Paper for Groundwork Collaborative: full version here.
As the country crests the most devastating wave yet of the COVID-19 pandemic, there is growing optimism that the new administration will act quickly to stem the economic crisis: both by deploying the federal government’s leadership to control the pandemic itself and by using the federal government’s fiscal capacity to mitigate the economic damage caused by the public health crisis.
The Biden administration will need to turn around both of these failures quickly in order to prevent further catastrophe for millions of Americans and a sustained recession. But the disaster unfolding now is not just a result of policy failures over the past eleven months; it is the result of decades of disinvestment and austerity, accelerated during the Great Recession, which made us more vulnerable to this crisis. Local, state, and national austerity set the country up for a harsh, prolonged, and profoundly unequal recession. We face a pivotal moment now: we can repeat those mistakes, leaving us more vulnerable to future crises, or we can build back our public sector to make us more economically resilient.
It is certainly bad luck that the long-predicted1 economic downturn was sparked by a pandemic, but our failure to meet this crisis with an effective public response is the outcome of years of deliberate policy choices. The austerity implemented after the Great Recession decimated both our ability to weather an economic downturn and our ability to handle any crisis requiring a strong public response. Long before COVID-19 emerged, many experts predicted that the next economic downturn would be unnecessarily long and harsh because of choices we failed to make in the wake of the Great Recession.2 Insufficient financial regulation, continued tax breaks for the wealthy, public spending cuts, weakened labor protections and other policies have weakened our economy, exacerbated inequality, and increased economic instability, making us more prone to damaging recessions.