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Slowdowns in the economy are inevitable. While it may be tempting to rely on Federal Reserve policy as a lone response to recessions, this would be a mistake; we know that fiscal stimulus is effective. Rather than wait for a crisis to strike before designing discretionary fiscal policy, we would be better served by preparing in advance. Enacting evidence-based automatic stabilizer proposals before the next recession will help the next recovery start faster, make job creation stronger, and restore confidence to businesses and households.
The design of the Temporary Assistance for Needy Families (TANF) program prevents it from providing sufficient assistance to families with children during economic downturns and from serving as an effective stabilizer. In order to help TANF better deliver on both these fronts, Indivar Dutta-Gupta proposes ways to change the funding, design, and administration of the program.