Why a Big Recovery Package is Necessary

by Michael Mandel

Some have questioned the need for the size of the $1.9 trillion American Rescue Plan just signed into law by President Biden. Leaving aside the benefits of the individual pieces of the bill, there are several reasons why “going big” is the right thing to do.

• As of February 2021, employment in service occupations is still down 14% compared to a year earlier.
• The fall in employment has hit precisely the Americans with the least financial resources.
• Because of loan forbearance, current bankruptcy and foreclosure rates underestimate the true hidden economic damage from the pandemic.
• As we learn more about long-lasting health effects from even mild Covid infections, the full economic impact of the pandemic may take months to emerge as well, especially in states that were hit especially hard.

Economists will be writing papers for years about how to use fiscal policy to fight pandemic downturns. But as PPI President Will Marshall has written, “Biden correctly gauged the magnitude of the nation’s health and economic emergency. After a long, grinding year of loss, suffering and social isolation, his instinct to go big is right.”