 It is a hard moment to have this conversation, as our country is roiled by righteous anger, chaos, and uncertainty. The coronavirus and the ensuing economic catastrophe have laid bare the fragility and vulnerabilities and structural weaknesses of our pre-existing economy, especially by race. Our job now, as economists, is to bring to bear all the tools of economic policy to craft a policy response that is timely, adequate in scope and scale, and targeted to address underlying inequity and structural weaknesses. Aid to support sustained state and local public services is essential to address racial injustice and wealth and wage gaps, both in terms of the public services provided and the quality and the composition of jobs and who holds them. EPI is well aware of how racism and economic inequality have hurt blacks in this country, and the pandemic has only shined a bright light on this issue. We will release a report later today through our program on race, ethnicity, and the economy that shows how racial and economic inequality have left many black workers with few good options for protecting both their health and economic well-being during the coronavirus pandemic. Again, thank you for joining us today. I will introduce all of our panelists who will each speak for five minutes, and then we will take as many of your questions as we have time for. We will end promptly at 10 o'clock. We are very pleased with the group of panelists who are joining us this morning. First will be Josh Bivens, the Economic Policy Institute's Research Director. Second, we will have Mark Zandy, former advisor to Senator McCain's presidential campaign chief economist at Moody Analytics. Third, Mr. Professor Glenn Hubbard, chair of the Council of Economic Advisors during the George W. Bush Administration, and Dean Emeritus and Russell L. Carson Professor of Finance and Economics at the Columbia School of Business. Fourth, we are pleased to have Banga Agilore, senior economist at the Center for American Progress. And finally, Jason Furman, who was chair of the Council of Economic Advisors during the Obama Administration, and now professor of the Practice of Economic Policy at the Harvard Kennedy School. Without further ado, Josh Bivens from the Economic Policy Institute, and thank you for joining us. Okay, thank you for that, Thea, and thank you for acknowledging the context of the past couple days that makes this a tough conversation, but I will try to focus for this morning on something I actually know about and something I might actually have some solutions for. So I'll say a couple things about the unique things about the economic shock inflicted by the coronavirus and the associated public health response. First and most obviously, it is historically enormous and rapid. Second, its ground zero is really the low wage sector. This is very different. Recessions tend to start elsewhere and then sweep up low wage workers and their spillover. Third, it's a health shock both to spending, but also in terms of the intense demands it is putting on the narrow sector of the healthcare complex that must deal with COVID directly. And fourth, it is directly affecting children and education through school shutdowns. All of these things means it's putting historically large strains on state and local governments. Revenues of these governments are highly cyclical, very plausible measures of the revenue shortfall these governments are facing by the end of 2021 cover around a trillion dollars given the forecast and path of unemployment over that time. Filling in these shortfalls is necessary to keep state and local governments around the country from becoming hundreds or even thousands of anti-stimulus machines over that time. If we don't fill them in, we'll end next year with roughly five to six million fewer jobs than we would have otherwise had. But filling in these shortfalls only returns these governments to the January 2020 status quo, but they're going to need a lot more resources than this. For one, they're the ones dealing with the crush of safety net applicants for programs like unemployment insurance. They will need to ramp up public health spending for things like testing and tracing to manage life with the virus. They're going to face extraordinary expenses associated with opening up schools safely. Think about lots of testing and PPE for kids and teachers in the coming year. The relief and recovery measures that we have passed so far in response to this, mostly the CARES Act, have done a very good job of supporting incomes through April and into May, but that tranche of money has already started pulling back and major pieces of it, the payroll protection program, the enhanced unemployment insurance benefits, they start turning off around mid-summer when most forecasts still have us in pretty high double-digit unemployment. Even if we're very lucky on the public health front, we're going to be making fiscal policy contractionary well before there's any private sector momentum for recovery. And we've basically baked in the cake for this fall a pronounced slowdown that will hit far before full recovery is achieved. We should start unbaking this. The most important start to this is the state and local aid, preferably with large tranches of it, tied to triggers that keep the aid flowing based on economic conditions rather than arbitrary calendar dates. One final word on this, basically about the rise in federal debt that is going to be needed to finance this, it will yield an enormously high rate of return. We are going to borrow from the future one way or the other in the coming crisis. We either do it really cheaply by doing lots of aid financed with essentially zero-interest treasury bonds or we're going to do it very expensively by bequeathing the future of a sicker economy that has done much less necessary investment and has a much less well-educated cohort of kids and just has lots of human misery in the meantime. It strikes me that the choice between these two courses is really obvious. We should do the aid to state local governments that is necessary over the next year or more. So with that, I'm going to turn it over to our next speaker. Thank you, Josh. Thank you, Thea and EPI for the opportunity to speak to the group today. I'll just make three quick points in my remarks. The first point is that state and local governments desperately need financial support based on my outlook for the economy over the next couple of three years, which is not dissimilar from outlooks presented by others like the congressional budget office. I would anticipate that the budget shortfall for state and local governments will approach about $500 billion. That's through fiscal year 2022 at a state level. So between now and mid 2022. The shortfall assumes that the states use all of their rainy day funds, which I think it's important to recognize is actually quite considerable. States have done a good job in general preparing for tough times like today. They did save during the previous expansion and also assumes that the federal government will continue to pick up the tab for direct health care costs associated with the virus. They've done that so far and I'm assuming that will continue. So under those assumptions, the budget shortfall will come in about $500 billion. Just for context, that's about one fourth the total general government revenues in the last fiscal year. So very substantial. Point number two, without the support, if state and local governments don't get that support, there will be substantial cuts in employment at state and local governments and in critical programs. And we're already getting a sense of that already. State and local governments in the last two months in March and April laid off a total of a million people. That's about 5% of their workforce. And that's stunning. Very surprising to me, not that they're starting to lay off, but that they've laid off at such an aggressive pace already suggests that there are significant financial stress. I would have thought that there'd be a little bit of stickiness there, that they take a little longer before they start shedding workers, but that's not been the case. And it's important to recognize who these workers are. These are folks right in the middle of the income distribution, middle America. The average pay is about $65,000 a year. And these are key occupations in the critical period like today. Teachers, police, fire, emergency responders, social workers, these are the kinds of folks that we need working in all times, but particularly in a time like exist today. Finally, point number three, and I should say just as a point of interest, if states don't get additional support in my economic outlook holds, I would expect that state and local governments will shed another close to 3 million jobs over the course of the next 12 to 18 months. And that's again on top of the million that they've already lost. Point number three, supporting state and local governments is tried and true, fiscal support. We do this historically. It's a very efficacious way to support the economy all communities across the country. We did this to great effect during the financial crisis a little over 10 years ago and did a fair amount of work trying to understand the benefit of state and local government support in periods like today. And our estimate of the multiplier, the so-called bank for the buck is about $1.34. So every dollar in support that the federal government provides state and local governments, that results in overall economic activity GDP about a year later of $1.34. So I don't think there'd be any difference in that multiplier today, given the circumstances that we're in. Could it be even a little bit larger? So this is a very effective way to try to support the economy, help it out in a tough time. So I would strongly support, and I think it's job number one actually in the next fiscal rescue package, where Congress and the administration to come together and provide this support to state and local governments that's critically necessary. Thank you. I'll pass the baton along. Good morning. Thanks. It's a pleasure to be with you. I actually wanted to make three points myself. First, I'll pick up on Mark's last point as the bottom line, which is this is a critical time to provide additional assistance to state and local governments. I can't imagine a successful next package without that. My three points are as follows. One is to describe the shock itself. Second, the question, what do we do now? And then a third question, what do we do going forward? For the shock itself, there've been both supply and demand elements, and they both play into the discussion we're having today about assisting state and local governments. On the supply side, obviously, we've had a massive shock from the pandemic itself, and people have pointed to shutdowns, but it's really the pandemic itself that's the source of the shock. So I think of responses there in terms of critical public health infrastructure and infrastructure to support critical state systems like unemployment insurance. On the demand side, and the point's already been made, that just as in the CARES Act, we wanted to avoid excessive layoffs in the private sector, so too do we want to in the public sector, the same economic logic points, ports over. So I think that that is going to be critical, as well as additional support for for Medicaid. The whole supply and demand structure of this shock has really laid bare some underlying problems we're already seeing in the economy that are divides by income group, by skill group, by race, and economic opportunity in the country. The state and local financing increases will help. What to do now? State and local governments employ roughly 15 million folks. They face very sharp budget constraints by design relative to the federal government. Many would face budget deadlines at June 30th is a fiscal year. The National Governors Association has put out numbers not too dissimilar to what Mark said, that the lost revenue over the period Mark mentioned would be about $500 billion. You could think of that, if you will, as a kind of federal business interruption insurance backstop, except for a state and local government. Mechanically, a couple of ways in which those funds are useful and critical in the short run would be to continue increased matches for Medicaid that began in the family's first act. And I think has been mentioned before, those could be associated with a trigger. Given the critical nature of the labor market for all of this, probably something like the unemployment rate is the is the right trigger and to continue complete federal cost sharing for emergency work. In terms of financing this, I would agree with the point Josh made, I think of this as like fighting a war. And when you fight a war, you necessarily borrow funds to prosecute that war. Afterward, you go back to hopefully more normal times and the economy grows so that the opportunity cost here is really what's the counterfactual if we don't fight this war? And what are the economic costs? And they're very, very large. Having said that, I don't think this is the occasion for dreaming up entirely new non one time ways to spend money, whether it's either for state governments or other programs. Third, what do we want to do going forward? I think this is the beginning time we should be considering more automatic stabilizers. That's always been a good idea in my humble opinion, but I think it's been laid bare now. The second is to perhaps to garner more political support by trading the needed state level support now for broader discussions of state level fiscal accountability to go beyond COVID-19. And then third, more federal funding for public health infrastructure. I think we've seen that public health infrastructure is a public good not just within a state, but across states really calling for a broader federal funding. So those are my three points. Thanks again for having me. Thank you. I would like to thank Thea Lee and the Economic Policy Institute for the invitation to speak about the need for much more substantial levels of aid to state and local governments. I want to focus on the importance of this for left-behind communities and the communities of color in both rural and urban settings. Through the first three COVID packages, these communities have not received any relief even though these groups are often suffering the most harm in this pandemic and are on the front line of these crisis. Support and relief provided to state and local governments will benefit rural places and communities of color throughout the nation. Post-great recession saw the longest period of economic growth in history. However, this economic recovery did not reach all communities within America. Rural places experienced significant increases in employment in during the Great Recession and through 2019 did not even return to a 2008 level of employment. African Americans had a lowest unemployment rate and recorded history at 5.5% in October of 2019, but that was still nearly doubled the white rate. Incidentally, the white unemployment rate was at 5.5% back in May of 2014. Now that the pandemic has hit, the pain has fallen disproportionately on communities of color. The April jobs report found that double-jitted increases leading to historic highs in unemployment for Asians and Latinx groups. The employment to population ratios dropped significantly for women of color. These deep drops for women of color are due to occupational segregation that steers them to jobs in the hospitality sector and the education and social services sector that have been hit hard. I'm pretty sure that the EPI report that's going to come out later today will hit on that. Due to the pandemic, states are facing increases in cost to combat the coronavirus as well as significant loss in income tax revenue due to the spikes in unemployment, bankruptcies, closures of small businesses, and then with retail sales having dropped in the last month of 16.4%, that's hit state revenues, sales revenues are as Josh mentioned before. So this is leading to states having to make difficult choices which inevitably end up in budget cuts. So as Mark just mentioned, there was a one million job loss. If you look back at the Great Recession, there was actually 750,000 state and local jobs that were cut and one-third of those cuts were falling in the K-12 sector. Again, these cuts fall disproportionately on people of color and especially women of color. We do not want to repeat this experience in this crisis. And the other thing is that the state, the struggle will not be limited to the states and has already filtered down to the localities. If we think about the financial situation for counties, school district, townships, these are the places that actually do a lot of spending in terms of health, as Glenn mentioned, in terms of the public health infrastructure. And you know, thinking about public health, we think about rural communities. You know, there's been a huge loss or huge spike in hospital closures and 90% of the hospital closures that have happened in the last 10 to 15 years have been in rural counties. So we had $150 billion in the CARES Act that went to state local governments, but this was insufficient for a number of reasons. So first, Congress placed restrictions on how these funds could be used by the governments. The $150 billion could be used for new spending incurred due to COVID crisis. However, because of the loss of revenue from the pandemic, states are going to incur a bunch of shortfalls that these funds can help address. Instead, states are forced to make drastic cuts that will have adverse macroeconomic effects and impact community of colors. Second, the $150 billion exclude localities that are smaller than 500,000 in population. This completely ignores the plight of rural communities and micropolitan areas. These are the areas where the post great recession economic recovery did not reach. And thus they are already struggling and this pandemic will exacerbate the issues that they face. Finally, $150 billion is insufficient to the scale and scope necessary for state localities to truly be able to confront the pandemic and subsequent economic disaster that is facing us. Funding for state local governments should be close to one trade to adequately provide funding to cover budget shortfalls, as people before I mentioned, to combat the health crisis and to fund needed services like education, childcare, housing, as mentioned before, that we're reopening the economy and a lot of the spending that has to happen are going to be at state and local level. So to conclude, we need substantial state relief, substantial relief to state local governments precisely because they can support the groups that have been left behind in the recovery from the great recession and who have been hit hard by this pandemic. Thank you for organizing this discussion. And I agree with everything that's been said, which is evidence that pretty much across the spectrum in the economics profession, this is widely agreed to. The shock that we're facing is a combination of a demand shock and a supply shock. The demand portion of the shock is completely treatable by economic policy. At the individual household level, it has been pretty much completely treated through the end of July by expanded unemployment insurance and by the checks that households got. And that has succeeded in maintaining disposable personal income for households in aggregate. Too many households have fallen through the cracks of that, which is why we should have expanded nutritional assistance and health care. The household portion of aggregate demand was only treated through the end of July. And so extending that will be necessary, but it has been treated. Policymakers have not treated the aggregate demand shortfall that will result from the fact that states and localities have balanced budget requirements and that when their revenue falls through no irresponsibility or fault of their own, they'll be legally required to cut their spending to match that revenue decline. That will be several percentage points of a couple percentage points of GDP in contraction. The macroeconomic impact of state and local fiscal relief is actually the best studied and best understood empirically of any form of fiscal relief. There were a set of papers in top journals written coming out of the experience mostly of the Great Recession. Some papers based on experiences before that and they took advantage of the fact that for some of the programs, one state got more money than another state. And then you could compare the economic outcome in the state that got more money to the state that got less money. It has to be based on random differences in the money. So you effectively had treatment groups and control groups. There were a half a dozen papers that looked at Medicaid money, education money, infrastructure money and the like, and found multipliers that ranged from 1.53 to 2.29. So for every dollar of spending, you added between $1.50 and $2.30 to GDP. That means that regardless of what the spending is supporting, you're adding more to GDP than you're adding to the debt and you're actually lowering the debt to GDP ratio as a result. So in effect, it's automatically, if what you're worried about with fiscal sustainability is how much debt we have relative to the economy, these add more to the economy than they do to GDP. Now, this is all purely macroeconomic analysis. In addition to the macroeconomic analysis, there's the value of the services that are provided by these funds, whether that is education, parks, healthcare, and the like. The last thing I wanted to briefly address is the mechanism by which one would deliver this aid. You could do it in the form of block grants to states or cities. You would need to have some minimal set of conditions attached to those. For example, you couldn't use those to pay for new tax cuts. You couldn't use them to pay for new increases in public pensions or something like that. You could do it through expanding Medicaid matching. That was something that was done by President Bush. It was something that was done by President Obama. It's a lever that is very easy to pull, very flexible, one that is supported across the board. And finally, you could do it by supporting education, which is something we have very high returns in and of itself, and best to combine the three of those. And ideally, my very last point would be that there's a tremendous amount of uncertainty about the economic outlook. Some people predicting a very quick recovery. I myself think that's unlikely and think it will be a long and protracted and painful one. You don't need to decide between which of those two you think are correct in order to do this policy. You can make the policy, especially with FMAP, and I have a paper on this with Matt Fiedler and Willie Powell, with Medicaid matching. You can make it a function of the unemployment rate. You can make it a function of economic conditions. So if you have a very quick recovery, the aid will end very quickly. If you have a very slow recovery, the aid will continue. Had we done this after the Great Recession, the growth rate would have been about 0.6 percentage points higher per year in the five years from the trough of the recession. I hope we don't make the same mistake of neglecting it on a sustained scale this time that we did the last time. Thank you so much, Jason, Benga, Glenn, Mark, and Josh for those excellent presentations. You really covered the waterfront and you all, I think, made both the compelling economic arguments about the importance of this aid in terms of macroeconomic impact, in terms of the negligible, if not positive impact on the debt. At this point, we would like to turn to your questions. You can use the Q&A function at the bottom of the screen to insert a question or raise your hand as a participant. Kayla, do we have a question? No one has asked. Hi, I'm Kayla. I'm the director of Media Relations at EPI. To use the raise hand function, if you go to the bottom of the screen, you'll see a participant's icon. Click on that and you will see a raise hand feature that shows up on the right side of your screen. If you're on the phone and would like to ask a question, we could maybe wait until the end and see if there are anyone else, just so we don't have people talking over each other. At the end, you can ask the question. Okay. In the meantime, why don't I pose one question to all the participants and we'll wait for your questions to show up. So I think you've all addressed this issue in one way or another, but I'd like to hear sort of the elevator pitch. We've heard politicians raise a lot of objections to increasing state and local aid at this time. Some people saying we shouldn't bail out states that have been irresponsible. Others saying we should just wait and see. There's no need to do anything right now. And others saying that there will be a detrimental impact on the federal deficit and we can't afford to do it. So if I could go maybe back on the same order in which you all just spoke and ask you for a quick couple of sentences, how would you answer that in your elevator speech? Thanks. So this is Josh Bivens. I'll go first. I mean, on the issue of the deficit and debt, I think I already sort of mentioned that in my remarks. Like, we are basically going to borrow from the future one way or the other. We can do it in a systematic way at very low interest rates, or we can just not do the aid and let the economy suffer and bequeath a sicker economy that has done a lot less investment. It seems obvious that the planned deliberate way is better. In terms of the bailing out states that are irresponsible, I mean, to me, the issue is we have been hit by a historically large economic shock. Every state is suffering. There is not a picking and choosing that this state that did better in the run up to managing its finances. They're fine. No one's fine right now. And as Mark said, lots of states and in the aggregate state local governments had built up rainy day funds and it actually managed their budgets pretty well before this hit. The problem here is just the unprecedented enormous economic shock, not any mismanagement. I think I'd say there's no evidence that state and local governments have been profligate in their spending and certainly not in aggregate. If you look at total spending, state and local government total spending as a share of GDP, today it's exactly where it was 30 years ago. It goes up and down a little bit depending on where you are in the cycle, but no evidence that spending has increased significantly compared to the size of the economy. And states have done broadly a very good job of preparing for today. I think they learned a lesson. In the Great Recession, many were not prepared, but I think in previous expansion, the 10-year long expansion, they worked pretty hard to build those radita day funds. In fact, according to NASBO data, the National Association of State Budget Officers, there were fewer than a handful of states that didn't have more than a rainy day fund that was more than 1% of their total general fund revenue. And many, most states had much more than that coming into this. So I think that's a very specious argument that they were profligate coming into this. I'll just stop there. It's more than an elevator pitch, I know. I'd have to hone it for you, but just on that one point. Yeah, three quick points. There really is no logic to an argument that you should not assist state and local governments. Any logic that we have had about mitigating the demand portion of the shock for the private sector, whether it's businesses, for individuals, ports over to state and local governments, whereas Jason points out the evidence of its efficaciousness is actually quite clear. The second is about bailout. Just to make the point that it's been made already. This is a common shock. It's massive. No one anticipated it. I do think some states have been less responsible than others if you count their accrued pension liabilities, but that's not really the point. This is a discussion about mitigating the demand shock, and it needs to happen separately. And the third to go back to the math Jason very helpfully did with everybody. If you look at what we know from studies of multipliers here, this is something that is about as close to a no-brainer to do as I could imagine, both in terms of stabilization policy, but also for legitimate concerns about the deficit. I would just go back to my earlier point that there are groups that just haven't been helped out really in certain cases ever. And if I had a slide that would show the figure, if you look at employment growth from the Great Recession, you look at metro areas, it just goes straight up, and non-metro areas, it's flat or going down. And so we need to help out these governments, these state and local governments, because we haven't helped them out before, and this is now even worse. And so we actually need to help them. Yeah, I'll not do macroeconomics. I was talking to a teacher, a friend of mine in Ohio, teaches in public school there. The governor's proposed, I think it was a $300 million cut to education, I might have that number a tiny bit wrong. And she's busily preparing what she needs to do to make her classroom more safe in the fall to teach in a socially distanced manner, which is more expensive and more complicated at the same time that she is dealing with the largest budget cut that they've seen for their schools. That makes no sense whatsoever, especially when the federal government can borrow at a negative interest rate, thus repaying people in the future less than it borrowed from them today. Thank you very much for those excellent answers. Kayla, I think we have a couple of questions. Yep. The first question is from Chris Ruggeber at AP, and I will allow you to talk. Great. Can you hear me? Yep. Go ahead. Great. Well, thank you. I just wanted to ask, there were some numbers about the gaps in state and local budgets, and obviously this is estimates that need to be made that are rough, but can any of you, I think several of you had numbers from $500 billion to $1 trillion. Can you give us a little more about what those numbers are based on? How even, you know, and how does that break down? Is that pretty much an evenly spread across states based on population or just where do those numbers come from and what leads you to get there? Thank you. I can take a crack at that. Okay. So, Chris, I would refer you to a paper that we've done that goes through our calculations in detail, state by state. So, if you just Google Moody's analytics, state budget shortfall, you get there. I can email it to you. You can see the methodology and these underlying assumptions laid out, you know, very clearly. There is to be fair, you know, a fair amount of debate around this, you know, exactly how much would be needed to completely fill the budget hole. And the reasons are, you know, pretty straightforward. One is just what are your economic assumptions? You know, how bad is this going to be for how long? And I think if you take a, you know, our serve outlook is based on a close to consensus view, close to CBO view, but you know, you can have different perspectives on that. Second, it depends on, you know, what you assume about rainy day funds, what you assume about whether the federal government is going to step in and fill the costs associated with fighting the direct healthcare costs associated with fighting the virus. And then there's methodological issues. But the bottom line is, you know, when you cut through all of those issues and look at the arithmetic, I think it's pretty clear that, you know, over the next couple of years, through the fiscal year 2022 for state and local governments, about 500 billion, about half of that is state, a little bit more than half of state, and about half of that is local government, roughly speaking. But that varies quite a bit, you know, state by state. But I would refer you to that paper because it goes through everything in gory detail to your heart's desire. Right. Anybody else want to weigh in? Yeah, I was just going to chime in that the number that it came up with come from two reports that we did at the Center for American Progress that I could share with you. We had one paper kind of outlining what are needed for states and into the separate paper looking at local governments, what they need to in the issues, and they kind of put those two numbers together. I can share with that with you later. Okay. Next question. The next question comes from Nib Ellis at the hill. He typed, how will the events of last weekend's protests, the riots this weekend further strain the state and local budgets and will that be significant? Anybody have an idea, Venga? I think one of the things that we have to look at is what we saw in this past week is kind of where priorities are for state and local governments. Because the way I looked at it is that you look, I think back to the beginning of May, there were all those protests about reopening the economy and all those protests at the state capitol. And you look at the police response in those cases, they appeared, but they were just they were calm. And they let, you know, those people kind of express their anger. And then in the past week, we see when in the aftermath of George Floyd and Tony McDade and Breonna Taylor, you know, people's anger there, police came out in full riot gear, and they had they had the materials that they needed to do their jobs as the way they thought they needed to do their jobs. And so one of the things that I've that's kind of concerning is that so far what we've talked about is the need that state and local governments are hurting with you look at public health infrastructure, you look at you think about, you know, rural areas with broadband infrastructure and the lack of that, and it doesn't seem to be spending for that. But it does seem to be spending for police, and it doesn't seem to be money for cleanup and maintenance and things like that. And so this is going to harm state and local governments because they do have to take that into account. But it feels like the harm is not going to be in those in that in that frame in terms of police. It's going to harm others. So it's going to be even you're going to see a lot more police presence. We see national guard coming in. We see curfew. You see all those things. Enforcement is going to take away from, you know, the COVID response is going to take away from education. You think about, you know, schools are ending now, and we have summer camps are being closed and things like that. You think about the childcare issues, reopening people coming back. So I think it's going to be a harm, but it's going to be a harm in terms of the shift away from certain services to other services. Thanks, Benga. And I don't see anybody else. I think it's hard to estimate right now with the aggregate impact in terms of the spending is going to be, but certainly there will be there will be an impact and there will be a change in priorities as Benga says. And I think that's one of the more interesting and important questions. Next, Kayla. Next question comes from Richard Miller at Bloomberg. He wrote besides filling the hole on state and local government budgets, should there be additional assistance either at the state and local level or nationally help facilitate what could be a major restructuring of the economy post COVID-19? I'll take this and give my view. I think this answer to that is certainly yes, that a substantial amount. I mean, first of all, the most important thing to help the economy and make the economy better in 2025 is to have a less prolonged deep recession now. And so anything we can do to help the economy today like the state and local relief we've been talking about will help prevent problems from perpetuating, multiplying and continuing on. I expect there to be a shortfall of jobs and a shortfall of demand for some time and so some combination of public investment in areas like infrastructure and, you know, investments in community college and training to help give people the skills for the reallocation of jobs that will be part of this, I think will continue to be important for some time. I think one could debate whether if those become permanent policies, they should be paid for as opposed to the short term emergency policies we're talking about now. I think there's no debate that they don't need to be paid for, but certainly something substantial to deal with jobs and economic shortfalls that I expect to be persistent. One, do everything you can today and to continue, especially with public investment and investment in skills. Glenn. If I could add to that, I agree with everything Jason said, but I want to underscore the community college point. We're going to be entering a period where there's going to be a lot of reallocation of talent in the economy across firms and industries. We have needed for some time additional training and skill support. Community colleges are the ones on the front lines of that. It's not the harvards and columbias that are providing that training. And so I do think we need a federal assistance for community college. Austin Gulesby and I proposed a block grant to do it. We intended that as a longer term solution, a paid for solution, but it's certainly something that needs to be considered in the current environment all the more. My fear is that we're going to go the opposite way of states necessarily cutting budgets in this area, cutting back funds that could be used to prepare people for this inevitable reallocation. Mark. Yeah, I would concur with everything Glenn and Jason just said. The way I think about the support, the fiscal support provided so far and even what we're talking about today, the next round of support is largely just rescue. It's just kind of filling in the hole left by the way Jason put it, the supply shock, the fact that we had to shut down our economy to fight the virus, which is still ongoing. And we still may see more further disruptions going forward. The state to local aid, the aid to state and local government, that's partly filling the hole. And now we're also talking a little bit about going forward and helping cover the loss due to the demand shock. But we certainly have a significant demand shock in certain significant shifts in the underlying structure of the economy as a result of all this. So the economy is going to need a lot more support going forward. And that will then be what I would consider to be in the future on the other side of the pandemic stimulus, how do we get this economy moving forward? How do we help it adjust more quickly and at less cost to the structural changes that are now occurring? And so I don't think I think this next package of support we're talking about is just the next package that there's got to be more on the other side of this. Otherwise, this is going to be very difficult, very painful, and the recovery is just going to be all the longer. So I don't think this is the end of the story. This is just one step in that story. Thank you, Mark. Josh? Yeah, just a couple of things, a substantial agreement with what people have said. And I do think, and I tried to say in my comments, I think filling in the hole is a really unambitious goal here. Like a lot of these estimates for what the shortfall might be based on unemployment going forward, they're about a very generic economic shock. Something happened that made unemployment go up and so revenues fall or state spending aspect. This is not that generic. This is, as I tried to say, a shock that really puts enormous strain on the public sector because it's a health shock, because it's caused school shutdowns, and that's going to be a very expensive thing to restart schools in a safe and effective way. And so someone in the public sector is going to have to respond to this in a serious way, well above even what the sort of generic shortfall estimates would get you. And at the moment, it's state and local governments who we put on the front lines of that. If people want to take the, you know, talk about should we federalize parts of the response in terms of unemployment insurance or something like that, I feel like that's sort of a long run restructuring conversation we should have. And then to reiterate something that Glenn said earlier, this really highlights the need for better automatic stabilizers, what I would say would be like deeper social insurance. The unemployment insurance system has been so crucial to this and yet has to, we had to patch it on the fly and that should be a real big structural change that we address going forward. Thank you, Josh. Bank, I didn't know if you had anything to add on the restructuring question. Okay. Kayla, is there a next question? Yeah, the next question comes from Tammy Luby at CNN. She asks, how should the federal government help the unemployed, including state and local government workers? Josh? I'll say, yeah, just first, as a couple people mentioned, the CARES Act did some good expansions to both who is eligible for unemployment and that's through the end of this year and then provided an enhanced benefit of a flat $600 per week increase in the benefit. That enhanced benefit just sort of falls off a cliff at the end of July and unemployment is still going to be very high at the end of July, so people will be suffering and, you know, unless there's return to the virus of the virus, we're going to be trying to restart the economy in a more serious way in July and so that will sap aggregate demand if we let those benefits just fall off the cliff and so I think that the number one thing we could do is to make the unemployment insurance enhancements based on triggers and economic conditions rather than sort of arbitrary calendar dates. I think that's the single biggest one on my agenda. I think one program that is in existence that's not being used widely enough is work sharing or short-term compensation and this is a program that where you can actually furlough workers, still get paid, they get eligible for benefits and then when the economy recovers they go back and so I know Michigan is starting to the state of Michigan started doing that in New Jersey too and so this is a way to actually keep employees attached to the labor force while going through this crisis so there's I think 27 states plus DC are encouraging work sharing and then the CARES Act put a provision in to have the other states to actually adopt it and implement it so that's something that we really should push for or work sharing. Thank you, Benda. Anybody else want to add anything to that question? Kayla? Sure, the next question comes from Bernice Napak at Think Advisor. She asks, what happens if there's more aid to state and local governments if the 500 billion to one trillion or more is not forthcoming by the federal government? What are the consequences for individual state and local governments and for the national economy? I can start. The consequences are all bad. It is that there's more layoffs, many of them would probably hit in the fall by state and local governments, that the job losses we've already seen, many of which are temporary furloughs, become permanent. So one consequence is job loss. The second consequence is a spillover of that into aggregate economic activity because when state and local governments cut back on their spending and have fewer employees, those people are then buying less in stores and that hurts the economy more broadly, the private sector and beyond and that results in further job losses, further losses in economic output. And then finally there's the things that state and local governments are producing like education and they'll do less of that at a time when if anything it is more expensive to do education given all the complexities of handling it at this moment and that education will be more important going forward to dealing with the reallocations that we're going to have in the economy. So both direct harms to jobs, indirect harms to the economy as a whole and harms to the priorities we care about all of which would be in proportion to the amount that state and local governments have to cut their budgets which right now looks like a very, very substantial fraction. Thank you. Jason, Mark. Yeah, I'll do a back of the envelope calculation for you. So this is economics on the back of the envelope. So say it's 500 billion over the next two fiscal years. So you know we're just starting fiscal year 2021 now. So let's for simplicity say it's $250 billion shortfall in the in fiscal year 2021 now in between now and this time next year. And let's say the multiplier is just 1.5 just low end of Jason high end of my estimate but you know to make the calculation easy that that comes to $375 billion if I did the calculation. Correct. At today's lower level of GDP because you know the crisis has taken GDP down that's about 2% of GDP, 2 percentage points of GDP you would lose over the next year. Now 2% you know because now we're talking about 20, 30, 40 percent down the annualized in Q2. You know people are getting lost and the numbers are becoming they don't seem that big but 2% of GDP is a lot of GDP. That's remember back that was exactly how much we would grow every single year we did in the economic expansion. The average annual growth in the expansion for 10 years was 2%. So we're going to lose that growth just simply based on state and local government. Forget about everything else just just that. So that gives you a sense of magnitude here it's it's a big deal. It's a big deal. So those consequences sound pretty grave. Anybody else Josh? Just quickly like if we come in too low in federal aid to states we're going to put states in a really tough position and I would say even if they are in that tough position that they still have choices they can either cut spending or they can try to raise taxes. It's not optimal. No one wants a tax increase during a really bad recession but I think states that do face that if we disappoint on the federal aid they should preserve spending to the degree possible and try to do revenue from progressive sources because I think that's going to drag on aggregate demand less. It's a terrible choice they would have to make. We should try to take that choice off their shoulders. If we disappoint at the federal level they will still have a little bit of agency although very constrained. Thank you. Anybody else want to add into that? Thank you. Kayla do we have more questions? Yep. Janelle Marty from Reuters asks as the crisis continues some states have lagged in reporting unemployment claims and varied in how quickly they offered pandemic unemployment assistance. What is the best way to measure the number of Americans currently receiving or in need of unemployment benefits? I have a really good answer to that which is always address questions like that to EPI. That's the way to answer that question. Josh? You have to be more specific on that. There are people at EPI who know this answer that are not me. I mean I would say I asked Heidi but anyway yeah exactly I would say so if you want to detail the answer ask Heidi shareholds who is our policy director after this call. We early in this crisis did a Google survey that asked people if they were trying to get unemployment insurance but were unable to get through sort of the administrative roadblocks you know not getting through on the phone getting rejected with online applications and at that time like about three weeks ago it was about for every ten workers who had managed to file an unemployment insurance claim there are about three to four workers who were trying and just couldn't get through the system. At this point it's gotten a little tougher I think what Heidi said in her latest report on the unemployment insurance claims is her preferred measure is people on continued unemployment insurance plus the initial claims for the week is the best sort of real-time measure for people trying to get in the system. I don't know that number off the top of my head but that is on our EPI blog if people want to take a look at it. Yeah I think between the reporting requirements and part of what we've learned during the crisis is we have these 50 unemployment insurance systems that are many of them underfunded, understaffed and using antiquated technology and and hardware and so even measuring the impact of unemployment we also see inconsistency across the states which has made it more confusing that some of them are including the pandemic unemployment assistance and some of them are counting it separately and it took it took many states you know four to six weeks to even be able to adjust their systems to be able to expand the eligibility criteria as required in the CARES Act and to be able to start getting the money out the door let alone answering the phone so this is something I think certainly going forward we do see that we want to we need to put more resources into this system and some of the some of the other things that you all have talked about about the triggers and the automatic stabilizers and the design of the unemployment insurance system I think these are important things for policymakers to keep in mind so we're better prepared the next time around. Anybody else have anything they want to add on that question? And everybody can call Heidi Shearholz for a follow-up afterwards. Kayla are there other questions? Yep there's one more question from Roger Hickey from Campaign for America's Future he asks a somewhat political question if polarization continues and we are not able to do state and local aid until January 2021 how much worse is this recession or depression likely to get? I think people have answered a version of that but Mark? Well I've done something close to that so a simulation assuming no additional fiscal support so no state and local government no extensive UI no stimulus checks just nothing else I'm assuming no meaningful second wave in the virus you know maybe some re-intensification but no wave that would cause businesses to be disruptive or people to be spooked and pull back on their spending so that's a pretty benign kind of assumption but let's just go with it. Under that assumption the economy double dips so we get a bounce in growth and we're going to get a much stronger growth in Q3 so we're going to go from big job losses through May to job growth in June July August into September and it's going to be quite substantive but unemployment will go from you know 20 in May down to something like 10 and that's where we're going to stay until we have some kind of effective vaccine and we'll avoid a recession if we get a rescue package that's worth about a trillion 500 billion state and local aid 500 billion in additional income support however you want to design it if we don't get that rescue package we go back into recession we doubled it even without a second wave so I think that's this is critical to avoiding going back into an economic downturn if we don't do it I think we're back into recession. Thank you Mark and I think with that we are nearing the end but just one quick question if anybody on the phone any of the reporters on the phone want to ask a question um they can unmute themselves Kayla there's one yep they should be able to uh know that sorry that was me I was seeing if people could unmute themselves if anyone on the phone has a question or if there are any more reporters with questions you can raise your hand don't think we have anyone else at this time okay well we are nearing the end of the hour so let me stop here and thank our five amazing panelists for five really extraordinary and useful and substantive presentations thanks to all the reporters who joined us on the phone or by zoom and and please keep an eye out for epi's report on the impact of the the virus on black workers coming out around noon today black and it's titled black workers face two of the most lethal pre-existing conditions for coronavirus racism and economic inequality and on that note let me thank you all for joining us