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Five National Policy Responses for COVID-19 / Coronavirus

Containing the epidemic and stabilizing the economy will require further action from Congress and the administration.

First: Keep Congress Open

The $8.3 billion emergency spending package passed by Congress last week boosted funding for detection and treatment of COVID-19, but it should only be the start. With the severity of the epidemic changing in real time, Congress must remain open and be prepared to pass follow-on legislation.

Fund Emergency Paid Sick Leave Through Unemployment Insurance

The U.S. is one of the only industrialized countries in the world that doesn’t guarantee paid sick leave nationally. This is largely a byproduct of the American system of federalism. Ten states, D.C. and 19 cities have sick leave programs of some form in place, and many employers provide sick leave benefits voluntarily. Nonetheless, the Bureau of Labor Statistics estimates that nearly 30 percent of private sector workers do not have access to paid sick leave of any kind.

Expedite Drug Approvals and Regulatory Waivers

Scientists and drug companies are working around the clock to develop a COVID-19 vaccine and novel treatments for the worst effects of the disease. In normal times, the FDA requires new drugs to undergo extensive testing for safety and efficacy before approval — a luxury that time does not afford.

Adopt a Price Level Target

Treasury yields reached unprecedented lows this week as investors around the world searched for a safe place to park their assets. As a result, U.S. borrowing costs are not merely low, but effectively negative. We should take this as an excuse to dramatically expand public investment in things like science, infrastructure, and anything else with a positive rate of return.

Strengthen Automatic Stabilizers

Recession fears have strengthened calls for an economic stimulus package. Yet not all stimulus packages are created equal. The White House has hinted at a payroll tax cut, for instance, despite the evidence that they are poorly targeted.


We are not powerless to affect the course of COVID-19 in the weeks and months ahead. As individuals, we can limit the virus’s spread by following the recommendations of public health experts. And as a country, there are many tools at our disposal to limit the virus’s economic impact, accelerate the diffusion of treatments, and provide maximal support and flexibility to the hospitals and medical workers on the front lines.

  • Second, Disaster Unemployment Insurance funding should be used to provide emergency sick leave for workers forced into self-quarantine.
  • Third, a public health emergency should be declared to enable the HHS Secretary to waive or modify regulations and reimbursements within Medicaid and Medicare, in line with the needs of local health authorities. Approval of new treatments should also be expedited, and made immediately available for patients at risk of dying.
  • Forth, the Federal Reserve should announce a shift to NGDP or price level targeting, if only temporarily, to reduce the risk of a recession and calm financial markets.
  • Fifth, fiscal stimulus should be provided to the most vulnerable through direct transfers, and as grants to be dispersed by states.

Ensnared in a web of belief / Poverty @NiskanenCenter / Tech @mercatus /

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