Category: Uncategorized

America Is On Track For A $4 Trillion Deficit In 2020. Should It Matter?

Posted on by The Progressive Policy Institute

Washington is finally responding with force to the coronavirus outbreak. This week, Congress agreed to the largest economic relief package in U.S. history to support families and businesses whose finances have been devastated by the crisis. These measures and more are essential for supporting public health efforts to contain the virus and preventing long-term damage to the American economy. But how much will they cost? Although price tags shouldn’t prevent policymakers and their constituents from taking any action necessary to combat the worst pandemic of our lifetimes, they can help prepare everyone for the hard choices we will have to face when this crisis is over.

Read the full piece here.

Blog: Finally, It’s the Right Time for Infrastructure Week

Posted on by The Progressive Policy Institute

As Congress passes its historic multi-trillion spending package, people across the country, as well as investors in our beleaguered financial markets, will breathe a sigh of relief. But the truth is, this “Phase 3” response to the pandemic-induced economic shutdown may just be the beginning of what we need to avert a savage recession or even depression.

Some experts, including St. Louis Federal Reserve President James Bullard warned that the nation’s GDP could fall by upwards of 50 percent in the second quarter alone. The first numbers showcasing the fallout dropped this week, with historic unemployment claims more than doubling economist’s worst fears at 3.3 million for the week.

Although it’s called a “stimulus” bill, the package is actually aimed at several urgent goals: Expanding the nation’s medical capacity to fight the contagion and treat its victims, putting money in Americans’ pockets and keeping businesses small and large from going under.

That’s essential, but we also need more of the traditional kind of stimulus intended to juice the economy. What comes next is for Congress and the Trump administration to address real stimulus- actions that use policy to activate increased economic activity.

For that -there is no better, more popular and bipartisan use of taxpayer funds than upgrading the nation’s transportation, communications and other infrastructure. And now, with unemployment spiking, it’s the right time to act at last on all those calls we hear every year during “Infrastructure Week” for a massive surge in public investment in our economy’s backbone.

Infrastructure Week has become a bad joke in Washington. It comes with great fanfare, wins praise from a bipartisan chorus of lawmakers and labor as well as business leaders — and then passes without anything changing. Perhaps now, with interest rates at nearly zero and lawmakers committed to spending whatever it takes to keep our economy afloat, infrastructure’s moment has finally come. And we should think big- upwards of one trillion dollars big.

Why? Because infrastructure investment yields the biggest bang for your buck when you have a higher jobless rate. The reason is what economists call the “multiplier effect,” which is basically a measure of how big a boost in economic output we get from each dollar spent. Creating new jobs and putting unemployed people back to work produces the strongest multiplier effect.

For example, take these estimates of multiplier effects from an economic scenario from S&P Global in 2016 on infrastructure investment (full disclosure- I was a co-author of the paper with Chief U.S. Economist Dr. Beth Ann Bovino):

“…an additional $150 billion in spending (spread evenly over eight quarters) would be fully returned to the economy within the first two years… and at least $189.5 billion to GDP in just the first few years. Additionally, this injection of funds would create roughly 307,000 infrastructure-related jobs in the first two years. Aside from the near-term boost, the country’s productive capacity and output would also likely increase once the infrastructure is built and absorbed into the economy-which means the investment would likely add jobs long after the initial effects have subsided…”

So what can numbers like this tell us about what would happen if we invest today, under the extraordinary circumstances of escalating unemployment? Well, in general, we can reasonably expect the unemployment rate to soon be higher than the 4.9% rate when the paper was written (October 2016), and general economic conditions to be softer. So those GDP returns and job estimates (proportional to the amount invested) could be on the lower end from what we might expect looking forward.

In a low unemployment scenario, which was the reality until the coronavirus hit, there’s too little slack in labor markets to generate high multiplier effects. In this scenario, you have lower overall output because you are essentially moving workers to infrastructure jobs from other jobs, as opposed to creating brand new ones and moving workers from unemployed to being employed.

Some immediate logistical problems come with quick action; for instance, can we even invest now at a time when most folks are forbidden from going to work? The answer is obviously no, but with a caveat. Infrastructure projects tend to have very long, multi-year lifecycles, with planning from engineers, environmental impact studies and permit bottlenecks, before the first shovel can even hit the ground. Additionally, it will take a long time- perhaps years- to work off the significant economic damage that is coming our way.

With even some of the longer estimates for how long it will take for life to return to “normal” running over 3 months, passing a trillion-dollar investment package soon still makes sense.

When looking for economic silver linings in a time of dour forecasts, and multiple trillion-dollar spending barely raises an eyebrow, it seems as good a time as any for a legitimate “Infrastructure Week”.

What’s In The Record-Breaking $2 Trillion Stimulus Package?

Posted on by The Progressive Policy Institute

After several days of negotiations, the U.S. Senate is voting tonight on a third bill to combat the coronavirus crisis. Whereas the first two bills focused on funding medical research and providing economic support to victims of the virus, the “Phase 3” stimulus bill is a massive rescue package for the broader American economy. It would cost over $2 trillion – more than ten times the amount spent on the first two coronavirus bills combined, and more than double the cost of the American Recovery and Reinvestment Act, which was the largest stimulus bill enacted following the 2008 financial crisis.

So how does Congress propose to allocate the most-expensive economic rescue package in American history? Here are the key provisions, published on Forbes.

Blog: Corporate Citizens in a Time of Crisis

Posted on by The Progressive Policy Institute

For parents struggling with the uncertainty of employment while also dealing with a global pandemic, paying for an internet connection may be the last thing on their minds. But with the closure of nearly every public and private school in America, many school systems are relying on the internet to make sure their students can keep learning. 

Even in the days before COVID 19, a strong and reliable internet connection was integral to functioning in our information age. During this time of social distancing and self-quarantine, a strong internet connection is essential. 

Unfortunately, far too many students lack access to a reliable internet connection. According to a Pew Research Study, 44% of households with incomes below $30,000 don’t have broadband. And while many Americans rely on smartphones for internet access, 29% of lower-income people don’t even have smartphones. 

For parents struggling to make ends meet, the costs of groceries could take precedent overpaying for the internet.

In a time like this, school system leaders cannot shy away from the mission of providing equitable access to education for all students. Fortunately, corporate citizens like Comcast, Charter Communications, and AT&T are stepping up to help school systems provide internet access. For Comcast President Dave Watson, “It is vital that as many Americans as possible stay connected to the Internet – for education, work, and personal health reasons.” 

On March 12th, as school closures began, Comcast announced a number of initiatives to help our nation’s students:

  • All Xfinity Wifi hotspots in businesses and outdoor locations are available to anyone for free.
  • All Comcast customers receive unlimited data for 60 days for no additional charge.
  • Internet Essentials, a service for low-income households that normally costs $9.95 a month, is free for new customers for 60 days.
  • New educational content for all grade levels is available to customers, in partnership with Common Sense Media.

Charter Communications announced that its Spectrum service would install both broadband and Wifi for K-12 and college students for free for 60 days, while also opening its Wifi hotspots to the public.

Comcast’s and Charter’s response came in advance of the Federal Communication Commission’s March 24th challenge to providers to take the “Keep America Connected Pledge.” The pledge is for the next 60 days to (1) not terminate service to any residential or business customer unable to pay, (2) waive late fees for any residential or business customer, and (3) open Wifi hotspots to any American who needs them. 

On March 24, AT&T announced that it would offer schools activating new lines free wireless data service for 60 days and expand access to its $10/month Access from AT&T service to any household receiving free or reduced-price lunch or Head Start, beginning with two months of free service.

And smaller, regional internet providers have announced similar initiatives.

For large school districts like Prince George’s County Public Schools (PGCPS) in Maryland, ensuring that 135,000 students continue their education is a top priority. With over 60% qualifying for free or reduced lunch, reliable, low-cost, internet is essential.

When asked about the impact of Comcast’s support, PGCPS CEO Dr. Monica Goldson said, “For some of our students, lack of equal access to Wi-Fi hotspots, connected devices, and mobile broadband internet will make continuing their education nearly impossible. It is not because they are unwilling, but these students simply are unable to get online at a time when they have no choice. Public spaces are closed and the economy is sputtering, leaving many to cut back on expenses.”

Schools in many states will likely be closed for at least another month. As parents around the country try to create a sense of normalcy for their kids, it is reassuring to know corporate citizens such as Comcast, Charter, and AT&T are stepping up in a major way. 

Statement: The Senate Flubs the Stimulus Package

Posted on by The Progressive Policy Institute

STATEMENT: Confirmed coronavirus cases roughly doubled over the weekend, doctors and hospitals are running out of personal protective equipment and supplies, and unemployment cases are expected to increase eightfold this week. The nation’s governors are issuing urgent pleas to the federal government to use its powers to ramp up production of protective gear and tests.

Yet Senate Republicans and Majority Leader Mitch McConnell apparently haven’t been listening. Over the weekend they produced a partisan stimulus package that fails to achieve the nation’s overriding priority: Giving America’s health care professionals and workers the resources they need to contain the pandemic so that we can better target social distancing and keep it from tanking our economy. 

Instead, the Senate bill authorized only $75 billion for health care providers while giving the Trump administration a $500 billion blank check to bail out businesses with no public disclosure for up to six months.

Democrats were right to reject the Senate bill. The action now shifts to the House, where Speaker Nancy Pelosi has pledged to dramatically boost spending to fuel a surge of protection equipment and tests, and to screen everyone.   

The key to ending a period of prolonged and general social distancing, which could plunge the country into a depression, is to dramatically expand our capacity to screen people for the virus. That will enable us to prescribe social distancing only to those infected and those at greatest risk — older Americans and people with severe medical conditions — while allowing people who test negative to start returning to work. Protective equipment will also help reduce transmissions. It should go first to health and emergency workers, then to people working in grocery stores, the police, and other essential public services. Eventually, everyone should get protective gear.  

House Democrats should direct at least $500 billion to personal protective equipment, ventilators, expanded testing, and ensuring everyone is covered for both testing and treatment of COVID symptoms and related complications. That’s the right order of magnitude for now, though policymakers should not hesitate to spend even more on these critical functions should it become necessary. Without supporting the health care workforce, soon too many physicians and nurses will get the virus and the health care system will be unable to adequately address the greatest public health challenge in modern history.

 The second priority for a stimulus package must be direct payments and a big increase in social insurance programs to protect the most economically vulnerable Americans. Increasing funding for and reversing Trump administration efforts to limit eligibility for SNAP benefits, unemployment insurance, and low-income support programs will help millions of Americans put food on their tables and ride out the recession. Although the Senate’s proposal to send $500 billion in direct cash assistance to low- and middle-income Americans would help ensure that no one falls through the cracks, it should abandon a front-end means test that could delay payments and instead “claw back” payments in next year’s tax returns from households lucky enough to skate through the inevitable recession financially unscathed. This framework would allow even more resources to be redirected to those most in need.

 The third priority should be helping private companies stay afloat until more targeted social distancing allows more Americans to return to work. For small and medium-sized businesses, Congress should offer at least $500 billion in emergency loans —- with proper accountability and oversight —- to enable businesses to maintain payrolls and other fixed expenses, such as rent and health care for workers. If necessary, debts for businesses that can’t repay them should be forgiven so long as their workers continue to be paid throughout the crisis. All businesses should be incentivized to keep their workers on payroll (and off taxpayers’ dime) knowing that they will make it to the other side of this crisis in a financially viable state.

In addition, we also need a Core Protection Fund of $500 billion specially targeted to keep afloat core systems that are essential to the national economy. That includes power, transportation, communications, and key manufacturing operations in areas from food production to aerospace manufacturing, which is essential for the national defense in an increasingly unstable world. 

For the Core Protection Fund, the government would be a funder of last resort for financially pressed companies in core sectors and take stock or stock warrants in exchange, which would pay off big if the economy rebounds. If more was needed, the model would be the GM rescue plan during the 2008-09 financial crisis, which was highly successful. Most workers should be kept on payroll, buybacks should be banned, and executive compensation should be limited. These funds should be monitored by an oversight board. If these core companies are not kept in operation, then Americans will suffer even more and restarting the economy will become immensely harder.  

PPI recognizes that speed is of the essence. But the right approach should align our efforts to slow the spread of coronavirus to our need to avoid long-term structural damage to our economy. Though this will likely be an unprecedented amount of money, every dollar must go where it will make the most difference – health care, unemployment insurance, and to American businesses – big and small. We may only have one chance to get this right. 

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Op-Ed: “Why Klobuchar should be Biden’s vice presidential pick”

Posted on by The Progressive Policy Institute

After Joe Biden’s strong debate performance on March 15 and third straight huge primary night two days later, it is increasingly obvious he will be the Democratic nominee. Even without the Ohio vote, the March 17 primaries all but sealed the deal, with sweeping wins in Florida, Illinois and Arizona giving Biden a 300 delegate lead, ending any reasonable chance for Sen. Bernie Sanders (I-Vt.) to catch up.

Biden’s bombshell pronouncement in the debate that he will choose a woman as running mate, while unprecedented, is less surprising than it may initially look — given the pressure he was under to pick a woman. There remains huge demand for a woman on the ticket among many Democrats bitterly disappointed with the 2016 outcome, as evidenced by a recent letter to the Democratic National Committee from top officials at EMILY’s List, the American Federation of Teachers, and other groups.

In fact, more than 56 percent of all women registered voters affiliate with or lean toward Democrats. Driving high turnout among suburban women outraged by Trump’s presidency is one key to a Biden victory.

Read the full piece here.

Op-Ed: Winning where it matters: Joe Biden’s task in the fall campaign

Posted on by The Progressive Policy Institute

Sen. Bernie Sanders has signaled his imminent departure from the nomination contest. His sooner-than-expected exit frees presumptive nominee Joe Biden to fire up his general election campaign to defeat President Trump in November.

Except that the coronavirus pandemic has put presidential politics in suspended animation, along with the economy and almost every other aspect of normal life. We don’t even know if the remaining primaries will happen, or whether it will be safe for delegates to assemble at a national convention this summer.

There will be a presidential election, however, and at this point it seems likely to unfold in only a handful of closely contested states: Florida, Ohio and the three rustbelt states that put Trump over the top in the Electoral College, Pennsylvania, Wisconsin and Michigan. New Hampshire, Arizona and North Carolina, also look to be in play.

With actual campaigning on hold, Biden strategists should be thinking geographically and crafting a message for winning where it matters.

Because of their pivotal status, the Progressive Policy Institute (PPI) recently commissioned an in-depth survey of voters in Michigan, Wisconsin and Pennsylvania, which had been considered part of the Democrats’ “blue wall” until Trump flipped them. We also zeroed in on swing voters, especially those who backed Obama in 2012 and Trump in 2016.

Read the full piece here.

Op-Ed: Timeline: The Regulations-and Regulators-That Delayed Coronavirus Testing

Posted on by The Progressive Policy Institute

Addressing the media alongside the coronavirus task force on Thursday, Donald Trump said he would “slash red tape like nobody has even done it before” to get approval for coronavirus treatments.

That would be a welcome development indeed. What’s unfortunate is that there was no similar push at the beginning of the crisis to expedite coronavirus testing. The U.S. response to the pandemic has been hampered at every level due to insufficient testing capacity.

The first coronavirus case in the U.S. and South Korea was detected on January 21. Since then, South Korea has effectively contained the coronavirus without shutting down its economy or quarantining tens of millions of people. Instead, the Korean government has pursued a “trace, test, and treat” strategy that identifies and isolates those infected with the coronavirus while allowing healthy people to go about their normal lives. Hong Kong, Singapore, and Taiwan have also managed to contain the virus via a combination of travel restrictions, social distancing, and heightened hygiene.

Unfortunately, the United States has not made testing widely available and now various regions are being forced to impose severe economic and social lockdowns. As of March 17, the U.S. had tested only about 125 people per million. South Korea had tested more than 5,000 people per million. Between early February and mid-March, the U.S. lost six crucial weeks because regulators stuck to rigid regulations instead of adapting as new information came in. While these rules might have made sense in normal times, they proved disastrous in a pandemic.

Read the full piece here.

Op-Ed: Why Experience, Not Funding, Matters More In New Bill To Help Startups

Posted on by The Progressive Policy Institute

Small businesses are hurting everywhere and the pain is only going to intensify. What about new businesses? Will anyone start a new company during the COVID-19 crisis and emerging recession?

History says yes: several years ago we did an analysis at the Kauffman Foundation that found that over half the companies on the Fortune 500 list had been founded during a recession or bear market. We updated those numbers a few times and the finding was consistent.

There’s a caveat, of course: with one exception, those prior recessions and bear markets didn’t occur during a pandemic. (There was a recession from August 1918 to March 1919, overlapping with the Spanish flu.) So maybe this time is different.

Read the full piece here.

Blog: Connectivity is Everything

Posted on by The Progressive Policy Institute

All the Distance Learning Tools in the World Don’t Matter if Kids Can’t Get Online

Now that distance learning is virtually the only learning happening, all levels of government must shift into high gear to ensure that every child in America who needs Internet connectivity has it.

School districts and charter schools across the country are doing their best to distribute laptops and Chromebooks to millions of students forced out of class by the coronavirus. But 14 percent of children have no internet access at home, including nearly 20 percent of black and Latinxstudents and 37 percent of Native American students.

A recent Microsoft survey found that three-quarters of a million Montana households lack Internet access. On American Indian reservations or tribal lands, just over half of Native Americans have access to high-speed internet service–compared to 82 percent of households nationally.

Census data shows that 29 percent of Cleveland households have no internet access. Pew Researchers found in a 2018 survey of 13- to 17-year-olds, one in fiveteens said they often or sometimes can’t complete assignments because they don’t have reliable access to the internet or a computer.

Predictably, some school districts are holding back from providing any distance learning because they can’t ensure that every child has access to it—a decision the New York Post has already labeled “progressive lunacy.”

For instance, Philadelphia’s superintendent told his teachers they could not require students to log on and could not grade work done online or by phone because they “cannot ensure students equal access to technology.” One wonders what this means for high school students who need course credits and GPA scores for college admission.

An affluent suburban Seattle district invested in Wi-Fi “hotspots” to loan to students without internet at home, then halted the effort for similar reasons.

In Montgomery County, Maryland, a public elementary school foundation planned to give money to every family at its school and a neighboring school that needed it for Wi-Fi access, a laptop, or food. The school district would not allow it.

We have to agree with the Post: This is lunacy. We should be rolling out connectivity for all as we begin distance learning, not giving up.

The federal and state departments of education need to make clear to every district in America that they don’t have to deny education to every child just because they can’t provide it equally to all. Then they should start funding a massive effort tomake it universal. After urging from Democratic Senators Michael Bennet, Edward Markey, Brian Schatz and others, the Federal Communications Commissionon Wednesday announced a waiver of federal E-rate rules. Under the E-rate program, until September 30th service providers can give free equipment and services—such as mobile hotspots, improved connections, and connected devices—to schools.

In addition, Comcast–and other providers–are giving free Wi-Fi and the modems and routers needed to access it to low-income families in its service areas for the next 60 days.

​Congress and the states should add more funding. Districts are scrambling to design and deploy distance learning programs, while simultaneously ensuringthat children who depend on school for nutrition don’t go hungry.

​With state and federal aid, they should go into overdrive to ensure that every child can log on, at adequate speed.

For those outside of areas where free Wi-Fi is on offer, it is time to get creative. As far back as 2014, one district outfitted school buses with Wi-Fi routers and deployed them after hours to park in remote neighborhoods. In this way, California’s Coachella Valley Unified School District–one of the nation’s poorest, spanning 1,200 miles of mountains and valleys–was able to get all of its students online outside of school.

Some rural districts, like Santa Fe, already have Wi-Fi on school buses that make long drives to transport rural students, so the kids can do homework while making the long commute. The U.S. currently has about 480,000 school buses–more than enough to bring Wi-Fi to all 21.3 million offline Americans. And it has almost as many bus drivers—now sitting home with little to do— who could help.

In 2014, the driver of one of Coachella’s buses, Darryl Adams told the Hechinger Report, “Come on! We can do better than this as a nation, especially for our low-income families and our disadvantaged families.’’ 

Surely, in this most extraordinary of times, we not only can do better–we must.

Tressa Pankovits is Associate director at Reinventing America’s Schools project at Progressive Policy Institute

Marshall and Osborne for The 74: ‘Free College for All’ Is a Non-Starter for Many Voters. New Poll Shows Why Talking Point Is Dangerous for Democrats

Posted on by The Progressive Policy Institute

Sadly, education has been all but ignored in this year’s Democratic primaries. But a new poll commissioned by the Progressive Policy Institute points toward one reason Sens. Bernie Sanders and Elizabeth Warren have not lived up to their supporters’ hopes: Their embrace of free college and paying off all student debt strikes many voters as elitist.

Because narrow victories in Michigan, Wisconsin and Pennsylvania gave Donald Trump his Electoral College win in 2016 — even while he lost the popular vote by 3 million ballots — PPI recently commissioned a poll in those states.

Much of the poll, by Expedition Strategies, dealt with health care, the economy, taxes, business and climate change. (You can find the entire poll here.) But when pollsters asked about promises of free college and the elimination of student debt, the response was anything but enthusiastic. To many voters, these are elite preoccupations that compound the advantages of the already privileged college-going cohort at their expense.

Read the full piece here.

Statement: New Business Preservation Act Provides Much Needed Capital to Startups

Posted on by The Progressive Policy Institute

Today, Senators Amy Klobuchar (D-MN), Chris Coons (D-DE), Tim Kaine (D-VA), and Angus King (I-ME) introduced the New Business Preservation Act. The legislation would  create an Innovation and Startups Equity Investment Program in partnership with states and private investors, providing vital capital during the coronavirus pandemic to new startups.

Startups play a critical role in the American economy, powering productivity gains and creating nearly 3 million jobs annually. Unfortunately, due to their nature, many new businesses do not have adequate assets on hand to survive an emergency such as coronavirus, with an average time to turn a profit of nearly three years.

The New Business Preservation Act would provide much needed financial resources to startups during the pandemic. Specifically, the New Business Preservation Act would allocate an initial $2 billion to the program for participating states to invest alongside private venture capital companies in new businesses outside of the Silicon Valley, New York, and Boston venture capital hubs. Importantly, special consideration is given to businesses created by women and persons of color, who face additional barriers in accessing investment capital.

As the U.S. economy continues to suffer due to the coronavirus pandemic, the New Business Preservation Act provides relief to America’s startups. The Progressive Policy Institute urges Congress to swiftly pass this legislation.

Getting Back to Basics on Health Care

Posted on by The Progressive Policy Institute

You can say one thing with certainty about health-care politics and the 2020 election: President Trump and Republicans still want to take away people’s health insurance. If they get their way, millions of Americans would lose coverage under the Affordable Care Act and Medicaid, and many more would be stuck with skimpier health insurance. That’s a stark fact U.S. voters should keep in mind as the coronavirus spreads across the country and threatens to shut down much of our economy. Democrats have fought against this in Congress, at the state level, and in the courts.

The contrast between the two parties couldn’t be clearer: Democrats want to make sure all Americans have health insurance, Republicans don’t.

 

Protecting the Core Systems

Posted on by The Progressive Policy Institute

The Federal Reserve protects the financial system by being ready to lend money to financial institutions that are stressed in a crisis. It’s already in motion, setting up “facilities” to protect money market funds and other investments.

But in this unprecedented emergency, we need a government agency that can provide the same financial lifeline to our core non-financial systems–healthcare, communications, power, food production and distribution, waste removal, key manufacturing.  This agency should be able to quickly provide a  short-term loan to any hospital, power company, phone company, food manufacturer that is about to fail.  Then after the emergency is over, the short-term loan can either be paid back, or turned into a long-term income-contingent loan.

Each of these systems interlock with the others. A failing power system will quickly take down health and food production. A lack of food will undermine the communications system.  Keeping the core systems of the economy going is essential.

Many of the companies involved are large and have plenty of financial reserves. They probably will not need help or even additional supervision. But a surprising number of businesses involved in core systems are medium size or small, including  hospitals, small telecom providers, and all the companies involved in the food supply chain. They are going to run into financial trouble and need to be supported.

Setting up a new agency is not something that I necessarily want to do.   But having a Core Systems Board with the responsibility of backstopping key networks–especially the smaller companies–is essential.

I’m interested in hearing thoughts and comments.

mmandel@www.progressivepolicy.org.

 

 

 

 

 

 

 

 

 

 

 

 

Next Steps For Stimulus

Posted on by The Progressive Policy Institute

As the coronavirus crisis brings the U.S. economy to a standstill, millions of Americans have suddenly seen their cashflows grind to a halt. Congress took concrete steps to support the people most directly harmed by the virus with the Families First Coronavirus Response Act, which was passed by the Senate and signed by President Trump yesterday after passing the House of Representatives five days earlier. Now they must adopt a broader stimulus package that offers immediate assistance to ensure otherwise financially healthy businesses and households avoid unnecessary bankruptcies that would drag down our economy well after the pandemic has been contained.

The Trump administration’s latest proposal is to make up to $500 billion in emergency loans available to small businesses, airlines, and other distressed industries hit by the coronavirus crisis. Additionally, it proposes to send $250 billion in direct cash assistance to American households in April and then another $250 billion in May. The proposal does not detail how these payments would be structured, but does specify that they would vary in size based on family size and income.

This framework is a welcome change from the administration’s earlier proposal to repeal payroll taxes through the end of the year, which would have given the greatest benefits to those least in need of assistance, but it still has a number of problems. A complicated means test will take time to design and administer, delaying much-needed relief to cash-strapped households when time is of the essence. Moreover, amid enormous economic uncertainty, nobody even knows what their income in 2020 will be. Many households that need assistance are almost certain to fall through the cracks under the administration’s plan.

Read the full piece.

The US medical equipment and supply industry: What happened?

Posted on by The Progressive Policy Institute

America now depends on overseas suppliers for more than half of its medical equipment and supplies, up sharply from a few years ago. That’s based on a PPI analysis of government trade and industry data, What happened?

As we go through this terrible pandemic, U.S. healthcare providers are suffering from a surprising shortage of medical equipment and supplies.  Even after President Trump invoked the Defense Production Act on Wednesday, there doesn’t seem to be an easy spigot of domestic factory production to turn on, and overseas factories are serving their own hardhit populations.

Part of the problem is that the U.S. has become increasing dependent on overseas sources for its medical equipment and supplies.  Until 2016, the U.S. economy consistently maintained a trade surplus in medical equipment and supplies. But things changed in the past few years (chart).  Demand rose and domestic production expanded, hiring 18,000 new workers since 2015.

But here’s the rub: Domestic production of medical equipment and supplies did not expand enough to meet demand. As a result, the long-time trade surplus in medical equipment and supplies turned into a rapidly widening trade deficit, hitting $7 billion in 2019.

As a result, an estimated 52% of medical equipment and supplies now come from outside the United States.

 

Where is the new surge of imports coming from? It’s not just China. In fact, imports of medical equipment and supplies from Europe have soared by $4.3 billion since 2015, or 33 percent. Imports from Asia (excepting China) are up $2.7 billion, or 43 percent. And of course, with these regions facing their own crisis, the flow of goods has slowed down.

This was not a case of hollowed-out manufacturing–employment in the U.S. medical equipment and supplies manufacturing industry is at an all time high. Nevertheless we didn’t expand fast enough.

In pandemics, like wars, it’s better to have your own factories.

 

 

 

Note: For trade purposes, we track NAICS 3391. For domestic sales and employment, we track the combination of NAICS 339112 and 339113.