Editor’s Note: Elizabeth Warren is a US senator from Massachusetts and a former Democratic candidate for president in 2020. The opinions expressed in this commentary are her own; view more opinion at CNN.
The coronavirus relief package awaiting a Senate vote should not be delayed, and we must pass it immediately. But we need to do more.
The US is heading toward a recession, and Speaker Nancy Pelosi has already announced plans for an additional emergency response package. This is the right approach. We must act quickly to enact a major fiscal stimulus package that wards off economic disaster. This legislation must meet the challenge of the crisis we face by taking the next steps crucial to safeguarding our public health, including truly universal paid leave. And it must learn from the lessons of our response to the 2008 financial crash.
During 2008, I watched first-hand as our government offered a no-strings-attached bailout to the same giant banks that had driven our economy over a cliff. Meanwhile, the government did too little for most homeowners facing foreclosure. In the years that followed, the big banks quickly returned to profitability, while countless American families struggled to recover.
We can do better this time.
First, this stimulus must be large enough to match the challenges that families and communities face. In 2008, the stimulus package was too small, too tilted towards ineffective tax cuts and too unwilling to make the structural changes needed to address serious damage to our economy. Once economists figured this out, Congress refused to pass another stimulus bill. The economic fallout was predictable: a sluggish recovery that left too many working families behind. Based on the latest projections of the likely economic harm of coronavirus, I have called for an immediate $750 billion stimulus – roughly 3.5% of GDP.
Next, the federal government should focus on recovery from the grassroots up, not Wall Street down. This means focusing on helping people directly, and, in doing so, addressing the gaping holes in our economy that leave families one lost paycheck away from defaulting on their mortgage, car, credit card or student loan payments.
Direct help begins by closing the gaps in the paid leave policies already approved by the House so that all workers have access to this critical benefit.
Direct help also means increasing Social Security benefits checks by $200 a month. That would send vital financial help to seniors and people with health conditions that make them more susceptible to Covid-19, while boosting the economy far more effectively than tax cuts.
A grassroots stimulus package should also include broad cancellation of student loan debt. The last economic crisis hit young people hard, plunging them deep into crushing student debt and pushing them into a historically weak job market. Temporarily suspending interest, as the President did last week, fails to right that generational wrong and only delays the pain for students. If the President won’t act on his own, Congress should include student debt cancellation in a stimulus package.
Direct help to families also means confronting the short- and long-term costs of housing. No family should lose their home during a pandemic. Congress should immediately halt evictions in federally subsidized, backed or insured housing, institute a moratorium on all foreclosure proceedings, increase funding for homelessness services and create a new program to allow homeowners to delay or modify their mortgage payments during disasters. This is also the moment to invest in affordable housing construction and rehabilitation, which will stimulate the economy and create jobs in the short term, while lowering rents in the long term.
Any stimulus package must also pass an important test: federal money that goes to big corporations or specific industries must be used to help their employees. Funds must come with strings attached to ensure that the money goes to maintain payroll, not to enrich shareholders or pay executive bonuses. Giant corporations that receive substantial loans from taxpayers should be required to set aside one or more board seats for a representative elected by the company’s workers. Violations should trigger criminal penalties and clawbacks.
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When the 2008 financial crisis hit, the federal government responded with a bankers’ bailout. The rich and powerful got richer and more powerful. We should learn from the past and meet the challenges of this pandemic head-on, this time to deliver meaningful, grassroots relief directly to American families.