It was no real surprise to see Ben Bernanke and Janet Yellen, the past two chairs of the Federal Reserve, testifying to Congress on Friday about the economic-policy response to the coronavirus pandemic. Although neither of them has appeared before a congressional committee since leaving the Fed, they have both emerged in recent months as vocal supporters of using monetary and fiscal policy aggressively to support the stricken economy. Last month, they signed a public letter from more than a hundred and fifty economists that called on Congress to pass another big spending bill to extend and broaden the Coronavirus Aid, Relief, and Economic Security (cares) Act, which was enacted in March.
There is no time to lose. About this time next week, the supplementary unemployment benefits of six hundred dollars a week that were introduced as part of the cares Act will start to expire. If Congress doesn’t extend the benefits, this will have a hugely negative impact on the roughly thirty-three million Americans who are out of work and claiming benefits from local or federal programs. Many of these people, who lost their jobs through no fault of their own, will be plunged into poverty, and the damage won’t end there. As they cut back on spending because their income has been slashed, the effects will ripple through the rest of the economy, causing further job losses. Exactly how many more jobs will go is difficult to say in advance, but Harvard’s Jason Furman, who headed the White House Council of Economic Advisers during the second term of the Obama Administration, recently estimated that over the course of the next year it could be around two million.
Appearing at the hearing of a coronavirus subcommittee that was set up by the House Committee on Oversight and Reform, Bernanke and Yellen didn’t get into that level of detail. Drawing on some basic economics and their experiences dealing with a previous crisis—the Great Recession and its aftermath—they did persuasively explain why Congress should act urgently on three fronts: extending the supplementary unemployment payments; providing additional financial support to state and local governments; and developing a comprehensive plan to make available adequate testing, medical equipment, and contact tracing. The two former policymakers, who are both highly regarded academic economists, also pushed back against recent suggestions from the White House that the new spending should be limited to a trillion dollars. Yellen said it was hard to tell precisely how much financial support might be needed, so it would be unwise to impose a spending cap. Bernanke said, “Whatever it takes is probably what we need to be thinking now.”
Acting White House chief of staff Mick Mulvaney told a crowd at a private gathering in England on Wednesday night that the Trump administration “needs more immigrants” for the U.S. economy to continue growing, according to an audio recording of his remarks obtained by The Washington Post.