We just need more stimuli – the need smarter We stimulus

We just need more stimuli – the need smarter We stimulus

led the Republicans in the Senate only now his first draft of the next stimulus package and the passage of a final bill depends weeks difficult negotiations between Congress and the White House, the already fragile economic recovery was only the slender revelation. It ‘also likely to name a misnomer location: from 15% to 11% unemployment as one can see a marked improvement, until you realize that at no time during the great recession of 2008-2009 have seen the flow rate of unemployment than it is now. With the pandemic lifting the situation in the south and west worsened since the early summer and employment figures do not reflect the 30% of Americans who rents are lost in June, or the majority of rent reductions and deferrals for companies nationwide. Unlike technology companies are booming in reality house and the odd pockets of increased demand will remain as a food manufacturer bicycle and RV sales, the remains of the US economy in terrible shape. The question is – or should be – is not whether the government needs to spend much more, it does, but how it should spend more, much more. For now, the federal government hardly tactic reaction spending. But to avoid a multi-year recession / depression, it needs a strategy, and it does not. You might think that the federal response would be another round of what we saw in April, supplemented by what we have learned since then. The fact that the Republicans another bill $1 Katherine consider (greater as the essential accounting during the Great Recession) to almost $3 Katherine in April is above all a testimony to the fact that this time it really is different. But while the numbers are, the urgency is not, and the numbers may not be large enough. The Democrat led House proposed a bill $3.5 Katherine who faced the painful fiscal deficits, but also that it does not have the biggest challenge in terms now: how to support economic activity, even in the midst of a pandemic . The challenge now is that the US economy is in purgatory, not quite open yet closed. for ambiguity, together with the attitude Forten heated partisan towards “Open” and “Close” seems hobbled Congress and the White House. But this hybrid reality or shutdown is still open almost certainly last for much of the rest of the year and probably in 2021 as well. It only takes a very aggressive government aid, but now tailored to the reality of an uncontrolled virus trying million of operating companies, or not allowed, and hundreds of millions of people trying to live a life version. The Senate Republicans have proposed reducing improved to $200 $600 per week for unemployment benefits and the White House Finance Mnuchin has a formula to ensure the replacement of wages by up to 70% free float. These figures are almost certainly back up, but the fact that these emergency cut was proposed also deeply flawed. Yes, some people have more in the unemployment rate were received when she worked there, and there are certainly cases of companies not able to hire cheap labor, but no one can seriously claim that the main challenge for the company in ready now, the workers work for lower wage earners. The challenge is, customers who are willing to spend, and consumers tend to spend less and save more if they are worried about the future, which is exactly what happened. The US savings rate of 32% in April and 23% in May, higher than a 2x factor than it has ever been since the data were collected in 1959, you can not pay to the working people, but you can not pay to spend, which is why the proposed new direct controls can alleviate some concerns, but not by yourself jump-start the economy. European government has a stellar job and income guarantee employment, but have not been able to stimulate a recovery of a large part of economic activity, so that the recent agreement to spend another trillion dollars. It will not be enough there, and will not be enough here. What is needed now is a strong awareness that as long as the virus is global unstoppable, there will be no real recovery. In the United States, as long as the state governments stagger opened between partial and partially closed, companies will Teeter and save the people as a whole, more and spend less, only slowing to restore and connection problems. As long as businesses are concerned about the spread of the virus in the workplace, there will be no resumption of the massive paperwork. Zoom is for many companies, but it can not completely replace the economic activity that created the work in offices, supported by society, businesses in the service sector, which made the work and movements. What we need is not only big attraction, but nice charm. This means income, preservation of jobs and the strengthening of public finances has recovered until the tax revenues that will continue only happen if a support measure that only when the virus is controlled can happen. This then requires cash for more experimentation and money for the openings of schools. And the last piece is the money not only the immediate crisis, but a means to the address will only be used for long-term investments. This could mean not only the short-terms loans to companies intending to stay afloat, but longer-term for long-term growth loans. Biden recently a massive “Buy America” ​​program proposed; Trump is reshoring has long advocated. It would be a perfect opportunity seems to support a multibillion dollar plan for all parties to increase American companies for the long term. In short, put together a next round of spending is necessary but not sufficient. This is a tactic. The country also needs a strategy. It needs emergency government spending; also he needs a vision for the coming years and beyond in the coming months. Long-term investments with money in short-term aggressive combination does not make us safe from the virus, but could businesses and companies ensure that the future is not so insecure that must save and save. Only when people can see their way to a stable future, which will more than splurging evasion and episodic spending and set in motion without further sustained activity, without which people and businesses money, all the government spending the world is not enough to be. Washington seems to have accepted the need to spend; it seems that they have not thought how to spend. It is not too late, but time is running out.
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