As the nation grapples with devastating healthcare and economic consequences of the spreading COVID-19 pandemic, policymakers in Washington have been ratcheting-up their responses. Bills and proposals have included actions to fight the virus, maintain employment and stimulate the economy. Given the unique nature of the crisis we are facing, vigorous efforts are needed on all these fronts.
To be effective, fiscal responses to the COVID-19 pandemic should be timely (get the money out fast), targeted (get the money to those who need it most) and temporary (permanent changes to spending and tax policy can wait). They should also be large enough to have an impact. While the costs will be substantial ($2 trillion at least), and will inevitably result in a major spike in the debt, this concern must take a back seat for now to protecting the nation’s physical and economic health.