ECONOMISTS RIP GOP, SAY US NEEDS $2.2B COVID RELIEF PACKAGE

The next coronavirus stimulus bill needs to be at least four times larger than Senate Majority Leader Mitch McConnell’s $500 billion proposal, economists told Igor Derysh of Salon. Congress remains deadlocked on a bill after McConnell repeatedly rejected the $3.4 trillion HEROES Act passed by the House back in May, and the $2.2 trillion compromise offer House Democrats approved last month.

“The delay in providing the stimulus almost surely will increase the amount of money necessary to restore the economy,” Joseph Stiglitz, Nobel-prize winning economist and Columbia University professor, told Salon. “Balance sheets of households and firms get eroded and firms go bankrupt. Digging yourself out of a deep hole is much more expensive than preventing a decline into a deep hole — another instance in which the aphorism an ounce of prevention is worth a pound of cure is applicable.”

The issue should not be a matter of cost but an issue of need, argued Michael Graetz, a former senior Treasury Department official and co-author of “The Wolf at the Door: The Menace of Economic Insecurity and How to Fight It.” Small businesses are closing around the country and, despite many re-openings, there are still more people unemployed than at any point since the Great Depression. “So we need to do what we did in the CARES Act,” said Graetz, who is now a professor at Columbia. That includes additional loans and grants to keep businesses open, enough money to provide at least $300 to $400 per week in federal unemployment benefits, funding to help struggling hospitals, another round of $1,200 checks to help people pay rent, and funding to help state and local governments that have “run out of money.” All of those measures add up to close to $2 trillion, he estimated.

Graetz argued that the government must get the economy through the next six months until there is an “effective vaccine” that is widely distributed. That view is shared by a large number of economists. The left-leaning Center for Budget and Policy Priorities estimated that it would take at least $2 trillion to provide $400-per-week unemployment benefits, food and housing aid, and state and local government aid without taking into account funds for virus testing and other pandemic-related efforts. Other economists estimate it may take $3 trillion to $4 trillion to help the economy recover. Josh Bivens, the director of research at the left-leaning Economic Policy Institute, argued that the path to recovery would take years and far more funding than is being discussed for the next round of relief. Restoring the unemployment rate to the 3.5% it was before the pandemic would require about $800 billion per year in stimulus funding totaling between $1.5 trillion and $2 trillion if it was for “very effective” stimulus measures like federal unemployment benefits and state and local aid, he told Salon.