I Don’t Want to Be That Guy

But I’m going to be that guy and use the coronavirus outbreak to highlight my own pet issue: fiscal sobriety.

One of the reasons it would be preferable to be a low-debt and low-deficit country is that rather than talking about coronavirus response measures in the few millions here and there, we could instead commit to replacing a large share of lost wages for furloughed workers for a few weeks and set aside, say, $2 trillion, or about 12 percent of the total annual personal income in the United States, to pay it, and then maybe help out disrupted employers with a one-time tax credit.

I don’t know that that is necessarily the best policy, but if we want people to stay home and we are worried about the epidemic causing an economic collapse, that might not be the worst response. If the United States had been maintaining a sound fiscal policy up until this point — which it has not — then carrying that extra $2 trillion in debt would be a relatively easy thing — as a one-time emergency measure. But when we are running $1 trillion or so annual deficits as a matter of course, then piling on an extra couple of trillion dollars in debt is a much difficult and riskier thing.

If you live day in and day out on an emergency basis, it is difficult to deal with an actual emergency.

I suppose it is worth pointing out that we’ve had twelve years to meaningfully address the problem of “too big to fail” in the banking system, but have not done so.

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