When $2 trillion is not enough
Senate Majority Leader Mitch McConnell said in an interview Wednesday that House Speaker Nancy Pelosi “needs to stand down” on talk of a sequel to the $2 trillion stimulus enacted last week to stem the economic ravages of the novel coronavirus. His advice did not age well.
The next day, the U.S. Labor Department reported that a superlativedefying 6.6 million Americans had filed unemployment claims during the previous week, twice the record set just the week before and nearly 10 times the number in the worst prepandemic week. The data documented nearly 10 million job losses in two weeks, over a million of them in California, eclipsing a cumulative Great Recession employment decline that unfolded over the course of more than a year.
With the monthly jobs report due Friday expected to end a decadelong streak of gains without even capturing much of the latest damage, the country is on pace to reach and exceed the prior downturn’s peak unemployment of 10%. The economic consequences have only begun to take shape, with much of the population expected to cease most activity for the next month or two and losses already spreading from hardhit industries, such as tourism and hospitality, to the broader economy. The Congressional Budget Office projected that the economy would “contract sharply” in the coming quarter, with gross domestic product expected to shrink by more than 7%.
The package passed by Congress and signed by President Trump last week will help, spending more than twice the postfinancialcrisis stimulus, augmenting and extending unemployment payments, sending checks to most Americans and floating emergency smallbusiness loans. Federal, state and local orders to halt foreclosures and evictions are essential and will likely have to be strengthened.
But even these extraordinary measures don’t match the damage being wrought by a broad suspension of economic activity. In light of the fiscal repercussions expected for government budgets in San Francisco, California and other jurisdictions, Congress will likely have to expand the stimulus’ $150 billion relief fund for states and municipalities. More spending to shore up our illprepared health care facilities, equipment stockpiles and workforce would also be wise. Both Pelosi and Trump have said they support a major infrastructure program, a worthy cause before the pandemic that is more so now that construction projects are grinding to a halt. Pelosi’s call to reverse the $10,000 cap on federal deductions for state and local taxes, which hits hardest in hightax states such as California, is merited but not the priority of the moment.
More than threequarters of Americans are now under shelterinplace orders like those first imposed in the
Bay Area as even holdout governors have begun to grasp the grim alternative. With the pandemic’s peak still weeks away in most of the country, keeping people safely at home depends on continued unprecedented support for their basic needs.