Sanders Must Set Up Economic Jobs Council for 4th Covid-19 Bill

Mar 29-With Friday’s way off-the-charts 3.3 million unemployment claims, Sanders must set up an Economic Jobs Council to provide concrete policy advice on how to save jobs for an expected fourth bill to deal with the Covid-19 crisis, as the U.S. economy has hit a brutal “sudden stop,” with thriving businesses, especially smaller ones, overnight struggling to survive.

The U.S. must emulate Denmark in preserving employment, not just providing for higher and longer unemployment insurance and income in the CARES Act “stimulus” bill, as helpful as the latter might be, there is NO substitute for having and keeping a job.

To influence the debate on the fourth Covid-19 bill, Sanders’ Economic Jobs Council should immediately draft and post in a major publication, NYT or WaPo, this week an open letter on the issue of preserving as many American jobs as possible, hopefully with the signature of many economists. FDR had his “brain trust,” Sanders should have his.

This should not be seen as taking attention away from priority number one, fighting Covid-19. Rather it is complementary. Jobs must be preserved, by giving subsidies to employers to keep workers at home on payroll, which will buy as much time as necessary to fight the disease, reducing pressure to end those efforts prematurely, which would be disastrous.

We can not let Trump fall behind the unemployment crisis too, as he fell way behind the testing and tracing of Covid-19, which greatly exacerbated what is now the current human misery in NYC, New Orleans, Detroit, Chicago, and elsewhere. See this March 28 NYT article on the disgraceful testing delays.

Along with the disease itself, rapidly rising unemployment is the other major national emergency and human tragedy that must be forcefully dealt with before it too runs out of control. Like testing for Covid-19, time is of the essence in dealing with rapidly rising unemployment, every day and week lost will make things much worse later.

Right now the U.S. is rudderless when it comes to economic policy responses to rapidly rising unemployment, with not much economic advice from the White House, other than from ex-Goldman Sachs financier Mnuchin, which of course shows in the $2.2 trillion CARES Act “stimulus” bill.

Or from Congress leaders, together they rammed the CARES Act through without much debate or even a House roll call vote, with the presumptive Democratic nominee having zero impact, like McCain in 2008 with TARP.

There is a human story behind each unemployment claim impacting families and communities, most especially those tens of millions of American families living paycheck-to-paycheck, many of which have members also most vulnerable to the virus and lack decent healthcare.

Like Covid-19 data, weekly unemployment claims will be watched closely. And for whoever wants to get elected in November, the unemployment rate, not the stock market, will be key.

The two “progressives” in the Senate, Sanders and Warren, voted for the CARES Act, which passed 96–0, with I believe Sanders saying it was what he could do given the current political situation, which there is now an urgent need to change to deal effectively with the rapidly growing unemployment crisis.

My suggestions is that Sanders’ Economic Jobs Council should be chaired by James Galbraith and should include two MMTers, Stephanie Kelton and Pavlina Tcherneva, I believe all three may have advised him in the past.

Along with other leading economists, I also suggested Dean Baker and Gabriel Zucman be on Sanders’ economic council in an update to my March 25 article, “Stimulus Bill Historic Paradigm Shift, “We Are All MMTers Now,” this post is a brief follow-up to that longer article.

I have had no contact with any of the economists mentioned in this article about this Economic Jobs Council idea, I apologize to them for putting their names out there, but the U.S. is in a national emergency, and I feel they can provide indispensable service to the nation.

The internationally well-known Galbraith should lead the drafting of the Open Letter on solutions to the unemployment crisis and recruiting of signatories. He is a labor market economics expert at the University of Texas with degrees from Harvard and Yale, with government experience as the executive director of the Joint Economic Committee in Congress. Galbraith wrote in a March 28 British Guardian article:

“Deficits are about to go through the roof: with spending soaring and taxes collapsing, they could rise to 20% of GDP this year or even more — more than in the vast mobilization of the second world war. But this is a good thing. The public debt is net private financial wealth — to the dollar — and that is why the stock market went up, not down, when the support package passed…Crowding out — that old shibboleth of textbooks and the Congressional Budget Office — has been debunked by this catastrophe. Anyone who says this debt must be repaid later with more cuts to basic services should be ignored. Anyone still teaching such ideas should be ashamed.”

“Payroll replacement is also much better than a tax rebate and could be put in place for workers not yet laid off…With a full rebate for 70% of payroll up to $20,000 per worker, the idled wage workforce would be decently covered for three months, and the unemployment insurance system could concentrate on the self-employed and gig workers, made newly eligible.”

I talked about MMTer Kelton extensively in my March 25 article, she also has government experience. The far less known Tcherneva is a resident MMT expert on its favorite program, the Job Guarantee, which is not the same thing as preserving jobs, with a book coming out “The Case for a Job Guarantee,” in July I believe, following Kelton’s “The Deficit Myth” in June.

Tcherneva was quoted in the March 28 NYT article titled “The Nordic Way to Economic Rescue In the face of the pandemic, Denmark is effectively nationalizing private payrolls, in contrast to the patchwork America” that I linked to in an update of my March 25 post.

Tcherneva subsequently posted a Twitter thread on March 28 titled “What If We Nationalized Payrolls?” containing “a few thought experiments…that didn’t make it in the [NYT] article,” which are absolutely critical. Her thread has been put together by thereaderapp in the link, it is the MUST READ in this post.

As were in my March 25 article Kelton’s March 21 Op-ed, “Just Use ‘the Computer’ at the Fed to Give People More Money,” and in my update her March 27 Intercept article, “As Congress Pushes a $2 Trillion Stimulus Package, the “How Will You Pay For It?” Question Is Tossed in the Trash.”

Dean Baker also has a March 28 blog post titled “Money Is Not the Reason the U.S. Is Not Following the Danish Model.” which I also linked to an update to my March 25 post.

As I wrote March 25, “there are many other MMT “academic scrbblers,” Keynes’ term above, who have toiled away in relative obscurity since the mid-1990s…you have effectively won the economists’ ideological battle, but much more importantly you must now win the political war.”

This is their time and golden opportunity to seize, for the good of the nation and the world. Including some MMTers who are experts in the more arcane plumbing details of monetary policy and operations. Sanders could use them all in his Economic Jobs Council.

AOC has been leading the charge on the CARES Act, in her impassioned floor speech which went viral Friday, but progressives need to do more than calling it “shameful.” They actually need clear, well-thought out, implementable policies to deal with the rapidly growing unemployment crisis.

I have no idea how bad things might get economically, I’m not an economist. Nouriel Roubini, aka “Dr. Doom” during the 2007–09 Great Financial Crisis (GFC), is once again leading the charge to the downside with his March 24 article in Project Syndicate, “A Greater Depression?”

Back then Roubini was always ahead of most other economists, even though his forecasts lagged behind reality. So I try to watch what he has to say now, along with Mohamed El-Erian @elerianm on financial markets and the economy, he’s been emphasizing the economic “sudden stop.”

MMTers have been writing about employment and other policies for decades. Now is the time to finally try to get them implemented into law, for the good of the nation, and the world. A first step would be for Sanders to set up an Economic Jobs Council and to post an Open Letter on the unemployment crisis this week.

Make America and World Awesome, MAWA

John Furlan

Photo credit: Vox.com