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By Nick Wakeman

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Nick Wakeman

What the 2009 financial crisis can teach us about COVID-19

John Kamensky has spent a career working for better government and as a senior fellow with the IBM Center for the Business of Government he’s already tracking the impact of the stimulus legislation that have passed to mitigate the COVID-19 pandemic.

In blogs on the IBM center webpage, Kamensky has drawn several lessons from the 2009 stimulus laws that were passed response to that economic crisis.

The coronavirus is a different kind of crisis because it has an economic element as well as a parallel health emergency that has upended the way the government responds. But there is still plenty to learn.

I spoke with Kamensky on Friday and below are the highlights I took away.

A major lesson for Kamensky is the need to quickly stand up new programs or greatly expand existing ones. The government did this in 2009 and is doing it even more robustly with the CARES Act.

The Small Business Administration, for one, is taking its loan program, which usually lends about $5 billion a year, and is expanding it to $340 billion. SBA also is getting $600 million to bolster its administrative capabilities. That’s roughly a 50 percent increase on its annual budget.

The CARES Act also calls for streamlining requirements so the government can the money out in to the market more quickly. Examples include the lifting of some restrictions on the use of Other Transaction Authority procurements. At the FCC, restrictions on the carriers manage their bandwidth is being lift to open channels for more video conferencing.

It’s important to note, that the FCC opening is for about 90 days, while the OTA changes will sunset after a few years.

We spent a good portion of our conversation talking about oversight. Many of the oversight requirements from the Recovery and TARP acts worked extremely well and eventually made their way into the regular contracting and oversight process through the later passage of the DATA Act.

So with the CARES Act, the government is starting with a better oversight foundation. One thing Kamensky hopes for is that the government does more data collection across agencies. While not a requirement of the Recovery Act, the inspector general council overseeing Recovery Act spending – the so-called RAT Board – created the Recovery Operations Center or ROC.

The ROC pulled together data from multiple agencies and other sources as a way of tracking what was going on. A more whole of government view.

Another area with lessons learned is how to stand up new program from scratch, Kamensky said.

Normally, it can take five years to implement a new program but now some will be in place in a matter of weeks. This includes programs at the IRS and SBA.

An enormous challenge is that the government is trying to do all of this while significant portions of the workforce are working from home. “They are doing it with one hand tied behind their back,” he said.

On the plus side is that many of the people who implemented TARP and the Recovery Act are still in and around government. They’ve done this before.

Kamensky also will be looking for what sticks after the COVID-19 crisis has passed. From the 2009 economic crisis, the government came to rely more on data and analytics. Those will definitely play a role now but time and experience will reveal what the new lessons learned are.

For more of Kamensky’s views, here is his first blog: Applying and Adapting Lessons from the 2009 Stimulus and a second blog, Where’s the Money? Oversight of the CARES Act.

Posted by Nick Wakeman on Apr 03, 2020 at 12:21 PM


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