Editor’s note: We endeavor to bring you the top voices on current events representing a range of perspectives. Below is a column arguing that a V-shaped recovery after the coronavirus pandemic is possible as long as President Donald Trump enacts certain policies. You can find a counterpoint here, where Alan Tonelson argues that a V-shaped economic recovery is unlikely.
The recovery stage for our economy is finally here (although slightly postponed by the inner-city riots), and now the trick is to gun the engines and get this $20 trillion economy flying again. President Trump and his economic advisers are forecasting a V-shaped recovery – meaning after the sharp downturn of the last three months, we soon start to soar back quickly and make up a lot of the lost ground.
Easier said than done – especially with Speaker Nancy Pelosi ruling over the House.
But a Reagan-style rapid bull-market recovery when we had quarters of 8% growth is possible, and here is how to achieve that and avoid the L-shaped tepid recovery we saw under Barack Obama a decade ago.
First, stop negotiating with Nancy Pelosi. Virtually every idea she has had – such as paying workers in more than half the states super-unemployment benefits so they get paid more to not work than to work – is harmful to the economy and will delay a recovery. The $3 trillion spending bill she bulldozed through the House would push the United States to the brink of fiscal catastrophe with government spending eclipsing 50% of GDP for the first time in U.S. history.
Second, no blue state bailout. The offer of money to states and cities is patently unfair to those who live in well-run and fiscally-sensible red cities and states and they shouldn’t be responsible for the profligacy of their blue-state neighbors. The federal government doesn’t produce anything so it can only give money to some states by taking money from other states. This is a game of kabuki. It also enables governors like New York’s Mario Cuomo and New York City’s mayor DeBlasio to stay shut down by paying them to do so, which makes the economic damage from the shutdown all the worse.
Third, immediately suspend the payroll tax for the rest of the year. With one in four Americans now unemployed, this will help get people back to work and fatten the paychecks of all 150 million workers who have remained on the job. The workers who would benefit the most would be minimum wage and middle class workers who pay more payroll than federal income tax. Isn’t this what Nancy Pelosi wants?
Opponents say this reduction in the worker tax does nothing to help the people who are unemployed. Wrong. It helps the unemployed the best way possible: by creating jobs and higher take-home pay when they do get a job. By reducing the payroll expenses for employers, the cost of hiring more workers falls — which helps get millions of Americans back to work.
Some also protest that we cannot afford to suspend the payroll tax because this would lower revenues by about $700 billion. But this plan is actually one-quarter as expensive as the Pelosi plan, which would not create any net new jobs.
Fourth, give every employer a liability shield to protect them from trial lawyers who want to sue small businesses every time a worker gets sick. This will kill the recovery if it isn’t prohibited. For the rest of the year, employers should only be liable if they negligently allow their workers to get hurt or sick.
Fifth, let more high-skilled immigrants come into the country to fill needed jobs and to start businesses. Also, the investor immigrant program should be expanded so that foreigners who wish to invest $1 million or more in the U.S. and create jobs can get a visa. This could create tens of thousands of new jobs.
Sixth, allow American companies and expatriates who have money invested or stored in China to bring those funds back to the United States with no tax applied. This could bring hundreds of billions of dollars back to these shores to be invested here, not in Chinese cities. This would penalize China for spreading the coronavirus and bring vitally needed reinvestment capital to American cities.
Seventh, reduce the massive cost of the $23 trillion national debt by refinancing expiring bonds with 30 or 50 year bonds to lock in low interest rates at 1.5% for decades to come and save taxpayers trillions of dollars. This is an idea that has been proposed by Senator Dan Sullivan of Alaska.
Eighth, make sure that all future coronavirus payments are in the form of loans to be repaid to taxpayers, not grants or unreimbursed benefits.
Nearly everything Washington has done until now in response to the pandemic has been to reward people for not working. Now it is time to get back to the idea of making work pay more than staying idle and on the couch. Trump rebuilt the economy with tax cuts, deregulation and cutting red tape, and that is exactly the prescription for our current economic woes.
The vast majority of Americans want to be earning a paycheck and they want to be paid a good after-tax wage. Polls show that if you ask voters would you rather have the next aid package go to mayors and governors and other politicians to spend or would you rather have more money directly in your paycheck, two of three voters want the payroll tax cut. They have the attitude of Cuba Gooding in the unforgettable movie Jerry Maguire: SHOW ME THE MONEY!
Stephen Moore is a senior fellow at FreedomWorks and a member of President Trump’s economic recovery task force.