The economic divide between those with enough money to live comfortably and those without is real — and it’s only getting worse. 

The current public health crisis and national emergency induced by COVID-19 in our country has shed light on just how vulnerable everyday Americans are. Many people in government have pledged solutions, but it’s essential that our leaders understand how economic policy is just as critical for protecting our residents from this health crisis. That is to say, smart economic policy can save lives. 

We cannot afford to do what we did during the Great Recession, where the focus was only centered on Wall Street firms and not our neighbors, who still have not fully recovered from the recent recession.  

Most of our neighbors were already on “survivor mode” before this public health crisis. It will only get worse if we take the same approach of the Great Recession that left many communities out of recovery. 

Nearly 4 in 10 Americans can’t afford a $400 emergency expense. More than 57 million Americans will see their earnings sharply decline due to the social distancing protocols. Most Americans — more than 107 million — are employed in the service sector, and tens of millions of them will see their jobs at least temporarily eliminated. We need to act now to stabilize families and local communities first and foremost. 

The most effective approach to stimulate our local economy is to invest in people, small businesses, local municipalities and communities.   

I propose that the U.S. Congress implement automatic recession payments designed to put money directly in the pockets of all our neighbors, which will chip away at economic inequality in our society during this pandemic. We must also require the Federal Reserve Bank to immediately commit to purchasing short-term local municipal debt as necessary to stabilize all state government funding needs and provide them with the appropriate financial flexibility to address the present public health crisis. They readily do it for banks; they should readily do it for our local governments too.

Former Federal Reserve Bank Chair Ben Bernanke agrees. He proposed a “Money Financed Fiscal Program” (MFFP) would permit the Federal Reserve to deposit funds into a new Treasury account, which the Treasury could then use to pay for new spending and tax rebates that put money directly in Americans’ pockets.

These are mainstream ideas supported by some of the country’s most prominent economists, including Claudi Sahm, Director of Macroeconomic Policy at the Washington Center for Equitable Growth and former top Fed economist. Sahm has proposed direct stimulus payments to individuals in the event of a recession, which has transformative potential to rescue our economy. Sahm’s proposal also includes continuing annual checks to individuals during a recession — and no less than $1.5 trillion in direct stimulus payments in response to COVID-19.  Sahm, economists and I agree: whatever we label it, direct payments to individuals during a recession is critical to saving small businesses, protecting families, and keeping our communities afloat. 

If we do not act, people we care deeply about will suffer, including families without health insurance, low-wage workers, those drowning in student loan debt, people doing contract work and everyone who is marginalized.

And let’s be clear: the payroll tax proposals you may have seen would not be able achieve this. As Sahm says, “The proposed policies from the Trump administration, including a payroll tax cut and tax breaks for industries the president chooses to favor, will fail to protect families from financial distress and everyone from a recession.” Why? The impact will be too slow and too small. So small, in fact, those struggling would barely even feel it. Worse, the unemployed and recently laid off wouldn’t feel it at all.   

We need an array of effective economic policies that focus on what we can put in the pockets of individuals and local communities — not financial markets or corporations — that will ensure no one is left behind. And we need this type of relief immediately.

Rashida Tlaib, a Democrat, represents Michigan’s 13th District in the U.S. Congress. 

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