How to do 2020 Stimulus: Learn from 2009 Mistakes

By Reed Hundt

In a crisis you have to solve simultaneously for both the short term and the long term.

In the Lehman brothers bankruptcy crisis it was critical to bail out the banks in some good way (we chose a bad way) and it was also critical to have a long-term solution for the woes of the economy. That is why a green bank should have been created at the same time as cash was handed out to individuals to deal with the immediate problems like losing their homes or their jobs.

You deal with the symptoms, find a cure and also do rehab.

In this case the medical analogy is not an analogy but precisely what we need to do.

We have to bail out healthcare system immediately. Masks, tests, beds, etc.

We also have to work on a cure for this and similar viruses that like recessions now hit globally every half dozen years.

And with respect to the economy, we have to hand people cash for sick pay and unemployment comp and immediate virus related health care.

But the shock to the economy may be long-term as it was in 2008.  So we have to invest in public-private infrastructure and especially in a green bank to make sure the infrastructure also helps reduce emissions. That is what was not done in 2009. It is tragic. We should not repeat.

The basic rules are:  do more than might be necessary and do it immediately ahead of the problem becoming fully manifest.

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