Former President Barack Obama's chief economist, Jason Furman, recently spoke to Vox's Ezra Klein about the coronavirus crisis and how it compares to the 2008 financial crisis. Furman notably played an essential role in crafting the Obama administration's response to the financial crisis and the recession that followed. He currently teaches at Harvard's Kennedy School of Government.
According to Furman, the financial markets and economic data currently paint a darker picture than the 2008 financial crisis.
"At this point, this feels much worse than 2008. Lehman Brothers was quite bad, but it was the culmination of a sequence of things that had happened over 14 months. This hit all at once."Furman pointed out that in 2008, some people were lucky enough not to reduce their spending and noted that almost everyone is doing so now.
"There are entire industries I interact with where I'm realizing: 'This may be the last time I'm paying you for a while,'" he said, adding that this wasn't the case in 2008.
Despite the current outlook, Furman claimed that recovery is possible if things return to normal two months from now.
"If this lasts six months or longer — and I think that's the more likely scenario — all of that just compounds," added the former deputy director of the National Economics Council.
Furman said that most financial crises have "multiple equilibriums" and claiming, for example, that panic could be eased by injecting capital into the economy or guaranteeing market. But in the case of the coronavirus crisis, he beieves there is only one equilibrium: "economic inactivity," which he says will be the case "until the danger passes."In response to the crisis, Donald Trump proposed a payroll tax cut that would include a suspension of the Social Security wage tax and Medicare tax. According to Furman, this proposal would benefit the highest earners the most. Specifically, Furman claimed a one-year payroll tax cut of 2 percent would provide a high-income couple $5,508 in savings but just $500 to a single parent surviving on $25,000 yearly. For workers placed on leave without pay, Furman said that the proposal provides them nothing.
As reported by Business Insider, Furman urged Congress to provide every American with a "stimulus package" of $1,000 to help the economy.
"It is absolutely unambiguously the right decision for Congress to make," he said.
As The Inquisitr reported, Furman is not the only one to support such a stimulus. Former Democratic presidential candidate Andrew Yang has made similar calls, echoing his campaign's signature proposal — a universal basic income (UBI) of $1,000 per month for all Americans.