Center for American Progress

RELEASE: 7 Principles that Must Guide Economic Relief Negotiations
Press Release

RELEASE: 7 Principles that Must Guide Economic Relief Negotiations

Washington, D.C. — A new analysis from the Center for American Progress looks at the seven principles that must guide an economic relief plan to deliver on health, provide targeted relief, and create broad-based growth.

Nearly a year into the COVID-19 crisis, the U.S. economy is incredibly fragile. Many businesses have permanently closed their doors, the labor market has still not recouped all the jobs lost last spring, and many state and local governments are facing budget shortfalls. The faltering economy coupled with an inadequate government response pushed more than 8 million Americans into poverty in the later part of 2020.

Only the federal government has the ability to provide the economic stimulus necessary to create a quick and equitable recovery, but economists agree that economic stimulus must be quickly applied, well-targeted, and sufficiently robust. In their new analysis, Andres Vinelli, vice president of Economic Policy at the Center for American Progress, and Christian Weller, CAP senior fellow and professor of public policy at the McCormack Graduate School of Policy and Global Studies at the University of Massachusetts, Boston, outline the following seven principles that the new administration and Congress should follow as they negotiate ongoing COVID relief:

  • Congress needs to act fast. Many people and businesses have exhausted their reserves, and many others are on the precipice of bankruptcy, eviction, and foreclosure. Without quick action, a deeper and longer recession is likely.
  • Now is the time to think big in order to reignite growth. Getting the economy back to its full potential may require spending in the area of $3 to $4.5 trillion dollars. This is an amount greater than currently proposed in the American Rescue Plan, so the plan will likely only be a very important first step toward building a strong, equitable recovery for the longer term.
  • Any economic package needs to include massive investments in public health. This includes money for the production and distribution of the vaccine, building up health care capacity in underserved communities, and paid family and sick leave.
  • Congress needs to provide more financial support for those struggling the most. This includes added stimulus payments but also increased unemployment benefits that add more than $400 per week, an expanded and fully refundable child tax credit (CTC) of $3,000 per child, a boost the earned income tax credit, and a 15 percent increase to Supplemental Nutrition Assistance Program (SNAP) benefits.
  • Congress needs to finally support state and local governments with quick, sizeable and reliable aid. Such help will ensure that state and local governments will be able to deliver on the increased demands brought about by the pandemic without taking the counterproductive steps of cutting vital services or laying off employees (mainly teachers) en masse. Congress must avoid a repeat after the last recession, when state and local governments cut spending and laid off people, contributing to a very slow recovery.
  • Congress should make a renewed effort to tackle massive and rising income and wealth inequality. Widespread inequality will otherwise continue to slow economic growth. Measures such as a higher minimum wage; renter and homeowner protections from eviction; foreclosure moratoriums; and added financial help to small businesses, especially those owned by people of color, are long overdue.
  • A second, future “infrastructure and jobs” package needs to make additional explicit pro-growth investments. A long-term economic recovery package should include robust, comprehensive investments in infrastructure. The final package should include transportation, water, clean energy, schools, rural broadband, and affordable housing, among other sectors.  Moreover, federal funds should be targeted to communities facing sustained economic hardship in order to achieve inclusive prosperity.

“The sluggish, uneven recovery from the 2008-2009 financial crisis shows the long-term risks of not quickly enacting a targeted and robust economic recovery package,” said Vinelli. “The American Rescue Plan, proposed by President Joe Biden last month, builds on the lessons learned from the Great Recession and from the relief packages passed earlier in the COVID crisis to provide relief that will get aid to the people who need it most while supporting broad-based economic growth.”

Read: “Move Fast and Think Big: 7 Key Principles for the Economic Package America Needs Now” by Andres Vinelli and Christian Weller

For more information or to speak to an expert, contact Julia Cusick at