Re-stimulating the Economy
Covid 19 will kick the US economy into a recession. But the economic fundamentals laid down by President Obama after the Great Recession of 2008-9 are still strong. They were augmented by Trump’s sugar water tax cuts which pumped up the stock market values but did not improve economic fundamentals like productivity and US manufacturing competitiveness.
Particular sectors of the economy are going to be hurt: air travel, restaurants, mall spending, tourism, entertainment, cruise ships and the like. Others like hospitals, nurses, doctors, pharmacy, medical supplies are going to be badly overstretched, but not damaged by a recession. There has been a run on and panic buying of toilet paper, hand sanitizers, firearms and groceries. There has been a panic selling of stocks and other investments undercutting the value of people’s retirement savings.
The President wants a payroll tax cut through the end of the year; that’s a bad idea; as one might expect from this President, it helps the highest paid salaries the most and leaves out all those Americans facing job losses or layoffs. Senator Romney takes a page from Andrew Yang and suggests $1,000 for every American; Secretary Mnuchin likes that idea. I think it’s less bad than the payroll tax cut, but does not target the money where it’s really needed. Our problem is that we are confined to our homes and cannot go out and spend the money.
The airline industry, the small shops and the good local restaurants are legitimately in danger of going under; that’s where funding is needed, but no one is flying or going to a restaurant or buying anything but the essentials during a health pandemic lock down. The gig workers, the self employed with no UI, no paid sick days, no employer provided health coverage; that’s where the funding is needed. Those who cannot pay their rent, their utilities, their food bills because a parent got laid off; that’s where the funding is needed. Those who cannot pay for child care or lunches for their children who are now back from school, but their mom is working one or two jobs; that’s where the funding is needed. Don’t just throw money indiscriminately at the recession in order to try to re-elect those who have already so badly bungled our response. Target it carefully and spend it wisely with those who need the most help now. These families and individuals need far more than a one time check for $1,000, but are far more likely to need $1,000 a month while the economy is in deep recession, then phased out as they get back on their feet. We can be sure that 100% of the funds will go into economic stimulus and jump start the economic recovery. We need to recognize the vital needs of the health care industry and pump more immediate money into respirators and other essential hospital supplies to assure that the front line heroes in this crisis get what they need. Finally we need to un-block the bottlenecks on testing and make it widespread so we are no longer flying so completely blind in trying to combat it.
This is not the time for panicked policy making, for political posturing or for electoral vote buying. This is the time to ignore the scam artists, liars, hucksters and the wanna-be profiteers from a real emergency. Can our elected representatives rise to today’s challenges?
Prepared by: Lucien Wulsin
Dated: 3/17/20