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Thread: stimulus/relief not equal to investment.
Twice in the last 2 days I& #39;ve heard someone ask the question in reference to the American Jobs and Family Plans: "Does the US really need more stimulus??"
Twice in the last 2 days I& #39;ve heard someone ask the question in reference to the American Jobs and Family Plans: "Does the US really need more stimulus??"
The question reveals confusion worth clearing up. Stimulus, or really, in the case of the Rescue Plan, relief, is near term gov& #39;t spending to address an acute shock. Its goal is to make sure fams and biz get to the other side of the crisis with their economic lives intact...
Such spending should generally be deficit financed, should spend out quickly, should target those hardest hit, and should use real force to deal with the source of the shock, in this case, COVID. The evidence is strong and growing, in terms of virus control...
...vax distribution, economic relief, that the Rescue Plan was and is highly effective in there regards. EG, see @WhiteHouseCEA thread on three important new econ reports out today and yesterday: https://twitter.com/WhiteHouseCEA/status/1388133132726059010">https://twitter.com/WhiteHous...
The Jobs and Family plans, however, are quite different creatures. They target investment, not near-term spending; they spend out over many years; they carry no direct checks or UI benefits, but aim to correct large, damaging, long-term disinvestments in public goods...
...and human capital. They stand up "missing markets" (eg, child & elder care), paid leave, creating lasting pathways for caretakers to find their way into the job market, they provide access to pre-K, higher ed, w/ lasting implications for lifetime earnings. They& #39;re paid for...
...by highly progressive taxation (no tax increases under $400K). They target the economy& #39;s long-term "supply-side"--productivity, labor supply, innovation, opportunity!--not, as in the case of traditional stimulus, near-term demand. Their impacts are thus far more lasting.
Both sets of policies are, of course, not just necessary but essential. We must first get reliably to the other side of the crisis and then build back better! But they should not be conflated, as I hope I& #39;ve shown.
