Economic Crisis and Government Response

Some Thoughts on What a Good Government Could Have Done in Response to the Coronavirus Economic Crisis

The U.S. response to the current economic crisis is not on par with other advanced economies. The unemployment system is archaic and broken. The health insurance system is patchwork and financially debilitating to millions of Americans. Corporate handouts are often unfair, misused, and given out based on favoritism. Nearly the entire stimulus passed in March is based on a top-down approach that needs to be overturned. There is still a chance to right some things during the current crisis.

What follows is a set of recovery policies that puts people first. These policies aim to lessen the harmful impact of economic crisis on the bulk of the American population. This is how a just and responsive federal government could have dealt with the economic impact of the coronavirus pandemic. It is also a guide to how we should prepare for the next crisis.

• Subsidize 70–80% of wages for those companies who do not lay off their employees. This would avoid the backlog of unemployment filings and the draining of state unemployment insurances reserves. It would also prevent millions of workers from losing their health insurance and it would make business startup easier once the worst is over. To stay on the payroll employees do not have to show up to work. They will continue to receive their full pay with the employer making up the difference. Employees can stay home, take care of their kids, practice isolation, etc.
• If employers do decide to lay off workers, the employing company gets no wage subsidies for those workers, and the laid off workers are eligible for supplemental and extended unemployment compensation.
• Adopt the “Heroes Fund” proposed by Senate Democrats. The fund would raise the pay of health care professionals, first responders, personal care and home health workers, truck drivers, grocery store workers and others essential workers.
• Enact a moratorium on rent, mortgage, and student loan payments for the duration of the declared emergency. Property taxes would still be paid to help prevent state and local governments from going deeply into debt or cutting back on necessary services.
• No corporate subsidies to companies that use overseas tax havens to lower their U.S. taxes.
• No corporate subsidies for any corporation that did not pay federal taxes in 2018 or 2019.
• Corporate subsidies cannot be used for stock buy backs, either directly or indirectly.
• No executive raises or bonuses for any year in which a company received a stimulus grant or loan.
• No price gouging. The price of materials, end products, and services, shall not be raised more than 10 percent of the previous year’s average price. Fines shall be imposed for violations.
• An excess profit tax on those corporations whose revenues climb by more than 10 percent for the year of the pandemic compared to their previous year earnings.
• Federal government financial support for state governments equal to 15 percent of the prior year’s state budget, or proportional to population size, so no state can be favored on penalized.
• Federal money for hospitals, prioritizing nonprofit ones.
• Protection for health care workers who voice concerns over supply shortages and other work place issues. No retaliatory firings or demotions.
• Full health insurance for any person deemed to be employed in an essential service.
• Workers stricken with illness cannot be fired and they are entitled to 30 days paid sick leave at 75 percent of their prior earnings, after which they are eligible for unemployment benefits if they do not go back to work.

As is always the case, good policies don’t simply develop out of good ideas, their implementation depends on political struggle. They also can’t be left to the “experts” in the professional-technical class, they must be an expression of these most effected. Getting good government and good policies is a protracted struggle.