The 4 Things Senate Republicans Are Not Saying When They Talk About the Economic Impact of COVID-19
Republicans short-sighted COVID response is hurting our economic recovery.
#1. COVID’s Economic Impact Has Been Brutal & Uneven
Coronavirus has impacted every community. But blows to workers’ economic security have fallen severely and disproportionately on Black and Latino Americans and lower-income families, threatening the well-being of some of our most vulnerable communities.
From job loss to worsening food and housing insecurity and rising uninsured rates, the Americans least able to withstand an economic crisis have been most affected. Overall, nearly 40% of households earning less than $40,000 a year experienced a job loss in March, compared to 13% of those earning more than $100,000. Among households earnings less than $50,000 a year, nearly 60% report having lost employment income since the middle of March.
The economy shrank by an unprecedented 9.5 percent in the second quarter of this year, wiping out nearly five years of economic growth in just three months. Forecasts suggest that while the economy has begun to recover, it will not return to its pre-pandemic state for several years. Assuming no further action by Congress, CBO projects real GDP would not exceed its level at the end of 2019 until the third quarter of 2022. By the end of 2030, the economy would still be smaller than the agency projected before the pandemic. Unemployment, which remains higher than the peak reached during the Great Recession, is projected to be 7.6 percent by the end of 2021 and not fall below 6 percent until the second half of 2024.
“A moment of job loss can lead to a lack of jobs for a long time…That will be particularly true for people who come into this cycle with less buffer against the vicissitudes of our very dynamic economy.”– Hearing Testimony from Dr. Doug Elmendorf, Dean of the Harvard Kennedy School and CBO director from 2009–2015
America’s workers & families will continue to need strong support from Congress to get back on their feet and make ends meet.
#2. State & Local Governments Cannot Afford to “Wait and See”
For months, Republicans have blocked critical coronavirus relief, telling struggling Americans to ‘just pause.’ But as the White House and Senate Republicans have refused to do the bare minimum, there’s another crisis unfolding for state and local governments across the country.
Faced with an estimated $900 billion budget shortfall through the end of 2021, state and local governments are shedding jobs and gutting programs in an effort to balance their budgets. These entities play a critical role in providing public services — which are even more essential as we grapple with this public health emergency — as well as supporting economic growth and employing millions of Americans.
“There are also a lot of additional expenditures that states and localities have undertaken to combat the virus and the effects of the pandemic. That is in the national interest, and I think it is appropriate that the taxpayer pick up that tab in whole or in part.” — Hearing Testimony from Dr. Doug Holtz-Eakin, President of the American Action Forum and CBO director from 2003–2005
In fact, every dollar that states and localities cut in the wake of the Great Recession shaved as much as $2 from the American economy and ultimately delayed the national recovery in employment by 4 years.
If Congress doesn’t act quickly to provide the critical support that state and local governments need, they will have no choice but to lay off more teachers, firefighters, and other government workers. These cuts would further endanger our health, exacerbate underinvestment in education and other public services, and undermine our economic recovery.
#3. We Have Ample Space to Do More
In the face of this unprecedented crisis, protecting lives and our economy in both the near and long term will inevitably require an aggressive and sustained fiscal response. Fortunately, the United States has ample fiscal space for such an undertaking.
While the economic collapse and Congress’ efforts to counter it will increase the national debt, there is no evidence that rising deficits are endangering the economy, fueling a fiscal crisis, or pushing us against the limits of our fiscal capacity. We must consider this rise in the debt in context of the scale of the emergency we face today and the consequences of not spending enough.
Experts agree that failing to support our economy and promote a strong, inclusive recovery is a greater threat to our economic and budget outlooks than deficits — especially since interest rates are so low and are expected to remain low for some time. Simply put, while there is no evidence that rising deficits are negatively impacting the economy, there is ample evidence that failing to invest in our recovery will prolong the economic downturn, lead to greater suffering, and worsen our fiscal outlook.
We cannot let Republicans use this crisis as an excuse to implement destructive austerity. Republicans were not concerned about the debt when they added $2 trillion to deficits with their 2017 tax scam, but now that workers and families need help to survive a once-in-a generation crisis, they are pushing for fiscal restraint.
#4. Congress Must See the American People Through This Crisis
Despite President Trump’s insistence that the coronavirus will just “go away,” it won’t. As Americans continue to grapple with the public health and economic consequences of the White House’s failed leadership, Congress cannot rush to eliminate the crucial support and protections that are helping working Americans pay their rent, feed their families, and meet their basic needs.
More than 12 weeks ago, House Democrats passed the Heroes Act to provide additional support for families and the economy, including extending the $600 Unemployment Insurance (UI) supplement into 2021. Republicans’ decision to let the supplement lapse at the end of July wasn’t just immoral, it’s bad policy. If enhanced UI is not extended, it could end up costing the economy 1.1 million jobs by the end of the year, dimming the prospects for a strong and broadly shared recovery.
Mitigating real pain and suffering in the economy — and in homes and communities across America — should not be a partisan issue. Abandoning the American people is not an option. Congress must see this recovery through and secure a bipartisan agreement that protects workers and families and ensures Americans will never be forced to choose between their health or a paycheck.