Written by John Furlan
Action Needed ASAP: Pelosi, Sanders -Turn Gates, Zucman, Emanuel Op-eds Into Phase 4 Bill
Bill Gates, Gabriel Zucman, Ezekiel Emanuel have given key suggestions in op-eds the past four days on how to fight Covid-19 and unemployment, the two interrelated crises of the U.S. Pelosi should make their ideas (and of Zucman’s co-author Emmanuel Saez) the core of a SHORT Phase 4 bill ASAP, along with suggestions and advice from governors on the front-lines, especially those in the hardest hit states, like Cuomo and Whitmer.
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The key action items that must be immediately addressed in the Phase 4 bill are the still critical shortages of necessary medical equipment, supplies and personnel, and the hemorrhaging of American jobs, with 3.3 millions unemployment claims filed just last week followed by 6.6 million more this week.
The lack of testing, tracing, PPE, ventilators, personnel, etc. is already costing thousands of American lives, ultimately much more, and stressing out healthcare systems and their heroic front-line professionals. The lack of Federal support of employers to keep their workers on their payrolls, which was in the CARES Act for airlines only, is costing millions of jobs, unlike in place like Denmark, which are doing so.
Pelosi doesn’t have until April 20 to draft the bill to do so, when Congress reconvenes. She must draft it by no later than April 8, a week from now, hopefully sooner. So it must be SHORT and targeted, not the CARES Act doorstop. She must resist the urge to throw in the proverbial kitchen sink, starting with infrastructure, and most of the other ideas she is now soliciting from her Democratic caucus.
“Pelosi doesn’t have until April 20 to draft the bill…”
Sanders, who does have the needed sense of urgency, must try to push Pelosi and Schumer on such a bill, and work with Biden if possible, I believe Emanuel advises Biden. This is a national emergency and Americans won’t tolerate politics as usual right now.
“… She must resist the urge to throw in the proverbial kitchen sink”
My recent articles have strongly supported Sanders (I didn’t get the DNC memo that he doesn’t have a chance). He should even consider the ideas of “billionaire” Gates, whom I strongly praised in my March 27 article. Again it’s a national emergency.
Pelosi, McConnell, Schumer, Mnuchin got the CARES Act “stimulus bill” done fast, which has some useful provisions for unemployment insurance and small businesses loans. But now both Trump and Pelosi want to spend big on infrastructure in the new Phase 4 bill.
They can’t try to open that front, yet again, while the current ones rage. First they have to stop Covid-19 and unemployment in their tracks, fighting the latter is complementary to defeating the former, it will allow us to do the former as long as necessary. Nothing else matters, right here, right now.
“Trump and Pelosi want to spend big on infrastructure in the new Phase 4 bill.”
Didn’t Trump and Pelosi learn the lessons of Obama’s lack of “shovel-ready” infrastructure jobs in the 2008 Great Financial Crisis (GFC)? Didn’t they learn the lessons of unemployment going through 10% back then. Ask Obama’s economist Furman, Krugman, Summers, Stiglitz.
If you want to see what parts of the U.S. might become if such a Phase 4 bill is not drafted and passed in the next two weeks, then I strongly urge you to read this WaPo article titled “Faced with a crush of patients, besieged NYC hospitals struggle with life-or-death decisions.”
As I suggested in my March 29 article, Sanders should convene an Economic Jobs Council, his “brain trust,” to fight unemployment. In that article and an update to my March 25 article I suggested Zucman for the Council, his March 30 NYT op-ed showed why he would be good choice, along with Galbraith, Kelton, Baker, Tcherneva.
“Didn’t Trump and Pelosi learn the lessons of Obama’s lack of “shovel-ready” infrastructure jobs”
Zucman has worked with Warren, whom Sanders should ask for help right now, she has the brains and energy necessary, again no time for politics as usual. And she gets along better with her Senate colleagues for Phase 4 bill votes. Also AOC should continue to support Sanders, perhaps she can help talk with Pelosi about the Phase 4 bill.
We’re now in the “Age of MMT,” “We Are All MMTers Now,” as I put it in my April 2 article. The U.S. must fully mobilize the power of the state to fight the twin enemies, Covid-19 and unemployment.
Economists of different stripes are on board with that. Since I’ve given MMT-type views in my last two articles, here’s Ed Dolan, a post-libertarian economist at the Niskanen Center, who wrote on March 30:
“One of the dangers ahead is that unwarranted alarm over the increase in the federal deficit and debt will bring renewed calls for budget austerity. To succumb to the temptation to tighten fiscal policy before the recovery is complete would be to repeat a mistake made during the recovery from the Great Recession.”
“The theoretically possible “exploding debt” scenario, in which the debt ratio grows without limit until wiped out by default or hyperinflation, looks unlikely, based on trends of interest rates and growth that seem well-anchored.”
Olivier Blanchard, former IMF chief economist now at the Peterson Institute for International Economics, wrote on March 30, (I can hear MMTers groaning):
“The motto for fiscal policy these days is: “Whatever it takes,” and it is indeed the right motto. But what does it mean? What about the specifics? And can we really afford it?”
Blanchard’s punch line:
“In advanced economies, the answer must be that, short of a defeat in the fight against the virus, debt will remain sustainable. (And if we lose that battle, debt sustainability will be the least of our problems.)”
MMTers, move on. As I said in my March 25 article, don’t continue to fight Twitter ideological battles, you’ve won, now you must win the real-world political war, which is FAR more difficult, ask Sanders.
“the [U.S.] system is not designed to react swiftly and competently enough to deal with modern crises”
Economists have been lowering this week their already very low forecasts for global growth, e.g. Goldman Sachs, the OECD and World Bank. For the downside economic risks, you can watch the new daily videos here from Roubini, aka “Dr. Doom,” he prefers “Dr. Realist.”
Once the U.S. defeats Covid-19 and unemployment, it will have to turn to fixing its political system. It’s obvious the system is not designed to react swiftly and competently enough to deal with modern crises, like Covid-19 and the 2008 GFC. 18th century horse-and-buggy era constitutional “checks and balances” don’t work well against 21st century viral and financial contagions, in the age of globalization and jumbo jets. And it’s profoundly undemocratic.
The U.S. actually has its own Federal agency that can rapidly turn on a dime with massive force. It’s called the Federal Reserve. It’s designed to save the financial system, and it’s been working overtime to do that. We need other agencies to save the healthcare system and real economy, so far they have been badly lagging.
“18th century horse-and-buggy era constitutional “checks and balances” don’t work well against 21st century viral and financial contagions”
Our political system didn’t even work well combating the Great Recession of the 2008 GFC, let alone rapidly dealing with the Great Depression of the 1930s and WW II. Covid-19 is far faster than Hitler’s blitzkrieg.
To close, Pelosi should now draft a SHORT Phase 4 bill ASAP, not by April 20, based on the ideas of the Gates/Zucman/Ezekiel op-eds in the first paragraph. And Sanders should try to influence and work with her, enlisting the aid of Warren and AOC to do so. He should also convene the Economic Jobs Council as his “brain trust,” which he will need well past the Phase 4 bill.
Make America and World Awesome, MAWA.
This article was adapted from a commentary published on Medium 01 April 2020.
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