In an op-ed for the New York Times, former U.S. Treasury secretary and LISC board chair Robert E. Rubin urges swift and intensive action to stimulate the economy, with special emphasis on extending credit to minority- and women-owned businesses in underinvested communities, the very ones most imperiled by the Covid-19 crisis.
The op-ed below was originally published on the New York Times:
Bringing the Economy Back to Life
Moments after being sworn in as Treasury Secretary in 1995, I stood in the Oval Office to advise the president on how to address the threat posed to us by the unfolding economic crisis in Mexico, an experience repeated two years later during the Asian financial crisis. I know what it’s like to recommend complex responses with no certainty of success.
Today, as our nation grapples with the worst pandemic in living memory, policymakers’ immediate focus is on containing the virus, caring for the sick and providing near-term economic aid and stimulus. But, while remaining focused on those imperatives, officials must begin planning when and how to regenerate economic life for the shorter and longer term.
A threshold issue is timing. We must avoid resuming economic activity too soon and creating a wave of new infections. But if we wait until there’s zero risk of further contagion, the hardship caused by this severe economic disruption could become far worse.
With the White House and some states already formulating guidelines for when to reopen, one way to reconcile any differences is for the administration and Congress to convene a small group of independent and respected public health experts and economists to weigh these interdependent health and economic considerations. The experts’ framework should reflect economic forecasts under different health scenarios and start with the emerging consensus that the transition will be gradual, that large-scale testing is essential, that different cities or regions may be on different timelines and that the guidance for people with antibodies may differ from that for those who remain vulnerable.
The second issue is how to best support economic revival. The relief for individuals, specific industries, state and local governments, and small businesses enacted by Congress provides some fiscal stimulus. And the Federal Reserve is offering liquidity to various parts of the economy.
But too many small businesses can’t survive without more being done. Even those that receive loans under the Paycheck Protection Program are likely to find the funding insufficient to reopen. And many very small businesses, like local restaurants, may not receive funds. A loan pegged to 2.5 months of payroll that must be spent within two months of receipt is unlikely to enable small businesses to weather the shutdown.