Must-read: Ben Spielberg: “How to Prepare for the Next Recession”

Must-Read: Ben Spielberg: How to Prepare for the Next Recession: “Because interest rates are already so low…

…the Fed’s principal ammunition–the ability to further lower rates–is unlikely to have much traction when the next downturn rolls around. If we want to mitigate hardship and help the economy get back on its feet when that happens, the prudent move would be to strengthen the ‘automatic stabilizers’ in the federal budget–programs like unemployment insurance, the Supplemental Nutrition Assistance Program, or SNAP (food stamps) and Medicaid–that, without the need for congressional action, expand when the economy is weak and contract when the economy is on its way to recovery…. As they currently stand, these programs aren’t enough…. One of the biggest challenges during a recession is at the state level–many states have balanced-budget requirements, which mean that as tax revenues drop, spending has to as well, making the recession more painful…. Policy makers from both major political parties recognize the risks of inaction; Congress passed stimulus packages under the administrations of both George W. Bush and President Obama. In addition to increasing SNAP benefits, providing states with fiscal relief and enacting a Homelessness Prevention and Rapid Rehousing Program that served over one million people, the Obama stimulus funded about 260,000 subsidized jobs in 2009 and 2010. But it would be risky to depend on the same wisdom to come through in the next crisis…