You are currently viewing A Second Economic Crisis for Biden, but a Different First Response – The New York Times

A Second Economic Crisis for Biden, but a Different First Response – The New York Times

Mr. Biden has stressed that such aid will support increased consumer spending, but he and his team cast the goal of distributing the money in more human terms: to ensure as many Americans as possible avoid the scarring damage of homelessness, hunger and the virus itself.

The Biden team and its allies are confident that, if they succeed, the economy will be poised for a roaring rebound. Other policymakers and forecasters, including Jerome H. Powell, the Federal Reserve chair, have predicted a swift rebound once the virus is under control.

“The recovery from the Great Recession was delayed by years because we failed to act at the scale of the problem,” said Heidi Shierholz, a former Labor Department chief economist who is now at the liberal Economic Policy Institute. “This is a huge break from past mistakes.”

The Biden plan is not, to be clear, the exact plan that many economists, including liberal ones like Mr. Furman, would have chosen. The direct checks, which proved a winning political message in the Georgia runoff elections that gave Democrats control of the Senate, will reach millions of Americans who have not lost income amid the pandemic and are most likely to sock the money away in savings.

And its price tag, along with the inclusion of provisions that conservatives have long fought, like increasing the federal minimum wage to $15 an hour, means the package is unlikely to draw much Republican support. Already, lawmakers are warning that it spends too much and is overkill on top of the $900 billion and $2.2 trillion packages passed in December and March.

Some conservative economists say the package spends far more than is necessary to fill what economists call the “output gap,” which is essentially the value of lost performance in the economy because of the recession. They are beginning to warn that pouring too much fuel on the economy risks runaway inflation — the same argument that many made in 2009 and that proved to be wrong.

“A package this size is inadvisable,” said Michael R. Strain, an economist at the conservative American Enterprise Institute. “It would fill the output gap several times over.”

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