Past economic catastrophes like the ones that began with stock crashes in 1929 and 2008 offer guidance on how to weather and lessen such storms. In each case, after stocks plummeted, many experts argued economic fundamentals were sound and the larger economy wasn’t at risk. They were wrong. In each case, market drops, combined with other negative influences, tanked spending, profits, growth and employment.
We need to remember those lessons now.
- Err on the side of doing too much too soon to bolster the economy, not too little too late. Government help immediately after the 1929 crash was nearly nonexistent. The $800 billion stimulus following the 2008 crash was helpful but small and poorly targeted. In each case, the reason was conservative opposition to stimulus spending.
- It’s no time for deficit talk. An economic collapse costs government coffers much more than proper moves taken to prevent a collapse.
- Get the money to suffering individuals, and companies using the cash to help employees.
The United States responded slowly to the health crisis of coronavirus. It cannot make the same blunder with the economic threat. But officials began too small, with a laughable $8.5 billion package, and a $100 billion bipartisan bill that passed the House last week is, while crucial, still too little.
That bill, now before the Senate, will expand federal Medicaid spending, and provide federal reimbursement for paid sick, family and medical leave. It will make coronavirus testing free — when the test kits get out — and extend unemployment insurance and food stamp eligibility, which are crucial.
President Donald Trump’s declaration of a national emergency Friday was a productive move that could get disaster aid to individuals and families especially hurt by the illness. The 90-day extension of the April 15 tax deadline will also relieve financial pressure.
But more will need to be done, more rescue efforts undertaken as the effect of the virus works it way through our economy. Trump’s suggested suspension of payroll taxes deserves consideration, but the corporate side of that cut must incentivize companies to resist furloughs and layoffs. And a quick cash grant to all Americans, part of an $850 billion plan promoted by Treasury Secretary Steven Mnuchin, could provide needed sustenance and optimism to the nation.
The federal government could also freeze all college loan repayments. The state could cancel monthly sales tax payments due Friday for companies forced to close or curtail operations due to the current restrictions. And significant funding must be allocated to help states and municipalities cope with the expenses of coronavirus and the loss of revenue.
Taking these steps, even though it could mean spending trillions of dollars, could stave off disaster.
The United States may yet have time to prevent a coronavirus-caused economic catastrophe. Republicans and Democrats in Congress and Trump must resist pinching pennies and promoting culture wars and do the next right thing.
— The editorial board