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TheeconomiccrisiscreatedbyCovid-19is unlikeanyother
inmodernAmericanhistory.Thousandsaredead,andthe
economicfallouthasbeendevastating.Morepeoplelosttheir
jobsoverfourweeksinMarchandAprilthandidsoduring
theentire2008-09financialcrisis.Infact,sincemid-March,
alloftheemploymentgainssincethelastcrisisendedhave
beenlost.Ofthe 156 millionpeopletheU.S.BureauofLabor
Statisticsmeasuredasworkingfulltimethen,morethan
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 toreplenishtheU.S.SmallBusinessAdministration’sPaycheck
ProtectionProgram.Thatsoundslikea lot,untilyoulearn
thatthefirstallotment,$349billion,lastedbarelya week.
CARES2,anothertrillion-dollarstimulus,isalreadyunder
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.
There’s no small amount of irony in this coming from
me. I’m the guy who wrote an entire book, Bailout Nation,
arguing against bailouts for, among others, Chrysler in
1980, Long-Term Capital Management in 1998, and the fail-
ing banks of 2008-09.To rescue America
from the Covid-19
crisis, we’re going
to need a lot more
than a bailout
By Barry Ritholtz