Jerome H. Powell Tuesday told the nation’s policymakers they would need to spend some more money if they had any hope of avoiding a weak recovery and inflicting untold pain on millions of American households. What stuns is that the policymakers had to be told.
More remarkably, later in the day, President Trump called off talks on any stimulus package until after the election.
Mr. Powell is chair of the Federal Reserve, the person whose actions guide the nation’s fiscal health. He is not given to needless gestures. He is not guided by politics. He is not a person inclined to urge governments to spend lavishly. He’s smart enough to know that what is lent has to be paid back. His reputation is one of limiting debt, not expanding it.
The president, in stark contrast, is all about power, his own. As we have learned, he doesn’t pay attention to the experts, on anything, Covid-19 or the economy, or climate change, the list goes on and on.
For months we have been in the middle of a pitched battle between Republicans and Democrats who couldn’t agree on a plan designed to address the once-in-a-century pandemic. Democrats want to spend on the high end. Republicans want the low end. Meanwhile Main Street businesses continue to suffer. Meanwhile, the unemployed have had their assistance cut and don’t know where to turn for help.
These financial challenges will intensify as winter closes in, particularly in states like our own which are disproportionately dependent on tourism, affecting our restaurants, lodging, bars, ski areas, etc. It’s a matter of weeks, not months before outside dining becomes more an exercise in tolerance than culinary pleasures.
Businesses that have been able to hang on through the summer will suffer. As Mr. Powell noted, without some extra help from the government “household insolvencies and business bankruptcies would rise, harming the productive capacity of the economy and holding back wage growth.”
There is the additional issue of state and local governments suffering massively, a circumstance that could easily mean a substantial reduction in services.
Republicans are holding back pointing at unemployment numbers that are dropping. The president says he wants Congress to work on the Supreme Court nomination of Amy Barrett and nothing else because he thinks the nomination will rally his base. Not only is that petty and morally wrong; it’s stupid politically. What political advantage is to be gleaned for being short-sighted? Why would Republicans not want to be seen as helping in a time of desperate need when the general election is less than a month away? Why would they not want to share the credit for helping?
We’ve been here once before — during the Great Recession in 2007. The mistake, as has been generally acknowledged, was that the Obama administration chose to be cautions, and it did too little. A much larger stimulus would have gotten us to the point of full recovery faster, instead it took the better part of a decade.
What Mr. Powell is asking is why we would choose to make the same mistake. The first stimulus package was spot on, and it worked. Now, we need another. For the president to resist is a threat to our well being and should be recognized as such on Nov. 3.
by Emerson Lynn