Bloomberg Businessweek’s Peter Coy emailed several preeminent conservative economists — the type who typically worry about large budget deficits and the rapidly rising national debt — to ask what the federal government should do to combat the economic effects of the virus. “Restraining the deficit was nowhere near the top of their list,” he writes. In fact, deficits are “good and necessary” at the moment.
Here some of what the economists had to say:
- “There are times to worry about increasing government debt. But a crisis like the current pandemic is not one of them,” said Harvard’s Gregory Mankiw, who chaired the Council of Economic Advisers under President George W. Bush.
- Glenn Hubbard, a Columbia professor who also chaired the Council of Economic Advisers under Bush 43, said policymakers should focus on funding for health infrastructure and support for state Medicaid programs. And he recommended loan guarantees to affected industries.
“While policy can’t offset the supply shock, it can make sure demand does not crater,” he told Businessweek. “Sending checks to low- and moderate-income individuals would be helpful and should be possible. ... A major infrastructure program commitment would reassure businesses about future demand — projects needn’t be ‘shovel ready’ for that to work. … While profligacy is not the goal, policy makers should prioritize reassurance over the near-term deficit.”
- Harvard’s Kenneth Rogoff told Bloomberg TV that the U.S. needs $500 billion to $1 trillion in fiscal stimulus “for starters,” with much of that money directed at lower-income earners who would spend it quickly. “The perfect storm that creates these really disastrous financial crises,” he said, “often involves having a government at war with itself, caught on its back, very often before an election.”
Sounds frighteningly familiar, doesn’t it?
