Coronavirus recovery: Don’t stop now

State and local governments face the worst threat to the health and well-being of our families since World War II. Congress has responded with unprecedented spending, which is increasingly worrying those of us not on a ventilator, facing eviction or wondering when we’ll

see another paycheck.

James McErlane eloquently expresses that worry in a recent Guest Column. He dazzles us with the “four commas” it takes to record the size of the federal response to the Covid-19 crisis — spending and lending to date of over $5 trillion — and warns of inflation and crushing burdens on taxpayers to come.

The irony is that spending to date has been too littleto rescue the economy and that the greatest threat to the “Coronavirus Recovery” is that Congress will heed McErlane’s warning and lose its nerve in doing what needs to be done.

Tell Representative Chrissy Houlahan and Senators Bob Casey and Pat Toomey not to repeat the mistakes of the Great Recession when too soon a shift to “austerity” weakened the economic recovery from the financial crisis, needlessly prolonged job losses and crippled vital public services.

Unless we push Congress to act now, the General Assembly and our municipal governments will be forced to implement massive spending cuts for 2021 that will reverse much of the benefit of federal spending to date. Any student of introductory economics will tell you that this would be crazy!

The necessary medical response to Covid-19 (lockdowns, social distancing and the like) has resulted in a massive shift back in our national demand curve. Only the federal government can push

demand back where it needs to be to avoid massive underemployment of our economic resources for years to come — and the unprecedented spending to date still falls well short of what is needed to bring demand in line with supply.

Many readers — including James McErlane and I — well remember the double-digit inflation of the 1970’s. But, that was the result of years in which government deficits pushed demand well beyond available supply.

The then-unprecedented federal deficits incurred during the recovery from the Great Recession failed to trigger inflation because, then as now, our total national spending remained well below the ability of our economy to provide the desired level of goods and services.

McErlane worries that the “ratio of national debt to gross domestic product has not been this high since the end of World War II” and predicts that this will impose a huge burden on future taxpayers. But taxpayers never paid off that World War II debt. My introductory economics student would explain that by keeping government revenue and spending in balance during the good times, we’ll shrink the debt’s share of national spending as we have before.

Urge Congress to do what needs to be done to complete our recovery and prevent needless suffering.