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Three ways Congress can save the U.S. economy

17 1 5
28.05.2020

New York – The U.S. economy desperately needs help. Unemployment, already at the highest level since the Great Depression, is expected to get worse and remain elevated for years. Yet the divide between Republicans and Democrats is threatening to delay action.

What’s needed are measures that can be put into practice quickly, without getting bogged down in ideological debate. I have some ideas.

Rarely has the argument for government spending to support the economy been more compelling. Long-term joblessness can do great damage, and the cost of preventing it is extremely low: The U.S. can borrow for 30 years at an interest rate of approximately zero, adjusted for inflation. The question, then, is how to use this fiscal capacity to the greatest effect.

The answer tends to depend on whether you’re a follower of a long-dead but still important economist: John Maynard Keynes. Keynesians think that unemployment is a demand problem: People aren’t buying enough goods and services, so businesses aren’t hiring people........

© The Japan Times