The Coronavirus Aid, Relief, and Economic Security Act (CARES) is big—but not big enough to protect working people. Economist Heidi Shierholz joins the show to explain where CARES falls short, and to recommend the safeguards we need to include in future bailout packages.
Heidi Shierholz is a Senior Economist and Director of Policy at the Economic Policy Institute. Her team monitors wage and employment policies coming out of Congress and the administration, and advances a worker-first policy agenda.
Twitter: @hshierholz
(News clip from FOX 17 VXMI)
Further reading:
Despite some good provisions, the CARES Act has glaring flaws and falls short of fully protecting workers during the coronavirus crisis: https://www.epi.org/blog/despite-some-good-provisions-the-cares-act-has-glaring-flaws-and-falls-short-of-fully-protecting-workers-during-the-coronavirus-crisis/
A widening toll on jobs: ‘This thing is going to come for us all’: https://www.nytimes.com/2020/04/02/business/economy/coronavirus-unemployment-claims.html
Does the stimulus package pass the test? https://civicskunk.works/does-the-stimulus-package-pass-the-test-a070bf4922dc
3.5 million workers likely lost their employer-provided health insurance in the past two weeks: https://www.epi.org/blog/3-5-million-workers-likely-lost-their-employer-provided-health-insurance-in-the-past-two-weeks/
Nearly 20 million workers will likely be laid off or furloughed by July: https://www.epi.org/blog/nearly-20-million-jobs-lost-by-july-due-to-the-coronavirus/
The CARES Act’s aid to state and local governments isn’t enough to shield vital public services from the coronavirus shock: https://www.epi.org/blog/the-cares-acts-aid-to-state-and-local-governments-isnt-enough-to-shield-vital-public-services-from-the-coronavirus-shock-lessons-from-the-great-recession-tell-us-why/
States get billions in record stimulus – but say it’s not enough: https://www.politico.com/states/new-york/albany/story/2020/03/26/states-get-billions-in-record-stimulus-but-say-its-not-enough-1269230
Here are safeguards needed in bailout packages to protect working people and fight corporate greed: https://www.epi.org/blog/any-industry-bailout-package-must-include-meaningful-protections-for-working-people-and-guardrails-against-corporate-greed/
A portrait of disaster: https://www.epi.org/press/a-portrait-of-disaster-initial-ui-claims-jump-from-211000-to-6-6-million-in-three-weeks/
Policymakers twice missed the chance to avert widespread job loss, now they should act to avoid more layoffs: https://www.epi.org/blog/policymakers-twice-missed-the-chance-to-avert-widespread-job-loss-now-they-should-act-to-avoid-more-layoffs/
Congress “CARES” for wealthy with COVID-19 tax policy provisions: https://itep.org/congress-cares-for-wealthy-with-covid-19-tax-policy-provisions/
Website: https://pitchforkeconomics.com/
Twitter: @PitchforkEcon
Instagram: @pitchforkeconomics
Nick’s twitter: @NickHanauer
Speaker 1:
The federal cares act offers assistance for individuals and also small businesses who are affected by covid-19.
Nick Hanauer:
So Heidi, We’d love to have you take us through the pluses and minuses of the cares act.
Heidi Shierholz:
It has some really great things in it, that I’m very happy about and it has some big holes. We needed a response immediately, but when you do a big bailout, it should have big strings attached.
Nick Hanauer:
Right.
Speaker 4:
From the offices of Civic Ventures in downtown Seattle. This is Pitchfork Economics with Nick Hanauer. A pointed conversation about who gets what and why, with one of America’s most provocative capitalists.
Nick Hanauer:
I’m Nick Hanauer, founder of Civic Ventures.
David Goldstein:
I’m David Goldstein, senior fellow at Civic Ventures. So Nick, when we started Pitchfork Economics, it seems like a decade ago now, only a little more than a year. We started focusing on theory, we were talking about economics and theory and how bad orthodox economics, economic theory was and how that can have bad consequences in the real world. The last few weeks, man, it’s all about practice now. And so for the foreseeable future we’re going to be focusing a lot more on what’s happening in the here and now and trying to unpack this economic crisis as it unfolds, what we’re doing about it, what we need to be doing about it, what we should be doing about it in the future.
Nick Hanauer:
Yeah. And for sure, this is a crisis, it’s going to affect everyone in one way, shape or form. And we want to use the podcast to, I suppose, connect people around the ideas that we should be embracing, to both make sense of what’s happening to our society and the world, but also to try to come together around some solutions to make it better. And today we get to talk to somebody who’s at the forefront of trying to make it better and that’s Heidi Shierholz, an economist with EPI. And the economic news, putting aside the health news, is dire.
David Goldstein:
It’s awful. It’s tragic.
Nick Hanauer:
And it’s going to take a big toll on lots and lots of folks. And I think what’s really clear is how unclear it is.
David Goldstein:
Nobody knows anything Nick. That is the lesson. That is the lesson to learn from all of this, is that nobody knows anything, not the folks in the White House clearly, but the geniuses making billions on Wall Street and the heads of corporations, even think tanks like EPI, constantly have to revise their data and their projections from day to day because we are in totally uncharted territory here.
Nick Hanauer:
Yeah. But for sure, unemployment in the country is going to go up dramatically and for sure, a lot of families are going to be super economically stressed. And despite the fact that we had a relatively strong economy, we had built one where the vast majority of families were economically fragile to begin with. And that of course when you pour on a pandemic on top, then you really find out how fragile people are.
David Goldstein:
Right. When you have an economy where 40% of households couldn’t survive a $400 financial emergency and then you have 10 million job losses in two weeks, at least, that can’t work out well.
Nick Hanauer:
That is not going to work out well. Another one of the things that we’re finding out about is how stupid it is to have an employer based healthcare system during a pandemic, where millions and millions and millions of people are losing their employer and therefore their healthcare. I’m laughing, I shouldn’t be laughing, it’s unbelievably awful and tragic. I’ll say this now and I’ll say it a thousand more times, what the pandemic is doing is making vivid all of neoliberalism’s lies. The lie that we can’t afford a universal healthcare system. Of course we can, it would be much cheaper, it just would inconvenience the existing players.
David Goldstein:
The lie, Nick, that deficits matter.
Nick Hanauer:
Yes, exactly. Exactly. All these things. But anyway, it should be really fun to hear from Heidi, who is one of the top labor economists in the country, about her perspective on the cares act, what’s good in it and there’s definitely some good stuff in it and what’s bad in it, there’s definitely some bad stuff in it and where we need to go from here.
Heidi Shierholz:
My name is Heidi Shierholz. I’m an economist and the director of policy at the Economic Policy Institute in Washington, DC. Right now we are going 24/7 with monitoring what’s going on around the impact of the coronavirus on the labor market and what policy makers should be doing to help mitigate this, the impact of this crisis on the workers of this country and their families.
David Goldstein:
I guess the first question is, have you ever seen anything like this before? I mean, not just in your own life, but ever in history?
Heidi Shierholz:
Never, never. I’ve never seen anything like this. Okay, so one caveat to that is we don’t have a modern data infrastructure going back very far, but back since we have data, there’s been nothing like this. And I sort of cut my teeth on the great recession, that was the first time I was in a job like the one I’m in today, we’re really monitoring the labor market and digging in on all this stuff. I thought that was bad, this blows that out of the water. Yesterday morning was the first time in my career that I saw a data release that just made me start shaking. It was the unemployment insurance claims that showed that 10 million people had applied for unemployment insurance, in just the prior two weeks.
David Goldstein:
Put that into perspective. What is it normally like at its worst?
Heidi Shierholz:
So the worst week of the great recession, unemployment insurance claims were less than 700,000 and what we saw last week was 6.6 million. So we’re talking 10 times the worst week of the great recession. We are really on a whole different scale. I was thinking about what are we going to do after this because now our graphs will all look strange. I do think this will end, this is not going to last forever. This is terrible and there’s going to be just an enormous amount of suffering and that’s the thing that just made me start shaking when I saw those numbers. But this will end and the labor economist in me is like, “This is going to screw up the scale of everything for a very long time.” Presentation, after this is over will be tricky. But I mean obviously that’s about one millionth on the list of our worries right now.
Nick Hanauer:
We’d love to have you sort of take us through the pluses and minuses of the cares act, which was just passed. Tell us what’s good in it and what could be improved.
Heidi Shierholz:
Okay, so the cares act that was recently passed by Congress to deal with this crisis, it has some really great things in it that I’m very happy about and it has some big holes. And so I mean I can start with one of the best things about it, is how big it was. It was a historic size and that really, really matters because as we said, we are facing something like we’ve never seen before, so we needed something big. What we’re learning is that even that is not going to be big enough, but it’s good that we came out of the gate with something big and that it was fast. It could have been a little bit faster but we needed a response immediately, this has been unfolding so fast and so the fact that Congress moved quickly really matters. Those are two really good things.
Heidi Shierholz:
Looking at the contents of the cares act, I would say that some of the strongest provisions in there are around unemployment insurance. They expanded the unemployment insurance program by $250 billion. Really key things in there are the increase of benefits, they’re across the board. If you’re getting UI, you get an extra bump of $600 a week. That will really matter to families who are suffering as a result of this downturn. And then maybe even more important or at least as important, is the fact that there was another program that was stood up called pandemic unemployment assistance, that’s modeled after disaster unemployment assistance that goes into place when there’s a hurricane or something, that just gets put in place temporarily for some kind of disaster. And what that does is it will give benefits to tons of people who fall through the enormous gaps in our standard UI system, like self employed people, they don’t get regular UI.
Heidi Shierholz:
People who don’t have long enough work histories, they don’t get regular UI. People who don’t have high enough earnings histories don’t get it. Somebody who is out of work right now because they have to stay home to take care of a kid whose school has closed, they wouldn’t normally get this. And so those groups and more now have, will have once the programs get going, will have access to unemployment insurance benefits, which will make it possible for them to get through this okay.
David Goldstein:
What are the hurdles in qualifying for that?
Heidi Shierholz:
It’s pretty broad. Most people will qualify for pandemic unemployment insurance assistance if they are out of work as a result of the pandemic and they wouldn’t qualify for regular UI. This is one of the very big drawbacks of the cares act, one group that’s left out of that are undocumented immigrants. Undocumented immigrants do not have access to any of the unemployment insurance benefits and that’s a problem on two levels. Obviously that’s going to increase the human suffering. But even if you don’t care about human suffering, you should still care about the public health impact. And not covering undocumented immigrants is a really dumb thing to do from a public health perspective because then you have a lot of people who know that if they leave work because they’re sick, they’re not going to have any way to provide for their family. So they will make, could make a very rational decision to keep working even if they’re sick and that’s a public health nightmare.
Heidi Shierholz:
Exempting the eight million workers in this country who are undocumented is actually going to make this crisis worse. So that’s a big problem. But other than that, the coverage is, I mean that’s a big other than, but other than that, the coverage is really broad. There’s a bunch of other stuff in there. Do you want me to …
Nick Hanauer:
Yeah, sure, take us through it.
Heidi Shierholz:
Okay. One key thing that’s in there is aid to small businesses and they did that in some respects in a really smart way because those are loans for small businesses that if they’re used to pay for wages and benefits of workers, they will get forgiven. So that’s a really great way to structure it because it incentivizes businesses to keep people on payroll and that’s good for workers and it’s very good for businesses because then when the recession is over or when the lockdown is over and we can all go back to our normal lives again, they’ll be able to just turn the lights back on, rather than do the scramble for finding workers, hiring them, onboarding them, training them up, they’ll be able to instead just get going right away. So the small business loans that incentivize small businesses to keep workers on payroll is really smart.
Heidi Shierholz:
What we have learned in the last week since this passed, is that the administration of those small business loans is having some problems. Actually the entities that are having to go through them are really perhaps not quite ready for the onslaught of applications that they’re going to get, so that could end up while potentially being a really good provision, end up not actually being all that effective. That’s a drawback. That’s the kind of thing that happens when you move something like this so quickly. It’s very, very good that we moved to this so quickly, not everything will go perfectly smoothly and that I think, unfortunately, maybe one of them. Another really great thing in the cares act was there’s just a lot of money, billions, like $100 billion for investments in healthcare preparedness. That’s going to hospitals, that’s going to buy equipment, that’s just given the nature of this crisis, exactly the right thing to do. We’re probably going to need more, but that’s a good start.
Heidi Shierholz:
And one of the things that is really, really good on its face, is the aid to state governments. There’s $150 billion in there, in aid to state governments. That’s great. Governments will absolutely need it, they’re facing enormous additional costs because they’re frontline in dealing with the pandemic. One of the problems with that money though is it can only be spent on expenses directly related to the coronavirus. So it can be spent on anything related to health. It can also be spent on dealing with the spikes in joblessness because of people being out of work as a result of the coronavirus and sort of the related human needs around that.
Heidi Shierholz:
But here’s why that structure is problematic. One of the things that happens to states in a recession is their tax revenues plummet because so many people have lost jobs and because they have balanced budget requirements, if states don’t get a ton of aid, then they will have no choice but to pull back on all kinds of spending to meet their budget requirements and then they become like anti stimulus machines. We’re going to need more aid to states that’s unfettered. That’s just like, we know you’re seeing this broad decline in revenues. We’re going to get you money so you don’t have to cut back spending.
David Goldstein:
Do you have an idea of how much that price tag would be to prevent austerity in the states, just compounding these layoffs?
Heidi Shierholz:
This is a moving target because it seems like with every day that passes, we get information about how this is actually worse than we had thought it was going to be. But I think if the last bill had 150 billion, I think we’re going to need twice again that much, at least.
Nick Hanauer:
Yeah, it’s going to be $500 billion.
Heidi Shierholz:
It’s funny, the yesterday me said 300 billion. Now with the new data coming in, I’m like, “That’s not going to be enough.” That’s the way the last couple of weeks have unfolded, but I do think 500 billion will probably be closer.
David Goldstein:
Yesterday I tweeted a trillion because I don’t believe in starting with what you need.
Heidi Shierholz:
That’s totally fair. We’ve been trying to be really grounded in what we’re calling for in terms of the data that we have, but the data just keep getting updated and they just keep showing that things were worse than anyone ever thought it would be. So it is, you have the right strategy.
David Goldstein:
Yeah. Deeper and it looks like it’s going to be longer than people first estimated.
Heidi Shierholz:
Well deeper for sure.
Nick Hanauer:
But let’s go on to what we wish was better in [inaudible 00:16:38].
David Goldstein:
That’s such a positive way of framing it, Nick, let’s go on to what is bad.
Heidi Shierholz:
One of the biggest disappointments there, was that the single largest traunch of money in the cares act was an industry bailout, which on the face of it, we need to get businesses money to go through, to make it through a situation where their revenues absolutely collapse. But when you do a big bailout, it should have big strings attached to make sure that that money is used in a way that’s most efficient for the economy, that actually achieves the goals that we want of making sure that the people who are in the economy are doing well or are going to be okay through the lockdown and then when the lockdown is over we can get right back up and running. What should have happened there is there should have been really tight, hard and fast provisions about the loans, the industry bailouts, require that you’re keeping your people on payroll, that you’re paying them not just laying off workers and there are some conditions like that but in the bailout language.
Heidi Shierholz:
But the language is so weak that it will be quite easy for businesses to get around it unless there’s extremely strict oversight, Congressional oversight around this. And president Trump, two hours after he signed the cares act, published a statement that said he believes that he can gag the special inspector general for the industry bail out money. And if that special inspector general finds something, the president can keep that person from sharing it with Congress. And so I do think there’s very little chance that we’ll get the oversight that will be required to ensure that this money is spent in a way that really is the most efficient way to help people get through this recession and make a V-shape recovery at the end. And instead, I think it’s going to be used a lot to sort of preserve the wealth.
Nick Hanauer:
Yeah. This is the thing that’s been driving me crazy, there’s a very simple way to make sure that money taxpayers provide to help companies or industries through this crisis, isn’t just a way to preserve the wealth of shareholders and corporate executives who should have known better and built more resiliency into their businesses, which is to make any bailout in the form of preferred shares. Where if you need the money, fine, but we own, now the public owns a piece of your company and it’s a preference above the existing shareholders. And if you really need the money, then you’ll take the money and if you don’t really need the money, then you’ll figure out another way and we won’t have to pay for it.
Heidi Shierholz:
That is the thing that feels like it’s completely missing from this, these business, if they really need the money, they’re going to take it with reasonable conditions on it. And the fact that we wouldn’t use that huge leverage to actually put the conditions on to make sure the money is used in the right way, it’s outrageous. It’s an outrageous miscarriage.
Nick Hanauer:
Yeah, well it’s a classic trickle down approach. When the rich get richer, everyone else will be better off. It just a huge miss and an unconscionable miss and really a shame.
Heidi Shierholz:
Yeah.
Nick Hanauer:
So I wanted to press on a couple of things that are sort of foremost in my mind as the country goes through this crisis. And one of them is my intuition that most of the damage, the economic damage that this crisis is creating, could be massively mitigated by using some of the wealth that has concentrated at the top over the last 30 or 40 years. I mean, rich people in America are worth trillions and trillions and trillions of dollars. And yeah, the stock market is down a little bit, but most rich people are shrewd enough to not just have money in the stock market. And even if everybody’s wealth is 20% less than it once was, it’s still a lot. And as I reflect on, this is a $2.2 trillion package we just passed, it makes me really wish that we hadn’t passed the $1.5 trillion tax cut a couple of years ago, which almost entirely went to rich people in big corporations, right?
Heidi Shierholz:
Yeah. One of the things that I do think is important now, is the sort of fiscal space isn’t a problem right now. Even though we did this insane tax cut that drastically increased inequality because it just went primarily to people at the top. We still can do everything we need to do to fight this recession. So I agree with absolutely everything you said and just don’t want it to ever be able to be used by people to say, “Oh well we can’t spend that employment insurance benefits any longer because we don’t have enough money.” We do. We absolutely have enough money to fight this. Interest rates are very low right now. Inflation is nowhere. We actually can spend as much money as we need to to get us through this. And so that’s key. But there’s these longer term structural problems that just absolutely have exacerbated this issue that we’re in right now.
David Goldstein:
Can we just pause for a moment and unpack for the audience this notion of fiscal space? Let me try to explain it and you tell me whether I’m right or you correct me, Heidi, that what you’re saying is because we’re under utilizing the capacity of the economy, if we just print money and spend it, you’re not going to get inflation. We don’t actually need to raise taxes to pay for this. We can just print the money and spend it and you’re not going to see any inflationary pressure because we have all this fiscal space right now.
Heidi Shierholz:
That’s absolutely true. And this is one of those times where it’s useful to, as an economist, I think about business cycles, think about the point that you need to do things differently in recessions than you do and expansions. People who don’t think about economics all the time, that can feel strange that, oh, you called for something else at that time and now you’re calling for this. But it really, really is important to note that at a time like this, when the economy is so weak, the government really, really should step in and spend money to fill that in. That is our role right now. That is the government’s role right now.
David Goldstein:
The federal government, because the federal government can print money and the states can’t and that is also why it is so important for the federal government just to send a shit ton of money to the states to prevent them from exacerbating this recession by cutting services and laying off hundreds of thousands of public employees.
Heidi Shierholz:
You got it.
David Goldstein:
I’d say Nick, that at the moment there’s a really strong moral argument for raising taxes on the wealthy, for at the very least eliminating that Trump Ryan tax cut, but it’s not actually necessary to pay for what we need to do right now.
Nick Hanauer:
No, no, no. Absolutely not.
Heidi Shierholz:
I like that. Can I tell you one other thing that really I found appalling in the cares act?
David Goldstein:
Absolutely.
Heidi Shierholz:
One other thing that I just think is an outrageous oversight in the cares act is the provisions. The pandemic fighting provisions had just arbitrary end dates on them. So it was like the unemployment insurance, extra unemployment insurance benefits, they just said, “Okay they end July 31st.” That is crazy because nobody knows how long this is going to take. What they could have done instead of have just some arbitrary date in the middle of utter uncertainty, they instead could have said, “All right, we’ll let these things trigger off once the employment to population ratio is within a half a percentage point of where it is right now.” Or something like that, that’s tied to actual economic conditions because that would mean we wouldn’t have to have these fights over and over and over again.
Heidi Shierholz:
And what we learned in the aftermath of the great recession is that when Congress thinks they did something big and then you have to come back and ask for more because they put an arbitrary expiration date on them, the people lose, the economy loses, Congress turn to austerity when the unemployment rate was still like 8% in the aftermath of the great recession. So that was a big mistake that I hope they, I mean I just hope next iterations of these relief packages are smarter.
Nick Hanauer:
Yeah, that’s a good point.
David Goldstein:
I’m curious, as of today, how bad does it look? What are we looking at in terms of number of people who are going to lose their jobs and how much the economy is going to contract over the coming months?
Heidi Shierholz:
So it’s a good idea to caveat this because we make a projection, this many millions of jobs are going to get lost and then we realize things are worse than we thought. And that’s happened over and over already. But here’s what we’ve done. So these big macro economic forecasting shops like Goldman Sachs and JP Morgan, they all put out projections of GDP growth for the second quarter of the year. And those all look, they’re a little bit different, but they’re kind of similar in their magnitude. What we did is we take one of those, the last one we did, we used Goldman Sachs’s projection of GDP growth. And once you have a GDP growth projection, you can just do a relatively straightforward translation into what that means for job loss. And the Goldman Sachs GDP projections translate into on the order of 20 million jobs lost by the end of June.
Heidi Shierholz:
And so I do think, my guess is that may get a little bit worse with recent data releases that we’ve got out, but in some ways it just speaks to the magnitude of this and the suffering behind every one of those data points is just incomprehensible. It’s huge. And here’s another thing that’s sort of disturbing or deeply disturbing. Our projections of 20 million jobs lost are based on GDP projections that include the impact of the cares act. So we’re getting those 20 million jobs lost even with the $2 trillion relief and recovery package that we already passed. Furthermore, those projections include an assumption that Congress will do another relief package.
Heidi Shierholz:
So to sum all that up, what we’re saying is we’re going to lose 20 million jobs, even if Congress passes another relief package that’s really focused on aid to state. There’s not enough adjectives to describe really how dire this situation is. I don’t think it’s going to last forever, the threat of the virus will end, when it does, we will be able to turn the lights back on, I think. I believe we will get a relatively good solid bounce back when this is over, but it’s not going to end until the threat of the virus is over. So it is very really scary territory.
Nick Hanauer:
So what lessons should we be taking from the great recession right now, as we craft stimulus bills? And like you said in the beginning of the chat, you sort of cut your teeth on that. If you were to abstract the lessons that we learned from the last go round, what should we be thinking about now?
Heidi Shierholz:
That’s a really good question. So one of the things I think we did learn, that the initial stimulus package needs to be really big and Congress did that. The first one was really big. It’s not going to be enough, but out of the gates they did something large. So I think the great recession taught us that and I’m glad that that lesson does seem to have gotten through. What I am worried about is then after that, that we may not have learned the lessons of the great recession. This question of after Congress passed their first big thing and it became very clear that the economy still needed more, Congress was much, much less willing to do more and never did enough, and that meant that the economy really just struggled along. So that remains to be seen if we’ve learned that lesson and Congress will step in again with the realization that we all have now, that the size of the package that they did before wasn’t nearly enough.
Heidi Shierholz:
But I’m worried, I’m not yet convinced that we have learned that lesson from the great recession and that ties into after the great recession when we had to keep coming back over and over and over again to ask Congress to do things like extend unemployment insurance benefits because we just put arbitrary expiration dates on them, rather than tying the end of those provisions to actual economic conditions. I’m worried that we clearly didn’t learn that lesson because that wasn’t in the most recent stimulus bills and I’m worried that it won’t end up in the next one either. I’m saying all the lessons we didn’t learn. Another lesson we didn’t learn obviously, was that big bailouts that don’t have big strings attached to them, mean you’re going to have that money go to line the pockets of shareholders and executives, rather than help do want them to and we’re replaying that again.
David Goldstein:
Yeah. Well I think that’s the purpose of the, that’s what the Senate wanted. I mean that’s why they did it that way on purpose, it’s not like they didn’t know what they were doing. I would say that the good news here is that since we have a Republican president and a Republican Senate in an election year, they will be incredibly craven in what they’re doing. And so there the chance of getting more money out of Congress, because the Democrats will largely try to do what’s good for the people, even if they don’t always know what to do. And the Republicans will try to do what’s good for themselves and bailing out the economy and the American people, is probably good for Republicans in an election year.
Heidi Shierholz:
Yeah. And we actually do have some good data on that.
David Goldstein:
Any remaining words of wisdom?
Heidi Shierholz:
I mean it’s always useful to connote that, this is more of the doom and gloom, but I think it’s always important to note this recession is going to exacerbate racial and ethnic inequality. That actually always happens in recessions, but this one is hitting occupations that are disproportionately filled by racial and ethnic minorities, particularly hard. And you can think of front line service sector jobs, description of that. I just think that’s an important backdrop to why it’s so urgent that we act right now.
David Goldstein:
Right. You and I, Heidi, we and the work from home crowd, we’re going to do just fine. Nick and the plutocrat crowd is going to do just fine. But this seems like it’s a recession that is disproportionately impacting people in the middle and lower income groups.
Nick Hanauer:
Yep, as always.
Heidi Shierholz:
As always, and I think this one is going to be … Right, it’s always bad. I do think this one is going to be particularly worse on exacerbating existing inequalities. It’s not the direction we want to go in.
Nick Hanauer:
Nope. Okay. Well, Heidi, thank you so much for joining us and thanks for grinding away every day.
David Goldstein:
And if things get much worse, we’ll have you back in a couple of weeks for you to depress us some more.
Heidi Shierholz:
Yeah, and I’ll be like, [inaudible 00:34:00].
David Goldstein:
That’s not out of the question.
Heidi Shierholz:
No it is not.
David Goldstein:
Yeah.
Nick Hanauer:
Okay.
Heidi Shierholz:
All right.
Nick Hanauer:
Talk soon.
Heidi Shierholz:
Stay safe.
Nick Hanauer:
Bye. That was a fantastic discussion with Heidi and I think I understand what’s in the package better. I think the bottom line is if the care package that we just passed in this country, is pointed in the right direction, largely, with some significant shortcomings, mostly around the lack of accountability in how we’re going to bail out businesses and industries. And I think the other thing we can conclude is it is only, certainly only a start. There’ll have to be a much bigger package passed to sustain what’s already in the package, but also to give direct relief to states to keep their economies and their governments going too.
David Goldstein:
It turns out, I mean, the lesson I learned, it turns out that $2 trillion isn’t all that much money.
Nick Hanauer:
No, that’s true.
David Goldstein:
So one of the things, Nick, that we have, a kind of a standard we’re using in the office, a three question test, the three I’s, we’re calling it. In a way of evaluing any policy to address this is three I’s. Is it immediate, is it impactful and is it inclusive? So to judge the cares package, was it immediate? Well it was immediate in the sense that it was passed relatively quickly, for this Congress, for any Congress. And some of the money’s going to come quickly in terms of the unemployment insurance and that’s good. The extra $600 a month, that’s good. That’s pretty immediate.
David Goldstein:
It turns out that not all the money, those $1,200 checks, if you file taxes, you’re going to get that via direct deposit. But there’s some 40 million Americans who don’t file taxes because they either don’t earn enough or they are seniors and they’re going to have to file taxes and it could take months for them to get that aid. So it’s not immediate in that sense. And it’s also turning out to be very difficult to administer the loans to small businesses. So it doesn’t quite completely pass the immediate test. Is it impactful on the scale of the problem? And I think we agree, no.
Nick Hanauer:
Yeah. Well I mean it’s a good start.
David Goldstein:
It’s a good start, but it doesn’t rise to the scale of the problem. And to be fair, that scale has grown since they’ve first started, since they passed the bill, let alone since they first started debating it. It’s a good start, but the states are going to need a lot more money and this is likely going to last far longer than anybody expected. So unemployment’s going to need to be extended again and again and there’s probably going to be more than just one round of $1,200 checks if we really want to make an impact.
David Goldstein:
And the last question, the last part of our test is, is the policy as inclusive as possible? Are we leaving people out on the margins? And again, I think it’s not, this is a recession that is disproportionately going to impact lower income households and that means in America, disproportionately impacting people of color. It’s not providing any relief to undocumented Americans, who by the way, perform a lot of the most essential services in agriculture and food production and distribution. So yeah, it’s a start, but it’s not nearly good enough to address the scale of this crisis.
Nick Hanauer:
The way out of this crisis now and the way to never have a crisis like this again, is to build an economy that makes sure that American citizens and American industries are not fragile. That people are well paid, that they have savings, that they have both food and housing security, that we have a government that is both run by capable people, but also has the fundamental capacity to respond to crises at the scale of the crises. And what we’re absolutely seeing play out now, is a federal government that is essentially helpless. But certainly we passed a bill, but there was no apparatus in place to address this problem and no willingness of the people running the country to actually address the problem when it could have been mitigated and smaller. And that is a terrible tragedy and the people running the country are going to have to be held accountable for that.
Nick Hanauer:
And so we’ll be back at you next week unpacking more of this. Stay safe. Wash your hands. Wear a mask, if you can find one. And we’ll talk to you soon.
Speaker 4:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate, and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer. Follow our writing on medium at Civic Skunkworks and peek behind the podcast scenes on Instagram at Pitchfork Economics. As always, from our team at Civic Ventures, thanks for listening. See you next week.