How to Prepare for the Next Recession: Automate the Rescue Plan – By Neil Irwin – The New York Times

By Neil Irwin
May 16, 2019,  49
Solar panels at Nellis Air Force Base in the Las Vegas area. In 2009, the Obama administration pointed to the project as a success it wanted to emulate with its stimulus plan.CreditAirman 1st Class Nadine Y. Barclay/U.S. Air Force
“When the economy goes south, the United States traditionally has two ways of dealing with it. The Federal Reserve cuts interest rates. And Congress passes spending increases or tax cuts to try to put more money into people’s pockets.

But the past decade has exposed flaws in both of these approaches.

Interest rates are now very low even when the economy is good, meaning the Fed probably won’t have much room to cut them in the next downturn. And while the Fed is good at reacting quickly to economic weakness, its actions to aid growth may fuel inequality and financial bubbles.

The use of fiscal policy — adjusting taxes and spending — has different problems. In a polarized Congress, the party that doesn’t control the White House tends not to want to do anything that might help the opponent get re-elected. When Congress does act, as when it passed the Obama administration’s stimulus bill in early 2009, it may not get the timing or the details of action right. Money tends to go wherever lawmakers have the most clout rather than where it would do the most to stabilize the economy or help people who are suffering.

But there may be another way: an approach that would reduce the pain of the next recession no matter when it comes, what causes it or what the political dynamic might be when it arrives.”

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s