BEYOND THE NUMBERS
The House and Senate this week are considering the budget resolution for fiscal year 2021, a first step toward enacting much-needed COVID relief using the fast-track “reconciliation” process for high-priority fiscal legislation. The budget provides for a relief package costing up to $1.9 trillion and instructs various committees to craft the necessary legislation. Quickly advancing COVID relief legislation scaled to the challenges the nation faces isn’t just appropriate; it’s essential.
First, the economy remains weak and the virus isn’t yet under control. The jobs recovery stalled in December when private and government payrolls shrank by 140,000 jobs, leaving the economy with nearly 10 million fewer jobs overall than before the pandemic. Getting the virus under control is “the single most important economic growth policy that we have,” Federal Reserve Chairman Jerome Powell said last week.
Even with success against the virus, economic recovery isn’t going to happen overnight. That’s especially true for people of color, immigrants, and people without a college degree, who have been hard hit by the pandemic and job losses. Workers of color have historically faced longer waits than white workers before a rebounding economy lowers unemployment and raises incomes, due to longstanding inequities and discrimination that limit opportunity in good economic times and lengthen bad times.
Second, the pandemic and economic fallout have inflicted severe hardship on tens of millions of people. Almost 24 million adults reported last month that their household sometimes or often didn’t get enough to eat in the last seven days. More than 15 million renters reported that they weren’t caught up on rent. Households with children face especially high hardship rates, with potentially serious impacts on the children’s long-term health and economic stability. Here too the racial disparities are striking, with about 1 in 5 Black and Latino adults reporting that their households sometimes or often didn’t get enough food and 36 percent of Black renters and 29 percent of Latino renters reporting that they are behind on rent.
While the Congressional Budget Office’s (CBO) latest economic projections (which assume no further fiscal support) show a stronger recovery than its July projections, they also show the economy not achieving its full-capacity potential until 2025. The number of people employed won’t return to pre-pandemic levels until 2024 and the unemployment rate won’t fall below 4.0 percent until 2026, CBO predicts.
Given the state of the economy and the millions of people who can’t afford enough food or pay the rent, the risk of doing too little far outweighs the risk of doing too much. Policymakers must not repeat the mistakes of the Great Recession, when they failed to follow up on the important aid provided by the 2009 Recovery Act. Instead, they pivoted to a posture of austerity even as the economy remained weak, slowing the recovery and leaving many laid-off workers facing particularly long unemployment.
Fed Chairman Powell echoed these sentiments when asked whether another fiscal package could overheat the economy and lead to higher inflation:
I’m much more worried about falling short of a complete recovery and losing people’s careers and lives that they built, because they don’t get back to work in time and things like that. I’m more concerned about that and the damage that will do, not just to their lives, but to the United States economy, to the productive capacity of the economy. I’m more concerned about that than about the possibility which exists of higher inflation.
And policymakers must move quickly. “Delay can be deadly,” economists Alan Blinder and R. Glenn Hubbard (senior officials in the Clinton and George W. Bush administrations, respectively) warned recently. “This is a national emergency and must be treated as such. That means agreeing on a big relief package quickly.”
Key unemployment benefits in the relief package enacted in December will run out in roughly five weeks, on March 14, when the economy will still be down millions of jobs, and important food assistance benefits are slated to run out in June.
Meeting other critical needs that received inadequate funding or none at all in the December package requires prompt action. For example, states and localities need funding to safely reopen schools, hire more local public health workers, help people and businesses struggling due to the pandemic, and avoid more layoffs of teachers and other public workers. Already, 1.4 million state and local workers have lost their jobs since last February, including 177,000 layoffs in the last quarter of 2020. Helping the millions of households behind on rent will require more federal rental assistance. And with the pandemic providing another reminder of the importance of health care, action is needed to expand coverage.
As the long wait for the December package showed, delays in reaching agreement have a high cost — a cost that is not evenly borne across lines of race, ethnicity, and income. By the time policymakers finally enacted it, key relief measures enacted earlier in the year had already dried up, contributing to an increase in hardship rates that left families unable to afford food and slowing the recovery.
Some congressional Republicans claim that Democratic leaders’ pursuit of reconciliation means they’ve abandoned bipartisanship. But nothing about reconciliation prohibits bipartisanship; many past reconciliation bills have received support from both parties. Starting this process is the best way to ensure that policymakers can deliver a robust relief package in a timely way to control the virus, help families facing hardship, strengthen the economy, and build toward a more equitable recovery.