Doing What it Takes

Blog Post
Wednesday, March 25, 2020

On the latest Facing the Future, I was joined by Concord Coalition Executive Director Robert L. Bixby and Donald Marron, a fellow and director of economic policy initiatives at the Urban Institute and a member of The Concord Coalition’s board of directors. We discussed the federal government’s response to the Coronavirus, the economic fallout of the pandemic and the relevance of the Congressional Budget Office's latest baseline update.

“We are basically turning off a substantial part of the economy; we’re putting it in suspended animation,” Marron said. “That’s causing immediate hardship to millions upon millions of people.” 

“It’s a necessary thing to do, but a big unknown is how long we do that,” he added. “And policy right now is very much focused on obviously getting the public health part right and support to people and businesses so they survive through that.” 

At the time of the show’s recording, Marron also provided his take on a potential relief and stimulus package coming out of Congress that focuses on aid to individuals, support for small businesses and funding for large businesses that are struggling with liquidity. 

“It’s obviously a big fiscal action, and it involves getting money to people and businesses, but the point of it is to just to help them survive this incredibly painful time … I think of it as a relief effort," Marron said. 

He said there is a lot of concern about what happens to the economy when we try to take it out of the freezer and turn it back on. 

Marron provided insight with regard to the type of economic recovery that could occur, explaining some of the “shapes” of recovery, like a “V,” “U,” “L” and “W.” He added that the nation needs to avoid an “L,” where the economy plummets and then it takes a very, very long time to come back. 

“My crystal ball is very fuzzy about the when on this; it feels like it’s going to be at least several months, and then you start getting in discussions about whether there’s going to be a second wave of the virus, whether the containment measures work,” he said. 

Marron, a former acting-director for the CBO, also said, “at this point, I don’t think people are too focused on the price tag, and I think that’s fine; the goal is to do what needs to be done.” 

“I think as we get further into this, we’ll eventually start having more conversations about tradeoffs, about what things work, what things don’t, what effects they have, and trying to select from a menu of options,” he added. “And CBO will play a crucial role in also helping people understand the magnitude of the various levers being pulled on.” 

On the latest update by the CBO to their baseline projections, which is their forecast of the budget for the next 10 years, Bixby said, “CBO went ahead and updated the baseline, but they noted it’s a mechanical thing … because of all that’s going on, they can’t project the new situation right now.” 

He said that the baseline is essentially a backward look at where we were going before the economic impact of the pandemic hit. With a $2 trillion relief package pending, “obviously big things are going to happen between now and when they issue their next baseline, which is usually sometime over the summer.” 

“What it says to me is whatever [Congress does] short term, no matter how massive the package is, they should not enact policies that are going to make the underlying structural deficits worse,” Bixby said. “In other words, we’re going to have to add huge amounts to the debt to treat the current problem, but you don’t need to make the underlying structural problem worse, that is the permanent gap between spending and revenues, you might call it the preexisting condition.” 

Hear more on Facing the Future. I host the program each week on WKXL, NHTalkRadio.com (N.H.), and it is also available via podcast. Join me and my guests as we discuss issues relating to national fiscal policy with budget experts, industry leaders and elected officials. Past broadcasts are available here. You can subscribe to the podcast on Spotify, iTunes, Google Play Music or with an RSS feed. And follow Facing the Future on Facebook

You can read more of Concord and Marron’s responses to the pandemic, here and here, respectively.