August 6, 2020

The U.S. Shut Down Its Economy. Here’s What Needs to Happen in Order to Restart.

“When the government is this late to the party,” he said, “they shouldn’t punish small businesses who acted fast.”

Economists stress that a successful program would be expensive: $1 trillion or more. Mr. Hubbard said a $300 billion loan program, as Senate Republicans proposed on Thursday, would be “woefully inadequate.”

Mr. Hamilton said this week that he worried members of Congress had “not come to terms with the scale” of what was needed. “Any fiscal package less than $1.5 trillion will be inadequate,” he said, “and frankly lead to a Great Depression-level economic collapse.”

Companies are only half the equation. For the shutdown/restart strategy to work, economists say, lawmakers must also keep money flowing to workers affected by the economic chill so they can continue to buy groceries, pay mortgage or rent and seek medical care if they are injured or sick.

One way to do that is by helping businesses — and hopefully keeping as many people as possible on payrolls, even if they are not working. But workers who lose jobs or hours will need more direct help.

Many economists, including Claudia Sahm of the Washington Center for Equitable Growth and N. Gregory Mankiw and Jason Furman of Harvard University, have called on lawmakers to send checks of $1,000 or more to all Americans as quickly as possible. Both Mr. Trump and Steven Mnuchin, the Treasury secretary, have voiced support for such payments. At least a scaled-back version of that plan is likely to be included in the stimulus bill being negotiated in Congress, with payments headed to low- and middle-income families.

But those payments will not be sufficient to cover costs of necessities for people who have suddenly seen their incomes shrink or vanish.

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