More Help is Desperately Needed!

This week the Democrats in the House are crafting a fourth pandemic relief bill. Their top priority is funding states and municipalities which face crushing drops in revenue and extraordinary new demands for services. Equally important is providing money to households to sustain their purchasing power and provide them with the disposable income that is essential to stabilizing and then reviving the economy. These should be bi-partisan goals to combat the worst health crisis of the century and the worst economic crisis since the Great Depression. Instead, Republicans are calling a halt to relief efforts and declaring the crisis is past its peak.

During the next 2 years the states will face budget shortfalls on the order of $500 billion. This crisis is caused by the combination of increased demand for safety net programs like Medicaid, the unexpected costs of responding to the COVID-19 pandemic and declining state revenues from sales and income taxes as unemployment increases and spending declines. 

Because states must balance their budgets their only option is to lay-off workers and cut services. Education, health care and transportation - three of the biggest items in every state budget - will be slashed. Similarly, counties, cities and towns will lay-off workers and cut basic services. In turn, these cuts will create a new wave of unemployment. The cuts will affect everyone and for many they will be devastating.

This isn’t a partisan crisis. It will hit red states and blue states, rural and urban areas.  This is why the Republican Governor who chairs the National Governors Association has called on the Federal government to backfill state and municipal budgets. The road back from the economic collapse will be made many times more difficult if state governments cannot provide the fundamental education, transportation, health care and safety services we rely on. This is a no-brainer. Tell your Republican senators and representatives to quit stalling!

The pandemic is still in the initial stages. Forcing people to work in unsafe conditions is wrong and simply won’t work. Cutting workers off the extended jobless benefits as many Republicans are demanding might get some desperate people to report for the job but it won’t do anything to restart the cycle of buying and consuming. In the meantime, many households will be struggling to make rent payments and put food on the table. The rest of us will be holding off on spending fearful of what the future will bring. The longer this situation goes on, the harder it will be to reverse. This downward spiral will move from an economic shock to a severe recession and, then, to a depression.

This is why Congressional Democrats are devising proposals to provide households with direct income support so they don’t have to return to work prematurely. This would allow them to pay their rent/mortgages and utilities, put food on the table and purchase some of the services that will become available as states begin to “open up” after stay at home orders.  While extending jobless benefits has worked to some extent, they miss a large portion of the population that desperately needs help now. Putting money directly in the hands of households via large emergency payments is the most efficient way to stimulate economic recovery.

This is a market strategy that empowers consumers to choose how they want to spend their income and forces businesses to compete to meet their needs. Isn’t this what Republicans say they stand for? Furthermore, it is the only way to allow states to open their economies slowly enough to avoid triggering a second spike in COVID-19 cases, hospitalizations and deaths.   

If we force financially struggling employees to choose between going back to work or protecting their health we all lose. Going back to work in unsafe conditions will continue the health crisis; not going back to work worsens the economic crisis.  Some form of guaranteed income for the duration of the pandemic is the only solution that solves both problems. The Republican approach of handing money to businesses has failed. It has only enriched the corporate owners and their banks.

The federal government can borrow freely and at very low interest rates.  Yes, it will raise the deficit. No, running a large deficit under the current economic conditions does not threaten the future of our grandchildren.  Quickly and decisively restoring the virtuous cycle of spending and employment is the best strategy for protecting the future. Without acting directly to “prime the pump” of consumer spending, we will find ourselves in an extended period of economic stagnation that is a far greater threat to economic and social well-being than a temporary rise in the deficit.

Call To Action

Call your representatives of both parties and insist that they support legislation that protects states and local governments and provides substantial emergency income support to all households. This support should last as long as the crisis persists.  And folks who don’t need the payments can be urged to donate to community organizations providing needed social services.