(C) Center for Economic and Policy Research
This unaltered story was originally published on CEPR.NET
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After Two Years of Covid, the U.S. Economy Is Thriving. We Have the Great Recession to Thank. [1]

['Bryce Covert', 'Ioana Moldovan', 'Timothy Noah', 'Melissa Gira Grant', 'Natalie Shure', 'Jordan Michael Smith', 'Illustration Evangeline Gallagher']

Date: 2022-03-08 00:00:00

The real difference, instead, was the way the government responded. President Trump declared the country to be in a pandemic on March 13, 2020; by March 18, he had signed the Families First Coronavirus Response Act into law, and less than two weeks later he followed that with the Coronavirus Aid, Relief, and Economic Security Act. Combined, the two packages came to over $2 trillion in federal spending. The laws included $1,200 stimulus checks, a $600 per week increase in unemployment benefits that also expanded eligibility, more money for food assistance, and emergency paid leave. Congress then followed that up with the $900 billion Coronavirus Response and Relief Supplemental Appropriations Act in December 2020, and Democrats passed the $1.9 trillion American Rescue Plan Act in early 2021, which sent out another round of stimulus checks and expanded child tax credit payments. In total, Congress has approved over $5 trillion in aid over just the past two years, three times as much as during the entire Great Recession.

That kind of aggressive, quick action meant that even though an earth-shattering 23 million people filed for unemployment in one week of May 2020 alone—more than triple the highest number during the peak of the Great Recession—the government ensured that their incomes weren’t wiped out. As soon as the initial restrictions lifted, spending carried on, allowing many businesses to keep their doors open and payrolls intact. The emergency measures didn’t reach everyone: Undocumented immigrants weren’t eligible for much of the relief, and many people struggled to get the expanded unemployment benefits. The Black unemployment rate is still double the white rate. Even so, most Americans are actually better off financially now than before the pandemic began.

Even before the pandemic emerged, left-of-center economic experts and Democratic Party leaders had settled on a consensus view of history: The 2009 stimulus was too small and too short. “It is abundantly clear that Congress’s response in 2008, 2009, and 2010 was just too small and stopped too quickly,” said Rakeen Mabud, chief economist at the Groundwork Collaborative. Even if the Obama administration couldn’t have gotten a trillion-dollar-plus bill through Congress at the start, it could have made it clear that another would need to follow. Instead, by 2010 Obama’s White House had pivoted to deficit reduction. The federal government “went from being a tailwind to a headwind way too soon,” said Mark Zandi, chief economist at Moody’s Analytics.

One problem facing lawmakers in 2009 was that there was little recent experience with direct government spending in a time of crisis. When he was running for president, Bill Clinton proposed a big stimulus package to fight the recession that had begun in 1990, but he dropped it once in office at the behest of advisers promoting deficit reduction. “Fiscal policy was just dormant,” Marr said. Some doubted whether the federal government could get money out fast enough in a crisis—or whether it should at all.

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[1] Url: https://newrepublic.com/article/165635/pandemic-covid-great-recession-economy

(C) Center for Economic and Policy Research, cepr.net
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