It doesn’t take a time-traveling DeLorean to learn some important economic lessons from the past. One of the greatest to come out of the last two decades is that recovering from economic disaster shouldn’t, but almost certainly will, fall victim to politics.
Presenting the sluggish recovery following the Great Recession as Exhibit A.
Consider this from MarketWatch: “Treasury Secretary Janet Yellen said Sunday the country was still in a ‘deep hole’ with millions of lost jobs but that President Joe Biden’s $1.9 trillion relief plan could generate enough growth to restore full employment by next year.”
As the adage goes, you have to spend money to make money.
Face it — economic recovery has largely stalled. National unemployment is still north of 6 percent with more than 10 million Americans out of work. As many as 4 million have dropped out of the labor market. The government reported Feb. 5 that the economy only created 49,000 jobs in January following job losses in December, normally the busiest month for the retail sector.
The predictable arguments against the latest relief package have already started — but the truth is, Biden should get the full support of Congress here, to include from our Colorado representatives.
First, the stimulus presents the perfect opportunity for both parties to show some solidarity and help the American people. After four years (much longer if we’re being honest) of bitter wrangling, and more than 460,000 American deaths from COVID-19 in one of those years, the nation is looking more than ever for competent governance. This start-fresh opportunity has been gift-wrapped for those taking office in Washington, D.C. And while Colorado Springs and the state as a whole are doing better than some, small businesses have certainly suffered.
But Republican senators are arguing the proposal is too expensive (there’s a credibility issue here following the Trump administration’s spending even before the pandemic) and that runaway inflation would be a side effect.
According to MarketWatch, those opposing the stimulus package cited criticism from Larry Summers, a treasury secretary under President Bill Clinton, that passage of the measure could run the risk of triggering runaway inflation. Summers also contended that Biden’s plan would make less money available for other initiatives such as improving the nation’s infrastructure (remember infrastructure?).
Yellen, the former Federal Reserve chairwoman who is the first woman to lead the Treasury Department, said the central bank had the tools to handle any potential inflationary threat. She said the urgent need now was to deal with the problems raised by the pandemic-induced recession, such as joblessness and small business closures, and reopen schools.
We could slog back to full employment over the next half-decade, or we could think big, spend bigger and revive the economy just as vaccine distribution is reviving new hope in Colorado and beyond.
“There’s absolutely no reason why we should suffer through a long, slow recovery,” Yellen said.
She’s right. Put the DeLorean back in the garage. We’ve seen this before and we know what needs to be done.