Powell, Stiglitz, and the Case for Stimulus
February 26, 2021
By Matt Hughes
The recovery is far from complete.
The Roosevelt Rundown is an email series featuring the Roosevelt Institute’s top stories of the week.
How to Rescue the US Economy
This week, Federal Reserve Chair Jerome Powell declined to say whether he was “cool or uncool” with passing the American Rescue Plan.
But in his testimony before the Senate Banking Committee, Powell nevertheless made the case for a massive rescue package, as Roosevelt Fellow J.W. Mason explains on the blog.
“If you support a federal relief bill on the scale of the American Rescue Plan or larger, you should be encouraged to find that the Fed chair is on your side,” Mason writes, pointing to three Powell arguments that capture the need and justification for more public spending now.
- The public debt shouldn’t be a factor in determining how much we spend on stimulus and relief.
- Inequality is stifling our economic growth.
- The US wasn’t actually experiencing full employment before the pandemic.
Full economic recovery is also far from guaranteed without greater support, as both Powell and Roosevelt Chief Economist Joseph Stiglitz have noted.
“Changes to the regimen—like tax and interest-rate adjustments—may be necessary. But to do anything less than what Biden has proposed would be irresponsible and reckless,” Stiglitz writes for CNN Business. “Congress must pass this legislation or risk an anemic and devastatingly incomplete recovery.”
In other words, President Biden’s $1.9 trillion package should be the floor, not the ceiling.
Employer Power and Employee Skills
In a new landscape analysis, Roosevelt’s Suzanne Kahn and Anna N. Smith examine how federal and philanthropic funds are being invested in workforce development and how training and job placement programs adhere to recommendations from Suresh Naidu and Aaron Sojourner’s Roosevelt report, Employer Power and Employee Skills: Understanding Workforce Training Programs in the Context of Labor Market Power. Read more.
What We’re Reading
The Jobs the Pandemic May Devastate – New York Times
Texas Electric Bills Were $28 Billion Higher under Deregulation – Wall Street Journal
Texas Pays the Price of the Culture War – The Atlantic