John Locher/AP Photo
People wait in line for help with unemployment benefits at the One-Stop Career Center in Las Vegas, March 17, 2020.
Trump now wants to spend a trillion dollars, starting with $1,000 checks for everyone. That upstages Chuck Schumer, who on Monday was talking about a $750 billion package. Trump would also give aid to several industries, like the airlines.
Get real, people. A $1,000 check is maybe two weeks’ pay, and massive layoffs have already begun.
Trump’s Treasury Secretary, Steve Mnuchin, let it slip in a meeting with Republican senators that he projects unemployment at 20 percent. In fact, it could go a lot higher.
The markets get this. They reacted to Trump’s trillion-dollar plan plus Mnuchin’s unemployment projection with another massive down day.
As the economic consequences reverberate of soon-to-be universal self-quarantines, we could lose massive parts of the economy. GDP could drop 10 or 20 percent. This is already Great Depression II, and very likely worse.
After 1929, it took more than three years for the economy to bottom out as the financial collapse slowly spread to the real economy. Unemployment did not hit bottom at 25 percent until 1933.
This collapse is occurring much faster. We could be at 25 percent unemployment by late spring; as people lose jobs they will lose homes, with cascading effects on the financial economy.
Fiscal stimulus, in the form of sending out checks, won’t do it. People will save some of that money, against an even rainier day. And two weeks’ pay is a pittance.
Even the New Deal, when deficits peaked at about 6 percent of GDP, did not get us out of the Great Depression.
World War II, with its massive public planning and public investment finally did. What we need today is direct federal public-works investment on a WWII scale, but without the war. That means several trillions of dollars a year.
As it happens, we have just the need for that massive public investment—a Green New Deal. This can inject trillions into the economy, modernize archaic public infrastructure, and create many millions of jobs.
Democrats need to get way out front on this—right now, as they draft the third anti-corona stimulus. Happily, Joe Biden (who otherwise leaves much to be desired) is a big fan of public-infrastructure spending.
