At Hearing, Economists Laud American Rescue Plan and Call for More Action to Reduce Inequities

March 17, 2021

Washington, D.C. (March 17, 2021) — Today, the Select Subcommittee on the Coronavirus Crisis, chaired by Rep. James E. Clyburn, held a hearing to examine current economic disparities and assess how to ensure an equitable and inclusive recovery from the pandemic.

Watch Chairman Clyburn's Opening Remarks

Chairman Clyburn stated at the hearing:

"While the overall unemployment rate in February was 6.2%, the rate for white Americans stood at 5.6%, while the rate was 8.5% for Latinos, and nearly 10% for Black Americans. These job losses can have devastating long-term consequences for people's future employment prospects and their ability to stay in their home, care for their family, and avoid a spiral of unsustainable debt. Even as the stock market hits record highs, 42 million Americans, including 1 in 6 children, do not have enough to eat."

"The American Rescue Plan will help lift up these communities with urgently needed support [and] will reduce poverty in America by one-third. … But rescue is only the first step toward recovery. Many economists are now sounding the alarm that if we fail to build on the American Rescue Plan, we could see a fundamentally inequitable post-pandemic economy, where the wealthy reconsolidate their pre-pandemic prosperity while lower-income families continue to suffer."

Prior to the hearing, Chairman Clyburn sent a letter urging the Biden-Harris Administration to closely track unemployment data for low-wage wage workers, people of color, women, and other economically vulnerable populations who have been suffered disproportionately harm.

Today's witnesses—Nobel Laureate and Columbia University Professor Joseph Stiglitz, Chief Economist of the AFL-CIO and Howard University Professor William Spriggs, and former National Economic Council Director Larry Kudlow—all agreed that the economic pain from the pandemic has hurt vulnerable communities the most.

Mr. Kudlow, even while repeatedly downplaying the severity of the economic crisis when he was President Trump's top economic advisor, conceded that "low-income industries have been hit the hardest."

Witnesses shared the following insights:

For a Strong Economic Recovery, We Must Address Inequities.

Dr. Stiglitz explained: "Going forward, we cannot afford to have inequality at this level. The IMF, the OECD, have clearly documented that inequality slows growth. This will be the biggest impediment for a thriving economy going forward."
Dr. Spriggs agreed, noting, "The loss of wealth from this large period of unemployment is a large contributor to the racial wealth gap. Downturns affect Black and Latino communities more severely."
Mr. Kudlow similarly conceded that "we need a balanced and equitable and inclusive economic recovery," saying, "I fully agree with that goal."

The American Rescue Plan Will Bring Urgent Relief and Speed Recovery.

Dr. Stiglitz explained: "The ability to get money to children means that the families can afford childcare, and that enables them to get back in the labor force. … One of the important aspects of this bill is that it was much more comprehensive in dealing with some of the sectors that had been left out of the earlier measures."
Dr. Spriggs urged Congress to draw on the successful lessons of the nation's the post-World War II recovery, when America "responded by doubling down our bets on the American people and made a down payment on America's future, launching the greatest increase in productivity, wages, and technological innovation among developed economies up through 1980." He praised the American Rescue Plan as "masterful in addressing the many losses that have taken place since February 2020."
When asked by Rep. Foster about the impact of the American Rescue Plan on the labor market, Dr. Stiglitz responded, "[A]bsolutely, it's going to be faster with the stimulus spending, particularly because the design of the spending is going to be directed at parts of the economy where the bang for buck will be large and distributive effects will be beneficial."
The Republican witness, Mr. Kudlow, conceded "there was some good" in the American Rescue Plan, and did not agree with concerns that it would overheat the economy by raising inflation.

More Action is Needed to Build and Sustain a Thriving and Inclusive Economy.

Dr. Spriggs told the Select Subcommittee: "We have long been warned that our physical infrastructure gets failing grades. Now we are living it, and living it too often. We need an infrastructure that can help us make the transition to a green economy. . . . Workers need transportation they can rely on. But that also includes workers in our rural areas, who need improved and expanded options to get to jobs."
Dr. Stiglitz agreed, stating: "Obviously the pandemic has exposed a lot of the weaknesses in our economy. The extent to which the $1.9 trillion will enable us to get back to near full employment is still uncertain. There are some people that think we will have 8 percent growth, but regardless of that, the need to address the problems that have been with us for so long—our inequality, the lack of infrastructure, the weaknesses in our health care system, the problems in our environment—all these need to be addressed and they need to be addressed quickly."

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