Putting policy on autopilot is not new. For the U.S. government, it began in 1935 when, with the guidance of Labor Secretary Frances Perkins, our first female cabinet secretary, the Roosevelt administration introduced unemployment insurance as part of the New Deal. Employers pay into the system, so that laid-off workers can receive benefits. More workers are laid off in recessions, so more money is spent on benefits. Then in expansions, much less is spent.

Food stamps and progressive income taxes are also, in their own ways, automatic stabilizers.

Yep.

In light of the pandemic, it was both humane and economically astute when, this past March, Congress made jobless benefits more generous through the CARES Act: The $600 a week federal supplement to state unemployment checks; the expanded eligibility for benefits; the increased number of weeks the unemployed could get support; the $1,200 direct checks to the vast majority of adults. It was all a strong start.

Then, political will eroded. The extra $600 expired on July 31, leaving millions with much less to make ends meet. In the meantime, a zombie debate over whether to renew that extra money — along with a bucket of other crucial economic benefits — dragged on for months.
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The surest sign that automatic stabilizers stand a fighting chance of being included in the stimulus is that Ms. Yellen may be on board, too. She endorsed using automatic triggers this summer, explaining her reasoning that struggling Americans “need relief and support for as long as the job market remains weak.”

Those aren’t automatic stabilisers then because they’re not automatic, are they?

3 thoughts on “Idiot”

  1. So Tim, please tell us what the state unemployment benefits amount to (on average, range) plus all the other stuff like child benefit, food stamps. Add in 600 bucks a week and some one off payments and the incentive to work for 12 dollars an hour seems to evaporate.

  2. Compare and contrast “with the guidance of Labor Secretary Frances Perkins … the Roosevelt administration introduced…” and “with the guidance of Labor Secretary XYZ the Trump administration introduced …”.

  3. Correct me if I’m wrong, but there’s probably a difference between an economic recession caused by a bubble, and an artificial recession caused by prolonged shutdowns engineered by elitists.

    Just seems strange to hear someone say, “We forced you to close your business, so we need more of your tax dollars to help you fund your business that we forced you to close.”

    Throughout this whole ordeal, it’s irritated me to hear people call these checks “stimulus.” Aren’t they simply relief checks? Sure, that money goes back into the economy, but it’s mostly meant to cancel out some of the losses caused by government policy. And most of those PPP recipients (since the government is certain to shortchange most of the applicants) won’t have any money leftover after simply keeping their businesses afloat.

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