Wrote this piece on financing pandemic resilience with Glenn Hubbard of @Columbia over the past few days, will summarize main points here (thread) https://twitter.com/rajivatbarnard/status/1260564384029474816

The economic crisis we face is the worst since the Great Depression, the CBO is forecasting an output loss of 2.5 *trillion* dollars in the second quarter, more than a tenth of our economy, a 40% decline at an annual rate

Unemployment is predicted to reach 16% in the third quarter and remain in double digits well into next year

But this crisis is very different from the Global Financial Crisis or the Great Depression in one important respect: those were internally generated events while this comes from a clearly identified external threat

Fiscal and monetary policy, while absolutely critical, will not bring us economic revival unless the threat is dealt with swiftly and decisively at the source

For this to happen, we need testing, tracing, and supported isolation on a massive scale, as explained in the #HowWeReopen roadmap published by @dsallentess and her team: https://ethics.harvard.edu/covid-roadmap 

But the roadmap is best executed through combination of central and local structures: centralized coordination for information aggregation and building test capacity, decentralized implementation so responses are tailored to local conditions and civic engagement is widespread.

But state and local government finances are in shambles in the face of falling tax revenue and rising emergency expenditures; for example New York State faces a $10 billion shortfall, New York City $7 billion, and both are sharply cutting expenditures, worsening economic decline

The US Treasury is the only public entity that can borrow at scale right now, Congress could provide block grants to states and municipalities in principle, but there isn't much consensus on this; conditions imposed by some are unacceptable to others for example

The Fed is facilitating borrowing by the Treasury at massive scale right now, and we argue that it should also facilitate long term state and local borrowing at near-zero rates through the issue by governments of pandemic resilience bonds

These could be potentially forgivable as in the loans to businesses under the paycheck protection program, but that's something Congress can deal with down the road

Bottom line is this: we need to reopen in a manner that allows us to stay open, and this can only happen if people trust that others in workplaces and social spaces have been tested recently, had contacts traced, and have enough support to isolate as needed

And this requires a financing structure in place, otherwise we face an economically crippling sequence of relaxations and lockdowns that will cost *both* lives and livelihoods (end)