Brookings Institution Event: “Recession Ready: Fiscal Policy Options to Support Communities and Stabilize the Economy”
Brookings Institution – The Hamilton Project
“Recession Ready: Fiscal Policy Options to Support Communities and Stabilize
the Economy”
Monday, June 8, 2020
Panel 1 – “Impact of Automatic Stabilizers in Economic Recovery”
- The Honorable Don Beyer, Vice Chair, U.S. Congress Joint Economic Committee, U.S. House of Representatives
- Heather Boushey, President & CEO, Washington Center for Equitable Growth
The first discussion between Rep. Don Beyer (D-Va.) and Heather Boushey focused on current events and how automatic stabilizers could assist in the recovery process. Beyer spoke about the impact policy has on culture and stated that if you get the policy right, it can significantly change the dynamic of society for the better. He emphasized that this sentiment is the foundation for his work in advocating for the availability of automatic stabilizers during times of crisis, such as food stamps and unemployment checks, as a method of incentivizing economic growth. A key point he identified was the different rates of recovery between states. He continued that states that have more stabilized job markets, like Virginia which has a larger portion of the population working for the federal government, will most likely have a faster recovery compared to other states without as stable of a job market. He stated that focusing recovery on the states with the greatest need will propel the recovery of the nation as a whole.
Beyer highlighted the social impact this economic crisis has created. He outlined that the simultaneous public health and economic crises have placed a much higher strain on minority demographics. He insisted that helping these populations is a vital task in the process of repairing both the economy and the nation. He noted a significant way of doing so is through automatic stabilizing tools. Beyer said that the numbers being studied in the economic recovery are surface level and that in order to address the root of the issues, it is necessary to look past the numbers and to the people themselves.
Panel 2 – “Importance of Federal Assistance to State and Local Governments”
- Jason Furman, Professor of the Practice of Economic Policy, Harvard University
- Michael Nutter, Former Mayor of Philadelphia; David N. Dinkins Professor of Professional Practice in Urban and Public Affairs, Columbia School of International and Public Affairs
- Moderator: Jay Shambaugh, Director, The Hamilton Project; Senior Fellow, Economic Studies, The Brookings Institution
The second panel discussed the impact of this economic crisis on city and state governments and highlighted the importance of federal assistance. Nutter drew upon his experience as the former mayor of Philadelphia during the previous economic crisis in 2008-2009. He touched upon the impact felt by residents and drew comparisons to what cities may be currently facing. Nutter stated his desire to see federal government support since a large part of the economic distress stems from the federally mandated shut down to flatten the COVID-19 curve.
He mirrored Beyer’s sentiment of ensuring that minority populations are not disproportionately impacted by the consequences of social distancing. Nutter stated that the best way to address the difficulties cities and states are facing is to provide direct aid to those cities and states. He outlined his opposition to the idea of restricting aid to areas that struggled prior to the pandemic. He postulated that unless a city or state was acting recklessly with their fiscal responsibilities, no city should be deprived aid to assist in their efforts of overcoming a global pandemic. Nutter concluded by reinforcing the importance of setting deadlines to keep pressure on legislators to assist cities in balancing their budgets by the end of the fiscal year.
Furman referenced his experiences working in the Obama administration following the 2008-2009 crisis. He admitted that while they had done well in initially addressing the crisis, the legislation created did not provide enough structure to address future issues. Furman reinforced Nutter’s emphasis on the current need for direct federal assistance to city and state governments. He stated there would be significant economic consequences if no actions are taken. He continued that there would be delays in recovery time and that temporary furloughs may become permanent job losses. Furman said that constraints placed on cities or states inhibiting their ability to deal with COVID-19 would result in significant recovery challenges and must be avoided. Furman suggested a potential solution of using current unemployment rates relative to a state’s historic average as a comparison tool in dividing up economic assistance. He concluded that this calculation would provide insight into which states were experiencing more severe economic distress.
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