This 180-degree turn in our collective financial fortune is due in significant part to the overwhelming response of the federal government to the economic pain inflicted by the pandemic.
Biden helped implement the Recovery Act as Obama’s Vice President and understands this mistake. That is evident in the massive American Rescue Plan. The post-pandemic recovery will soon kick into high gear.
These are pernicious problems that have developed over decades. Solving them will take persistent policies over decades to come. As such, they must be paid for. Deficit financing makes sense to help a struggling economy in a crisis like the pandemic, when interest rates are low. But that won’t work for long-running problems after the economy is back to full employment and interest rates have normalized.
The federal government stepped up admirably during the pandemic, quickly providing a financial backstop, particularly for the hardest hit among us. It showed that government is indispensable during a crisis. Let’s hope lawmakers can use this success to tackle our most difficult long-term problems that only government can address.