Policy choices in time of crises

This is an excerpt from Bloomberg’s Morning Joe:

Citizens need to recognize that Federal government has the power to mitigate economic crises to a greater extent. I ask why are our leaders in Washington choosing austerity over charity? Read Joe’s take on Federal response to crises.

“Something people should understand about the current U.S. economic crisis is that it is in large part a policy choice.

People joining food lines all around the country is the result of a policy choice not to supply laid off workers with more income, or easy enough access to income from the government. The spiraling number of small businesses closing up shop is the result of a policy choice to cap the level of payroll support, turning the program into a de facto lottery. The wave of state and local austerity we’re already seeing (Los Angeles is the latest) is due to a policy choice, not to include ample money for municipal funding in any of the emergency spending bills that we’ve seen so far. Of course, the social distancing demands create an exceptionally difficult and disruptive situation for everyone, but the attendant level of economic devastation that this has caused was a choice. The federal government isn’t anywhere close to exhausting its fiscal capabilities to supply the private, state and local sectors with replacement income for the duration of the public health emergency.

The reasons behind these choices are different and complex. However the economist JW Mason nailed one aspect of it in a blog post, writing: “It seems like one of the deepest lessons of the crisis is that a system organized around the threat of withholding people’s subsistence will deeply resist measures to guarantee it, even when particular circumstances make that necessary for the survival of the system itself.” Tomorrow another 4.5 million initial jobless claims are expected to be reported.”

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