Stimulus Is Not Enough

March 27, 2020

Learning from the Great Recession and World War II.

The Roosevelt Rundown is an email series featuring the Roosevelt Institute’s top stories of the week.

Beyond the CARES Act

With more confirmed coronavirus cases than any other nation and a record 3.3 million unemployment claims filed last week, the American economy is in free fall. But as Congress passes the largest stimulus package in US history—$2 trillion, or about 10 percent of GDP—experts are warning that it won’t be enough. “We have long known that 40 percent of Americans cannot afford an unexpected $400 expense. Now we are beginning to understand exactly what that means,” Roosevelt President & CEO Felicia Wong and Roosevelt Director of Progressive Thought Mike Konczal write for the Boston Review. “The current rescue package, at its best, is designed to stabilize. Our long-term goal must go well beyond that, building a more resilient economy.” Read on.

  • What’s in the bill: The CARES (Coronavirus Aid, Relief, and Economic Security) Act comprises direct payments to Americans, expanded unemployment insurance, funds for the health care system and state and local governments, and loans for small businesses. It also establishes a Pandemic Response Accountability Committee and bans stock buybacks for companies during the time that they’re receiving government assistance—and for an additional year for companies receiving government loans.
  • What’s not in the bill: “The very term ‘stimulus’ is indicative that people don’t understand the nature of this downturn,” Roosevelt Chief Economist Joseph Stiglitz tells Foreign Policy. “If workers don’t have wages, they can’t pay their bills. They’ll be buying food [with stimulus money], but their balance sheet is still going to be ruined. The answer is we need no evictions, no foreclosures on all properties, and the government should guarantee pay.”
  • Another angle: “What has been frustrating is to see so many ideas—ideas that once seemed impossible to imagine in our political system—suddenly emerge into the realm of possibility, only to collapse once they hit the hard reality of a system hostile to radical change and serious economic reforms,” Konczal writes for Dissent. “Universal unemployment insurance, a coordinated national labor policy, and a basic income were all discussed at a level that was unthinkable a month ago . . . But trying to get them over the finish line of legislation forced me to see how difficult it is to carry out serious programs in a system that is innately hostile to reform and has become less and less responsive to everyday people in recent decades.” Read more.

Lessons from World War II

Senate Majority Leader Mitch McConnell (R-KY) describes the CARES Act as a “wartime level of investment into our nation.” In a new paper, Roosevelt Fellow J.W. Mason looks to the economic mobilization policies of World War II and makes the case that government can—and should—be doing more in times like these. “Problems like the climate crisis and future pandemics will involve an economic restructuring comparable in scale, if not speed, to the mobilization of World War II,” Mason writes. “. . . when thinking about the role of the public sector in fostering investment in new industries or technologies, we should not think of it as merely providing resources. Additionally, and even more critically, its role is to bear risk and to solve coordination problems, both of which it can do in a way that private businesses cannot.” Read more.

We Need to Cancel Student Debt

“The coronavirus pandemic has pushed the entire country into a massive health and financial crisis. But well before coronavirus hit the United States, millions of young Americans were dealing with a crisis of their own: the crushing burden of student debt,” write Julie Margetta Morgan (Roosevelt Vice President of Research) and Suzanne Kahn (deputy director of the Great Democracy Initiative and a Roosevelt Institute expert on education initiatives) for Teen Vogue. “The short-term stimulus of canceling monthly payments during this crisis is essential but insufficient to address the challenges young people face . . . To help stabilize and grow the economy, a recovery package should bring down outstanding student debt levels by canceling a portion of student debt balances over the long term.” Read on.

  • On the Hill: This week, Rep. Ayanna Pressley (D-MA) introduced the Student Debt Emergency Relief Act, which both cancels short-term payments and provides long-term balance reductions. “I’m hopeful that this bill is a pathway to a national, bipartisan effort to cancel student loan debt and end the $1.6 trillion student loan burden that is crippling our economy,” Margetta Morgan responded.


Though the stimulus package may not encompass everything workers, small businesses, and state and local governments need to recover from this crisis, the progressive movement continues to fight for structural change. In a Twitter chat today, Roosevelt gathered economists, academics, and advocates to discuss how government can best address both the coronavirus pandemic and the preexisting challenges it’s exacerbating—from economic insecurity to racial and gender inequality. For more insight into these unprecedented times, watch Roosevelt’s explainer webinar, coproduced by the Groundwork Collaborative and Washington Center for Equitable Growth.

What We’re Reading

“It Will Look Like a Depression”: A Financial Expert Warns Us About What’s Coming Next for the Economy – Mother Jones

DJT Is No FDR – New York Times

Where Is the Government? – The Atlantic

The Worst Time to Slash Medicaid: Coronavirus and Cuomo’s Redesign Plans – New York Daily News

These Companies Enriched Themselves. Now They’re Getting a Bailout. – New York Times

4 Ways to Eradicate the Corporate Disease That Is Worsening the COVID-19 Pandemic – INET

Southern State Economic Responses to COVID-19 Pandemic – Southern Economic Advancement Project

A Green Stimulus Plan for a Post-Coronavirus Economy – CityLab