How to rescue America

To rescue America from the Covid-19 crisis, we’re going to need a lot more than a bailout

- Barry Ritholtz

The economic crisis created by Covid-19 is unlike any other in modern American history. Thousands are dead, and the economic fallout has been devastating. More people lost their jobs over four weeks in March and April than did so during the entire 2008-09 financial crisis. In fact, since mid-March, all of the employment gains since the last crisis ended have been lost. Of the 156 million people the U.S. Bureau of Labor Statistics measured as working full time then, more than 26 million—about 16.7%—were no longer receiving a paycheck as of April 23. If you add in gig workers and those who were unable to file unemployment claims because state offices were too overwhelmed, the tally was more than 20%. At this pace, we will eclipse the peak of unemployment during the Great Depression, 25%, in a matter of weeks.

This sudden collapse in economic activity, hitting every sector except for food, health care, and Netflix, is why Congress moved quickly to pass the $2 trillion CARES Act on March 27. In late April, lawmakers added $320 billion to replenish the U.S. Small Business Administration’s Paycheck Protection Program. That sounds like a lot until you learn that the first allotment, $349 billion, lasted barely a week. CARES2, another trillion-dollar stimulus, is already under congressional consideration. CARES3 won’t be too far behind.

But these are all temporary salves, not long-term solutions. The current rescues only treat the symptoms of economic distress; they do nothing to address structural issues that have been a drag on middle-class household income since the 1980s. If we want to restart the engine that made this nation a superpower, we need to do something big. I mean really, really big: defeat-the-Nazis, land-a-man-on-the-moon, invent-the-internet big.