PRESS RELEASE: ECONOMISTS: CBO REPORT SHOWS THE NEED FOR MAJOR ADDITIONAL STIMULUS
FOR IMMEDIATE RELEASE
February 1, 2021
Maddy McDaniel, Communications Director
[email protected] or 914-471-7716
ECONOMISTS: CBO REPORT SHOWS THE NEED FOR MAJOR ADDITIONAL STIMULUS
U.S. Employment Will Not Reach Pre-Pandemic Numbers Until 2024, Per Congressional Budget Office’s Latest Economic Projections
Former NEC Director Gene Sperling: “These CBO projections are completely consistent with the view that the risks of going too small dramatically outweigh the risks of going too big”
Economic Policy Institute Director of Research Josh Bivens: “When I look at this CBO report I don’t see the case for going small on recovery.”
Economist Gabriel Mathy: “There’s no reason to suffer through high unemployment just because the Republicans think it’s prudent to shrink the number.”
Economist Anna Stansbury: “The CBO’s new projections only represent an upgrade from a catastrophically slow recovery to an extremely slow recovery”
WASHINGTON, D.C. — Without additional stimulus from Congress, the U.S. unemployment rate will not fall to pre-pandemic levels until 2024, according to the latest economic projections from the Congressional Budget Office (CBO). Economists made the following statements in response to the new CBO report in a press call hosted by Invest in America today.
“These CBO projections are completely consistent with the view that the risks of going too small dramatically outweigh the risks of going too big,” said Gene Sperling, former Director of the National Economic Council under President Clinton and President Obama. “It is not just about whether you get to full employment, but the speed at which that happens. The CBO projections make clear that we will reach full employment much, much later than necessary without something like the $1.9 trillion package that Biden has put forward. Failure to respond with fiscal force risks so much avoidable pain in terms of long-term unemployment, lower pay, job opportunities and scarring of young workers entering the workforce. There is no question that going too small will hurt those workers — often the essential workers we celebrate — who are already struggling with low pay and high unemployment.
“When I look at this CBO report I don’t see the case for going small on recovery. The risks of going too small with fiscal support in this moment are absolutely huge. The risks of going too big are pretty trivial,” said Josh Bivens, director of research at the Economic Policy Institute. “The rapid bounceback we saw from the covid shut down in the spring and summer has gotten weaker each month since then, and in December we saw job loss go in reverse. Based on that trajectory, there is very little reason to think the economy is close to achieving some kind of self-sustained escape velocity from the damage it sustained from the covid shock.”
“Stimulus avoided a great depression, but we’re not out of the woods yet. There’s no reason to suffer through high unemployment just because the Republicans think it’s prudent to shrink the number,” said Gabriel Mathy assistant professor of economics at American University. “The unemployment rate masks exits from the labor force — especially women who are caring for children who often are not in school. For those people that are not counted in the unemployment statistics, we’re going to need to run the economy hot.”
“The CBO’s new projections only represent an upgrade from a catastrophically slow recovery to an extremely slow recovery,” said Anna Stansbury, Ph.D. Scholar at Harvard University’s Program in Inequality and Social Policy. “Extrapolating from the CBO’s estimates, the true labor market story is that we might not reach full employment until the late years of the 2020s, which means unconscionably high unemployment for many years, particularly for African American and Hispanic workers. The plan that President Biden is proposing will help us reach full employment substantially faster than the track we’re on right now.”
President Biden’s COVID relief plan would boost GDP by 4 percent by the end of 2021, according to an analysis released by the Brookings Institution last week. The robust plan provides for another round of direct stimulus checks, an expansion of unemployment insurance, and much-needed relief to state and local governments, renters and homeowners, and small businesses, among other key provisions.
Expert research shows that these measures are needed to rescue and grow the American economy.
- Expanding unemployment insurance now would support more than 5 million jobs, and boost the GDP by 3.7%, according to the Economic Policy Institute.
- Every dollar spent on unemployment insurance generates a $1.64 increase in GDP.
- Every dollar invested in state and local aid generates $1.36 in GDP growth.
- Federal Reserve Chair Jerome Powell credited the stimulus checks and additional unemployment insurance passed in 2020 with a rebound in household spending.
Recent polling from GQR demonstrates the strong support from voters across the political spectrum for urgent and expansive public investment. More than half of voters said that the previous stimulus packages weren’t enough, and 77% say the government should pass another.
About Invest in America
Invest In America is a national rapid response operation advocating for robust public investment to rescue the economy from the COVID crisis and create prosperity for the future, and to fight back against fear-mongers who use deficit concerns as a scapegoat to starve American communities and businesses of resources.
The operation consists of two components: Invest in America, the charitable and public education arm, which is a fiscally sponsored project of Economic Security Project funded by the William and Flora Hewlett Foundation and Economic Security Project co-chair Chris Hughes; and Invest in America Action, the advocacy and social welfare arm, which is a fiscally sponsored project of Economic Security Project Action funded by Chris Hughes and the Omidyar Network.