Some have asked how much would my own Fiscal ‘Economic Recovery Program’ cost? It can’t be quantified exactly, as the impact on working families is spreading rapidly. But here’s some financing, administrating, and implementation principles associated with my proposal:
* First, the amount of financing applied in its first phase should be no less than the same amount that the Federal Reserve bank has already allocated to spend on the banks and investors. That’s $2.2 trillion in just the last week. So if we can spend that on the bankers, why can’t we allocated the same funds to bail out workers and the middle class. Index that $2.2T to whatever further increases the Fed spends on its pre-emptive bailout of bankers and investors already under way. If the Fed can ‘create $2.2 trillion’ out of thin air to give to bankers and investors, why can’t it do the same for Main St. and working families?
*Second, use some of the money to enroll those without health insurance or whose insurance will not cover the costs of health services, apart from the actual tests only, in the Medicare system. Introduce a one page sign up for Medicare online. Create a special ‘temporary’ membership category. Have healthcare providers bill Medicare for the tests costs to workers, and for all other related costs, as well as costs for those on unpaid medical leave or unemployed due to the economic effects of the virus on the economy-i.e. economic layoffs. Immediately enroll the 30 million uninsured. Voluntarily enroll the 87 million who are under-insured with massive deductibles, copays, with no dependents covered, etc. Immediately allocate funds from the $2.2 trillion to bail out Main St. and transfer the allocated funds to the Medicare-Social Security Trust Fund. And hire as many workers in the Medicare administration as needed.
*Third, instead of reimbursing companies for continuing paying wages to workers sent home on unpaid leave, or who are laid off because of the major economic impact that’s coming (there will be mass layoffs starting in May), why not have the government ‘hire’ the laid off for the duration of the crisis–which today Trump admitted will likely continue through August. Adapt the unemployment benefits system to make the payments to those so covered. This would be a 21st century, electronic administered ‘Works Progress Administration’ that provided 8 million government jobs to the unemployed.
The administrative apparatus is there already: Medicare and Unemployment Benefits. Why not use it. And make it clear it is the government that is providing their health care and employment protection–not the private employers or bankers who would otherwise cut them loose to scramble individually to protect them and their families.
*Fourth, immediately create a ‘Public Investment Corporation‘, funded and managed by the government (Federal, State & Local) to invest in alternative energy expansion and other climate crisis mitigation that would hire workers, since the current crisis will mean private business investment will collapse across the board and such much needed investment from the private sector will not be forthcoming for some time.
Let the Federal Reserve pre-emptively bail out its bankers and billionaire private investors! But if they can spend $2.2 trillion, then the government can, and should, pre-emptively bail out Main St. as well for no less!
Further economic measures will be needed to address the current US recession, and the increasing possibility of the recession morphing into another ‘great recession’ (or worse). But the above represents an initial phase of immediate fiscal spending response in the short run to restore incomes being devastated right now.
Dr. Jack Rasmus
March 16, 2020
Long time reader and listener…why are policy makers so hung up on pouring money into financial markets and not so much into putting money into consumers hands?
At what point does that stimulus and incentive system break?
Answer to your first point: because finance capitalists (Goldman Sachs, Citigroup, etc.) now run US economic policy, as well as the Fed, and their solution is to pour money into bankers, investors, and corporate America and let them keep the vast majority of the money and dribble some (hopefully) to the rest of us. (see my books, ‘The Scourge of Neoliberalism’ & ‘Central Bankers at the End of Their Ropes’ & others.
Second point: the monetary stimulus apparatus is already broke. Has been since 2013. The fiscal system is almost broken as well, with deficits of $1.4T this year (before the current recessions & financial crisis underway). National debt will exceed $35 trillion by 2028 and interest on it $1 trillion a year. So government spending option is seriously constrained as well.
But all that is about late Neoliberalism–aka late finance capitalism in the 21st century. Which is breaking down now. What’s to follow? Maybe a kind of corporate neo-fascism, if not a shift to progressive solutions. But that’s a political fight for this decade. (one that Biden won’t fight for sure).
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