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The Case for a Permanent Stimulus

Climate change guarantees more crises ahead. Relief measures should kick in automatically.

A large quantity of men stand assembled in a dockyard.
Fox Photos/Getty Images
Unemployed laborers wait for work at a dockyard in 1931.

The $1.9 trillion recovery package set to go to a vote in the coming weeks won’t include automatic stabilizers. A perennially popular policy among left-of-center wonks and the public, automatic stabilizers can refer to any program that’s there when you need it. Unemployment insurance is an automatic stabilizer: Since it’s already in place, it can swell when more people are out of work and contract when the economy improves. The term can also refer to programs that kick in automatically once certain thresholds are satisfied.

Instead of including such measures in the current stimulus, Congress is poised to say, again, that new benefits will expire based on its best guess for when life will get back to something like normal. If current elected officials guess wrong, they’ll have to come back to the bargaining table with Republicans and hope that some critical mass of people don’t starve in the interim.

But normal itself is a strange concept in the twenty-first century. Texas just experienced a freak deep freeze that left 4.4 million people without power. Several parts of the country are being hit by floods that were supposed to come just once in a century. Infectious diseases and spillover events become more likely as the planet gets hotter and industrial practices force various vector species into dangerously close quarters. And there’s always a chance that Covid-19 itself could mutate and become immune to the vaccines now being doled out around the world. More disruptions are coming. We’ll need more automatic stabilizers to deal with them.

Such policies are broadly popular, and the lack of them leaves Americans worse off. A study published last year found that the United States has some of the weakest automatic stabilizers among Organization for Economic Cooperation and Development countries, leaving us more vulnerable to shocks. That’s partially because the U.S. now tends to deal with spikes in joblessness through policies like unemployment insurance, which support people looking for work financially but don’t help them find it. Among the biggest barriers to putting more automatic stabilizers in place has been the Congressional Budget Office, which doles out “scores” for proposed legislation based on its “budgetary consequences.” The CBO plays an outsize role in the policymaking process—even if, as The American Prospect’s David Dayen reported in a recent profile of the agency, its own staff see their role as more informational. Most recently, Republicans have touted the CBO’s pessimistic scoring of an increase to the minimum wage as a reason not to raise it. As Dayen writes, “It’s not that CBO governs Washington, it’s that Washington has allowed itself to be governed, by an unelected collection of well-meaning economists given a fundamentally impossible task.”

Since it was only invented in the 1970s, the CBO never got the chance to score New Deal programs that rescued millions from dire poverty. That included enduring programs like Social Security and Medicaid but also those that did something the federal government doesn’t do much of anymore: put people to work directly. The Works Progress Administration and Civilian Conservation Corps hired the unemployed to do everything from build bridges to cut trails to write plays. Yet the fact that they had to be reauthorized annually in Congress was a drag on their administrative capacities. Their champions wanted to see them made permanent, viewing unemployment as a longer-term problem, which would outlive the Depression.

As WPA administrator Harry Hopkins wrote in The New Republic in 1937, “We will never do away with mass unemployment until we actively direct the resources of government and industry toward making more employment possible.” A long-term fix requires that unemployment “no longer be regarded as an emergency problem.” There was no reason, he added, why the unemployed “should be asked to live as exiles in their own country, finding courage only in the hope that some day they may be admitted to the magic circle” of private sector employment. “Either a way must be found to admit them to participation in the economy of private enterprise or else they must be given a definite and respectable status as recipients of insurance benefits or as public workers.… No arrangements, necessary and good in their time but labeled ‘temporary’ and ‘emergency’ in order to preserve the unstable nature of our relief measures, will meet this long-time need.”

Ironically for those balking at their potential CBO scores, automatic stabilizers serve to streamline the policymaking process. By setting a floor below which no one living here should fall, they make it so that whether people get vital things like food and shelter isn’t left up to political games. In the current case, that would mean a stimulus package that keeps expanded unemployment benefits in place until jobless rates drop below a certain threshold. But there are more creative options, too. Such a framework, as Nathan Tankus wrote in his newsletter Notes on the Crises, could be used for instituting eviction bans, to ensure people aren’t left homeless in a pandemic when rising unemployment threatens their ability to pay rent. Both of these would help respond to the more uncertain future climate change practically guarantees. But to offer just one example of a more direct and obvious climate-geared automatic stabilizing policy: Agricultural laborers could be paid to stay at home when extreme temperatures make it too dangerous to work outside.

Many millions could be forced to leave their homes and jobs as seas rise. Meanwhile, the core business model of the fossil fuel industry has to be scaled down dramatically. Coal is already in terminal decline. And when the price of oil swings up and down, the sector can—and has, in the past year—shed tens of thousands of workers at a time. Transition programs tend to focus narrowly on what happens to fossil fuel workers themselves. But whole regional economies are bound up in coal, oil, and gas. The most generous retraining programs for roughnecks in West Texas won’t put waitresses or gas station attendants back to work once traffic slows down. Automatic stabilization policies, however, could.

Expanded unemployment insurance has helped level the state-by-state disparities in these benefits amid the pandemic. Letting them expire will leave people in red states with big extractive sectors at greater risk when their next bust comes, whether through shifts in global oil markets, declining demand, or climate policies that phase down production. Stronger safety nets are the backstop of any plan to phase out fossil fuels—automatic stabilizers can help states that rely on fossil fuel revenues to transition away from them. A plan to zero out carbon emissions, for instance, could declare that states that derive more than 5 percent of their tax revenues from coal, oil, or gas get automatic access to a reserve pot of federal funds for infrastructure and jobs programs.

One proposal on offer from Representative Ayanna Pressley would establish that every American has the right to a job, in line with long-standing calls for full employment from civil rights campaigners who look to extend gains on voting rights into the economic sphere. Translated into law, Pressley’s federal job guarantee resolution would establish the government as the country’s employer and put people to work directly through local employment offices receiving funds from the Department of Labor. It’s aimed explicitly at addressing the enormous and persistent gap in white and Black unemployment rates, wherein Black workers tend to be the last hired and first fired. And as climate crises continue to mount, such an automatic stabilizer—paying $15 an hour with full benefits—could create invaluable, low-carbon work that the private sector simply won’t do since it isn’t profitable: Think remediating coastlines, or checking in on the elderly. A job guarantee can help people settling into new homes find work and put down roots, and offer close-to-home alternatives to the many low-wage jobs bound up in the fossil fuel economy, like those at Walmart or McDonalds, which depend on carbon-intensive supply chains. By offering a living wage and competitive benefits, a job guarantee could also force those companies to make the jobs they offer better.

The GOP has every incentive at present to make sure Democrats deliver as little as possible. It can simply blame the lack of aid on the Democrats and use it to hammer them in campaign ads in 2022. People’s access to jobs, food, shelter, and housing, though, shouldn’t be contingent on guesswork or partisan squabbling—CBO scores be damned.