WASHINGTON DC (March 10, 2020) — The threat of the coronavirus (COVID-19) outbreak has spooked markets and appears likely to significantly weaken the economy on both the supply and demand sides. Assuming policymakers implement measures to support the economy, they should be structured for the particular situation we face and offset over a reasonable period of time. The following is a statement from Maya MacGuineas, president of the Committee for a Responsible Federal Budget:
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We’re potentially on the verge of an economic emergency, and the federal government should work to keep our economy strong and our citizens safe. If lawmakers put together a fiscal-stimulus package, it should focus on policies that would help the current situation — public-health measures, support targeted to those families and businesses most impacted by the disruptions and slowdown, and policies that would generate a broad boost in overall economic activity. Policymakers should not use this an excuse to implement expensive pet projects.
Short-term borrowing is appropriate for economic stimulus. However, given our historically high debt levels, we should also plan on offsetting the costs over a reasonable period of time once the economy has recovered. Last summer, the Committee released a Break the Glass Plan that featured a robust stimulus plan and two paths to offset that plan over the long run. Our Budget Offset Bank also includes numerous options to reduce health-care costs, raise new revenue, fund infrastructure, or otherwise pay for the costs of new spending or tax relief.
It is precisely moments like this that illustrate why it is so important to improve our nation’s fiscal situation during periods of economic expansion. Unfortunately, policymakers have instead spent the last five years offering new tax and spending giveaways that have doubled this year’s deficit. The irresponsibility, partisanship, and brokenness in Washington has left us weaker and less prepared for a moment like this.
In times like these, this country needs to pull together. Not just the federal government, but state and local governments, non-profits, businesses, communities, and families too. If we all do our part, we can best overcome this challenge.
