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.
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.
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?