How to Keep the Economy Booming

Well, we’ve all been expecting some good news, but not this good. The United States economy added an astounding 2.5 million jobs in May, and the country’s unemployment rate fell from 14.7 percent (in April) to 13.3 percent. This latter figure certainly isn’t ideal, and businesses continue to struggle mightily to respond to the lasting impact of the Coronavirus pandemic and stay-at-home orders. But to say expectations were beaten is the understatement of the millennium. On the eve of these numbers being released, CNBC reported that, “the unemployment rate is expected to have hit nearly 20%, with 20.5 million jobs lost in April and millions more expected in May data.”

This spectacular about-face from expectations is a result of regulatory reform and support given to businesses these last few months, as well as the slow but steady reopening plans across the fifty states. Starting the last week of April, states such as Colorado, Georgia, and Alaska kickstarted the limiting reopening of their states, including the gradual resumption of retail and dine-in services. Other states followed suit, and as of June 5, only four states (CA, KY, NJ, NH) still have statewide active stay-at-home orders. Since then, patterns in COVID-19 cases and deaths in the pioneer reopening states have been difficult to make sense of but there’s little evidence of a feared spike in cases. And nationwide, new cases are down about 50 percent from their peak, while deaths are down more than 60 percent from peak.

There’s no denying that this is still very much a somber moment in U.S. history, as injustices and protests continue to rile the nation. As we acknowledge these difficulties, Americans should also take stock of how far we have come in resuming our normal lives and beating back COVID-19. America must press forward and continue reopening while striving to resolve the tension gripping the streets. Below, the Taxpayers Protection Alliance provides five suggestions for the path forward:

• Allow counties, localities to take the lead in further reopening. The process of getting the economy back on its feet is far from finished, and populous states such as New Jersey continue to face shuttered economies. It makes no sense for densely populated cities to be treated the same as rural areas, and governors in these states should empower localities to reopen as they see fit. Policymakers should afford struggling businesses some much-needed flexibility in resuming services to consumers.
• Tailor any future COVID-19 relief to businesses, households struggling the most. Congress recently passed tweaks to the Paycheck Protection Program that allow small businesses (defined as 500 employees or fewer) more flexibility in how they spend loan dollars. Lawmakers should pursue increased loan flexibility and prolonged forgiveness periods while limiting eligibility to truly small businesses with, say, 50 employees or fewer. Similarly, any future relief for households should focus on individuals and families within 200 percent of the poverty line who are truly bearing the brunt of the crisis.
• Fix incentive problems related to expanded unemployment benefits. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress created a new, flat federal unemployment benefit totaling $600 per week in addition to existing state unemployment benefits. Because this benefit level applies to everybody regardless of previous wage level, workers have found that, in many cases, claiming unemployment is actually more lucrative than remaining on the job. While lawmakers have proposed fixes such as “Return to Work” incentive payments, the only real, sustainable fix is to maintain the July 31 phase-out date and tether the benefit to a percentage of workers’ previous wages as proposed in the Getting Americans Back to Work Act.
• Examine which taxes, regulations should be permanently repealed. In order to provide flexibility for beleaguered businesses and households during the pandemic, policymakers at all levels of government relaxed taxes and regulatory restrictions. The Food and Drug Administration, for instance, expedited approvals of COVID-19 testing kits and remains committed to rapid vaccine approval. Meanwhile, governments have allowed doctors to treat patients across state lines via telemedicine, while restaurants were able to stay afloat as they were permitted to deliver alcohol and sell cocktails to-go. Government officials across the country should consider making these regulatory relaxations permanent.
• Empower cities to keep the peace. On June 1, TPA provided some suggestions as to how localities could put an end to recent unrest related to the unjust killing of George Floyd. The federal government can lead the charge by kyboshing “qualified immunity” which makes suing police officers for misconduct in a court of law all-but-impossible. Once immunity is rolled back, cities should impose liability systems and insurance requirements to hold cops accountable for their actions. Cities must also make clear that wanton destruction is unacceptable and enact zero-tolerance policies against looting.