Speaker Nancy Pelosi has spearheaded the development and House approval of another recovery package, with almost $1 trillion going to fill holes in state and city budgets decimated by high expenses and tax revenue lost to the coronavirus.

A package of this size will certainly increase the national deficit. That’s a good thing.

The word “budget” conjures an image of balancing a checkbook or deciding how big a loan we can afford based on our income.

Budgeting at the federal level is different. Unlike families, the federal government borrows money based on currency it controls, the dollar. Because it makes its own money, the federal government can never go broke.

That gives the federal government unparalleled power to act in a time of crisis. It takes resources to address an acute crisis like this pandemic. But while families who have lost jobs or health care lack those resources, the federal government does not. It can run a deficit to help fight the coronavirus and protect families from the worst harm of this recession.

We can see the power of deficit spending in our own history.


In 1933, the newly inaugurated President Franklin D. Roosevelt faced unemployment at 25 percent while Americans were experiencing bread lines and living in shanty towns. Money was so tight that FDR had to close the banks for a short time, to prevent them from running out of cash due to customers’ panicked withdrawals. The federal debt was at $22.5 billion.

Frances Perkins, FDR’s secretary of labor, later said the administration knew it would need to provide both direct relief and economic stimulus through public works as a way of “getting money into circulation and stimulating a great variety of industries.”

So, they did. The federal government ran up the deficit, borrowing money and putting it to work to rebuild the economy.

Within months, 30,000 young men found jobs in the Civilian Conservation Corps, building bridges, restoring historic sites and creating infrastructure that many of us still benefit from today. They also earned paychecks that helped fuel economic growth.

Simultaneously, the Federal Emergency Relief Administration sent money to state and local governments to use as necessary – for teachers, housing, building public parks – whatever was deemed most helpful by local authorities. Other relief programs followed, including Social Security and unemployment insurance. By 1937, unemployment had dropped below 15 percent.

After his first four years, the federal deficit had grown by 62 percent, up to $36.4 billion. As a result, people’s lives stated to improve. Deficit spending continued through the 1940s with the buildup and engagement of World War II, culminating with generations of post-war prosperity.


Congress must remember that deficit spending can be a good investment if it’s used to improve the well-being and security of American people.

Today’s crisis is not identical to the Great Depression, but we are in similarly dire straits.

More than 3 million Americans have lost their jobs since the pandemic began, and the nation is likely to see lasting, historically high unemployment rates at least through the end of 2021

Meanwhile, states face a $650 billion revenue shortfall over the next three years, putting them at risk of a budget collapse at a time when they are taking on additional costs associated with the pandemic. Maine could see a $1.2 billion revenue decline in the next year alone.

Without bold action, the combined damage from the recession and the state budget crisis would spur even greater joblessness and spending cuts that will hurt families and communities. Essential services would be reduced when they are needed most. The economic suffering experienced today by tens of thousands of Mainers will be magnified in weeks and months to come.

Federal officials must do everything in their power to meet this historic moment. While some may bristle at the thought of doing or spending too much, the greater risk is in doing too little. Deficit spending is one of the most powerful tools at their disposal to protect Americans and hasten the economic recovery. Congress can and should provide states, communities and families with the resources they need to weather the public health crisis and rebuild our economy.

Comments are not available on this story.