In 2013, for example, more than one million unemployed people who had been looking for work for more than six months were cut off from the Emergency Unemployment Compensation program, even as the unemployment rate remained elevated at 6.7 percent. Just as importantly, automatizing temporary expansions in social programs can ensure that lawmakers aren’t pressured into pumping the brakes on those programs too early during the economic recovery. Advance planning can target relief to populations in most acute need and ensure that help is not held hostage by time-consuming political wrangling ahead of economic downturns. As it was, it took several weeks for payments to start arriving, and many people are still waiting.Ī variety of proposals could automatize relief during times of economic turmoil ranging from creating new programs to expanding existing ones (see research from the Economic Policy Institute and Washington Center for Equitable Growth, among others). The cash payments provided by the CARES Act (which are usually described as tax rebates) provide important relief, but they could be even more effective if Congress had already taken the time to enact them as a program that kicks in automatically when triggered by certain economic indicators. Providing automatic cash payments to households is another.
system is just one example of how the United States could have protected people and the economy more effectively. is structured to allow state programs to run out of funds during a recession unless Congress provides federal support to prop them up.Ī stronger U.I. spending partly offsets the drop in consumer demand that would otherwise occur. For example, during a recession, more unemployment insurance (U.I.) benefits are paid out simply because more people are unemployed, and this increased U.I. The United States has some automatic stabilizers in place, but they are limited and insufficient. And regular people could get help more quickly, blunting the economic downturn. With adequate automatic stabilizers, the United States might not end up with economic relief bills that have provisions tucked in them mostly helping millionaires, as we learned was the case with a CARES Act provision suspending limits on business losses. But lawmakers could have ensured better targeted and better timed relief if our system of social supports did more through automatic stabilizers for the economy, meaning they take effect, or ramp up, as soon as the economy deteriorates, resulting in government spending that pumps money into the economy even in the absence of any legislative action. Yes, the COVID-19 crisis forced Congress to act quickly. The third stimulus package-the Coronavirus Aid, Relief, and Economic Security (CARES) Act-was deeply flawed.
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