemployment insurance benefits that according to Department of Labor numbers could mean that for upwards of nine million people on December 26th they abruptly lose all of their unemployment insurance benefits,” Edelberg said during the event. 

In The News

Health

Voting

Economy

August 3, 2021
by TWN Staff
Farmers Cautiously Optimistic About Future of Their Farms, Ag Barometer Finds

America’s farmers are feeling the sobering pinch of weakened principal crop prices, but nevertheless remain cautiously optimistic about the financial... Read More

America’s farmers are feeling the sobering pinch of weakened principal crop prices, but nevertheless remain cautiously optimistic about the financial conditions of their farms, a just- released industry barometer has found. According to the Purdue University/CME Group Ag Economy Barometer farmer sentiment leveled off in July... Read More

July 30, 2021
by Daniel Mollenkamp
Bidenomics Means Increasing 'Worker Power,' Advisor Argues

WASHINGTON -- The success of President Joe Biden's promise to breathe new life into the American working and middle class... Read More

WASHINGTON -- The success of President Joe Biden's promise to breathe new life into the American working and middle class will hang on the administration's ability to build up the power of workers, according to a group of economic experts. They say to be successful it... Read More

July 29, 2021
by TWN Staff
US Economy Continues to Grow, Eclipses Pre-Pandemic High

WASHINGTON -- The U.S. economy grew at an annualized rate of 6.5% in the second quarter, as vaccinations that released... Read More

WASHINGTON -- The U.S. economy grew at an annualized rate of 6.5% in the second quarter, as vaccinations that released pent up consumer activity finally lifted the nation out of the pandemic-sized crater it had been in for more than a year. The numbers released Thursday... Read More

Biden Admin Stepping Up Community Grants from COVID Bill

WASHINGTON (AP) — President Joe Biden's administration is beginning to make $3 billion in economic development grants available to communities... Read More

WASHINGTON (AP) — President Joe Biden's administration is beginning to make $3 billion in economic development grants available to communities — a tenfold increase in the program paid for by this year's COVID-19 relief bill. Commerce Secretary Gina Raimondo said her agency on Thursday will begin... Read More

July 21, 2021
by Brock Blasdell
Arizona Outpaces Nation In Post-COVID Private Sector Job Recovery

According to a recently released economic report by the Arizona Office of Economic Opportunity, the state of Arizona has outpaced... Read More

According to a recently released economic report by the Arizona Office of Economic Opportunity, the state of Arizona has outpaced the nation in private sector economic recovery post-COVID. In June alone, Arizona added 26,000 private sector jobs to its economy -- a rate 17% higher than... Read More

Biden's 3rd Trip to Reddish Ohio Pushes His Economic Agenda

WASHINGTON (AP) — President Joe Biden just can't quit Ohio — even if it rejected him in last year's election.... Read More

WASHINGTON (AP) — President Joe Biden just can't quit Ohio — even if it rejected him in last year's election. The Democrat travels to Cincinnati on Wednesday to push his economic policies. It's the third visit of his presidency to Ohio, the only state he lost... Read More

News From The Well
scroll top