Ex-CBO director calls for more than $1 trillion in coronavirus stimulus spending

Congress should pass at least $1 trillion in further stimulus and emergency relief to keep the economy afloat through the COVID-19 pandemic, former Congressional Budget Office Director Doug Elmendorf testified Wednesday.

Elmendorf, the leader of the CBO during the Great Recession, also said it was a mistake for the government to have quit stimulating the economy during that crisis.

“The premature tightening of federal fiscal policy in 2011 was a significant mistake of economic policy. I hope that policymakers do not make the same mistake again,” he said at a House Budget Committee hearing.

“More than $1 trillion of additional fiscal support is warranted,” he added.

The comments come as the House and Senate prepare to negotiate over the next and possibly final emergency relief bill for COVID-19. The House passed a $3 trillion bill last month, including a slew of Democratic priorities.

Senate Majority Leader Mitch McConnell said the Senate would take up a narrower bill with the aim of passing it by the July 4 recess. Some of the central benefits of the $2.2 trillion CARES Act, such as expanded unemployment benefits, expire in July.

McConnell has expressed concerns about the amount of federal spending in the crisis and has suggested this could be the last big coronavirus relief bill. 

The negotiations take place just months before an election where the GOP will be protecting a 53-seat majority.

In Wednesday’s hearing, Democrats warned against pulling back support too soon, while Republicans focused their attention more closely on reopening the economy.

“While the support Congress has provided to date has helped to alleviate hardship for millions of Americans and avert an even worse economic collapse, there is still much more that needs to be done,” said committee Chairman John Yarmuth (D-Ky.).

“The American people need us to push the recovery along and keep support flowing,” he added.

Yarmuth noted that small business loans were intended for an eight-week period and start running out this month and that state and local governments could shed jobs without more federal support.

Rep. Seth Moulton (D-Mass.) pointed to the Great Depression as an example of how early fiscal pullback could exacerbate a crisis.

“Nobody looks back at the Great Depression and says that the problem was that Congress did too much,” he said.

Republicans were quicker to raise concerns over a rising deficit, though many agreed that problem should wait until after the crisis.

“If we had been doing our job all along, funding the crisis would not be so daunting a challenge,” noted committee ranking member Steve Womack (R-Ark.).

Rep. Bill Johnson (R-Ohio) urged fiscal restraint.

“We cannot let this pandemic be a justification for massive government spending and policies that will continue to drive up our national debt and deficits,” he said.

Doug Holtz-Eakin, another former CBO director who testified, said a plan would be necessary in the aftermath of the crisis to raise tax revenues and reduce spending, with a special focus on mandatory programs.

“There is now a large amount of debt, and the minimum thing that a country has to do is stabilize the debt. This country has not done that in the 21st century,” he said.

The debt is expected to surpass 100 percent of gross domestic product this year for the first time since World War II and is on track to reach its highest point ever in the coming years.

But even budget hawks have emphasized the need to restore the economy.

Holtz-Eakin agreed that aid to state and local governments, which is expected to be a significant part of the next bill and comprised a third of the House’s version, would be an important factor.

In a separate hearing, Committee for a Responsible Federal Budget President Maya MacGuineas said transparency efforts would be key to ensuring that emergency and stimulus money wasn’t wasted.

“As policymakers consider additional relief and economic support efforts, they deserve assurances that the money will be spent wisely, with minimal waste, fraud and abuse and without special interest giveaways,” she said.

“Failing at this goal will not only reduce the efficacy of spending but could undermine public trust and thus hamper the recovery efforts,” she added.