The group of more than 125 economists signed an open letter this week calling on the federal government to provide additional incentives to Americans amid the growing COVID-19 epidemic through direct incentive checks and recurring payments.
Negotiations on the second round of economic stimulus have been at a dead end for months after Congress came together and passed the bipartisan $ 2.2 trillion-dollar CARES law in March. This legislation included a one-time $ 1,200 direct incentive check for most Americans, as well as an additional $ 600 in weekly federal unemployment benefits and forgivable loans for businesses in difficulty amid closure measures across the country. But this financial support has largely run out by the end of the summer, as lawmakers have stressed the need for further incentives.
“Unless policymakers respond quickly to the crisis with the necessary response, we risk the economy suffering much longer-than-necessary damage, especially to the underprivileged,” a group of more than 125 economists wrote through the Economic Security Project in their open letter published on Monday.
Alan Blinder, former vice president of the Federal Reserve, Claudia Sahm, a former Federal Reserve economist, and Jason Furman, former economic adviser to President Barack Obama, were among the signatories.
“We know that the next stimulus should be big, immediate and immediate, and it should be lasting until the economy recovers,” the letter said. “We urge policymakers to use all the tools at their disposal to stimulate the economy, including direct cash payments, which are one of the fastest, fairest and most efficient ways to recover families and the economy.
“Recurring direct payments help families meet basic needs, boost the state and local economy, and accelerate recovery,” he explained, adding that these payments “need to be coupled with other valuable programs such as unemployment benefits, support for state and local governments, stronger SNAP [Supplemental Nutrition Assistance Program] benefits, strong childcare funding and much more. “
Economists have written that “critical” is the “rapid implementation of a rapid stimulus that promotes lasting and racially equitable recovery and helps families and businesses recover.” In their letter, they argued that minorities were particularly hard hit by the economic downturn in the pandemic, saying direct payments would “ensure” that these groups “did not lag behind” in continuing the recovery.
Newsweek spoke to the White House, Speaker Nancy Pelosi, and Senate Majority Leader Mitch McConnell, but did not respond immediately.
Economists and Federal Reserve President Jerome Powell has been calling for further encouragement from lawmakers for months, warning of the growing danger of long-term economic damage without appropriate action. Negotiations went back and forth. The Democratic-controlled House of Representatives passed a $ 300 billion package in May, but was rejected by Republicans and the White House as a democratic “wish list.”
McConnell and the White House later unveiled a $ 1 trillion package in late July, but it couldn’t even gain Republican support to get through the Senate. Negotiations have been going on ever since, with Finance Minister Pelosi and Steven Mnuchin coming back and forth with various compromises. Before the election, the White House offered to support a $ 1.8 trillion compromise after the House Democrats adopted another $ 2.2 trillion package.
Despite urging its party members, Pelosi rejected the White House offer. Some Democrats suggest they are willing to compromise further and accept an even smaller package because millions of Americans are in dire need of financial help. Unemployment remains at historic levels, while many states and municipalities have implemented new closure measures to curb the rapid spread of COVID-19.
“I just hope we can reach an agreement. That may not be all everyone wants, but at least if we can get significant help for the people,” Steny Hoyer, the House’s majority leader, Democratic Republic of Maryland, told Roll Call on Friday. . “And then we’ll be here next year. If we need other things, we’ll do others.”
President-elect Joe Biden voiced support for the $ 3 trillion package adopted by the House Democrats in May. But Biden will only take office at the end of January, and it’s still unclear whether such a huge incentive bill will be passed by Senate Republicans.