As Washington confronts the economic fallout of the Covid-19 crisis, it needs to think bigger than it ever has. It has already approved a sick-leave measure, free coronavirus testing, expanded funding for food security programs, new money for Medicaid and unemployment insurance and more.
It is now working on a $1 trillion dollar “Phase Three” measure that could provide direct payments to most Americans among other efforts. The House of Representatives envisions a broader Phase Three than the Senate and wisely includes infrastructure spending, long a goal of Rep. Brian Higgins, D-Buffalo.
Both versions are radical and, some say, even teetering on socialism, an unfair and inaccurate accusation. The rapidly expanding pandemic demands radical measures including social distancing, cancellation of most public events and the closure of many businesses. Fallout from the new coronavirus has opened economic fissures that require broadly creative thinking, beyond airline industry bailouts and $1,200 checks.
Andrew Ross Sorkin suggested in the New York Times a “thought experiment” to prevent the next Great Recession, or depression: government-backed, bank-administered no-interest bridge loans that would be guaranteed for the duration of the crisis and paid back over a five-year period. Eligible for the loan would be businesses, both large and small, as well as self-employed and gig workers. Businesses would have to continue to employ at least 90% of their workforce at pre-crisis wages to qualify for the program.
It’s an ambitious and daring proposal that merits strong consideration. We’ve never done anything like it before, but we’ve haven’t come upon this kind of crisis in a century and today’s knowledge and technology gives us advantages in seeking strategies to soften the economic blow.
Higgins has been pushing for years to gain traction on another useful idea, along the lines of Franklin Roosevelt’s New Deal: government-funded infrastructure improvements and nation building at a cost of another $1 trillion to $2 trillion. It makes for a smart follow-up phase to a government program dealing directly with the health crisis. An infrastructure bill will help sustain the economy by protecting jobs ranging from material sourcing to construction. The cost is high, and subject to debate.
Such projects could include roads and bridges but also aging water and sewer lines. Many of them, across the country, are in poor to dangerous conditions. This is a moment to address that.
Remember the embarrassing and smelly Niagara Falls discharge? Get the Army Corps of Engineers to fix breakwalls to make Buffalo’s waterfront safer for development. Build schools, municipal buildings, and, in a carefully considered program, hospitals that can create greater capacity for future crises.
Higgins proposes to finance the effort with 10-year treasury yields that would cost the federal government 1.2% in interest. Locking in and issuing up to $2 trillion in debt over the next 10 years would send a positive signal to the financial markets and larger economy. It demonstrates commitment to economic growth once the public health crisis passes.
“It will promote and engender great confidence in this nation’s ability to pull itself out from under this horrible situation that we’re dealing with today,” the congressman said.
It’s bold and expensive, and it deserves scrutiny – within the opposing contexts of a genuine national emergency and a large federal debt made worse daily by high budget deficits.
• • •
What’s your opinion? Send it to us at email@example.com. Letters should be a maximum of 300 words and must convey an opinion. The column does not print poetry, announcements of community events or thank you letters. A writer or household may appear only once every 30 days. All letters are subject to fact-checking and editing.