Posted on 03/17/2020 12:02:44 PM PDT by Kaslin
House Speaker Nancy Pelosi's coronavirus bill is not enough. It is not nearly enough. And if there is any hope of keeping the U.S. economy from free fall, its deficiencies must be addressed this week.
House Speaker Nancy Pelosi’s coronavirus bill is not enough. It is not nearly enough. And if there is any hope of keeping the U.S. economy from free fall, its deficiencies must be addressed this week with a combination of immediate and direct aid to the businesses that feed our families, host our celebrations, employ our neighbors, sponsor our Little Leagues, and make our towns our homes.
The House bill starts off right. Free-testing, paid sick leave, and shoring up Medicare, food stamps, and unemployment insurance. But that’s it. The problem with this wish list is it fails to shore up small and mid-sized businesses, which means it barely begins to address the upward-cascading nature of the destruction.
The coronavirus economic crisis is not the 2008 financial crisis, and a stimulus is not going to save the town centers we love and recognize. More than a decade ago, stupid loans, foolish risks, and over-leveraged companies caused a credit crunch and the federal government chose to infuse banks with capital to keep people solvent and the economy from turning off.
Today, in contrast, we are intentionally turning the economy off to save lives and protect our future, but if we want any shot to turn that economy back on in three to six months, we’re going to need to make sure the small and mid-sized businesses that form our middle class and civil society’s spine are still there. As things stand, they won’t be.
A combination of sudden loss of business and city and state decrees across the country have closed restaurants, bars, clubs, event spaces, catering companies, entertainment venues, and other small businesses. More will follow as we work to curb the spread, with each company forced to send their employees to the public unemployment rolls. The capital crisis, though, is rolling up hill as well: These fully- and half-shuttered companies have landlords, distributors, and a host of others that rely on their business.
The billions President Donald Trump directed the Small Business Administration (SBA) to give banks to distribute in loans won’t cut it. For one, small businesses with no revenue stream and mounting bills can’t afford to go further into debt — they need interest-free loans.
There’s a problem with that too, though: The SBA exists to back up the local banks, and banks want nothing to do with handing out money to struggling companies. What incentive do banks have to give no-profit loans to businesses that are asset-poor, or whose business models don’t demonstrate the kind of profit projections needed to satisfy the bank? As a number of your family’s favorite restaurants, your friends’ favorite taverns, and others have begun to discover over the past week, the banks prefer to send them mining deep into a mountain of paperwork over giving them the money they need right now.
To tackle this, Congress must authorize the SBA to take on a Federal Emergency Management Agency-like role, cutting checks and providing direct infusions to small and mid-sized businesses. The process must be streamlined, with discretion given to the administrator (or a federal corona czar) to oversee and move the machinery along.
Additionally, simple loans aren’t going to be enough if we want the economy to remotely resemble January 2020 when we try to switch it back on. Many of the businesses we love and patronize every week aren’t bank-funded ventures, they’re the physical manifestation of their owners’ personal savings and life’s work.
Even a company that is able to defer its rent to a future date and use a loan to hold core employees and business needs is faced with a stark choice: “Do I want to work for the real estate company or the bank for two, three, four years digging out of this, or do I want to close shop, join my employees on the dole and maybe — maybe — try again another day?” The effort is going to look similar to a mass-scale version of our program to pay farmers not to farm land so that land remains productive. That, for our hometown economy.
But how much is enough? The process is going to be victimized by fraud and abuse, although one method for more-safely streamlining the process is to ask business owners to present tax returns from previous years — documents already verified by the federal government. A percentage of past revenues can then be given directly to the business in a combination of grants and loans, with the specifics decided by negotiations between the House, Senate, and White House. New ventures, unfortunately, likely must be left to falter.
It makes no sense to send a level of relief unprecedented in modern America and then to demand it back in April’s taxes, so Democrats are going to have to come around to the understanding that the nature of this challenge and the necessary response demand a suspension of a number of federal taxes.
Politicians and the Federal Reserve know that the solutions necessary will lead us screaming toward inflation. Dangers abound, and it will be a hard bill to swallow for both parties. While world governments and laboratories work day and night to develop vaccines and treatments to lessen the coronavirus’s impact, however, Washington must move.
Right now, as the current and completely deficient House bill moves through the Senate, the powerful airline and cruise industries are using their considerable size and influence to carve aid out of the U.S. taxpayer. Washington is going to give it to them, too, because we do not want to emerge in six months without a U.S. travel industry. How is the United States of America content saving airplanes while our middle class goes under? It’s the same middle class, by the way, that will be needed to buy those airplane and cruise ship tickets on the other end.
We’re all in this together, and we can neither expect to get all our money back nor be satisfied with none of our money back. Once again it will be a difficult compromise between Republicans loathe to hand out money and Democrats loathe to ask for it back.
Congress needs to move now, though, because while the woes of small businesses across the country are hitting their owners today, they will be hitting their employees tomorrow and their landlords the next day as the impact compounds. The liquidity crisis lands on all of our doorsteps, so the question for the House, Senate and president is how many middle-class entrepreneurs will it leave in its wake?
This isn’t 2008, and the program outlined above is not a stimulus — it’s a national mobilization. And it is necessary to save the country we know and love.
“immediate and direct aid to the businesses”
I thought this was a conservative website.
Loans to small businesses are called home equity loans.
Don’t own a home? Get a silent partner with one.
That’s what I tell everyone. I plan on ordering dinner for take-out tonight. My kids and their families are going for corned beef and cabbage where the tables have to be set 6 feet apart.
I will utilize the local grocer and Walmart and I have planned on spending more than normal in general. I made a large internet order Saturday. Through our business we will continue to buy everything we normally buy.
Within eight weeks most people will have gotten infected and the fear will be mainly gone.
Only really careful vulnerable people will be able to avoid infection.
We got red tide about 18 months ago here in Florida.
There was no mass federal dole payments to businesses.
2019 & 2020 self-employment taxation could be made personally optional in exchange for an eight percent future Social Security benefit reduction.
To these Leninists, wiping out the kulaks is a side benefit.
I guess you did not perceive that my comment was sarcastic. Point being that about 95% of the ridiculous crap we have to endure originates with those groups.
Collapse is what they want. This is a CLoward-Piven dream, overwhelming the system.
A month out...President Trump is suspending all taxes and closing most federal agencies. Nancy Pelosi is seen behind PREZ tearing up the tax code at this historic event.
https://www.youtube.com/watch?v=54BCLYNkFKg
IMO best R&R song in American history. YMMV.
Totally agree with you. It is insanity, and I am really sick of the nationwide guilt trip being laid on anyone who dares question it.
"Never let a serious crisis go to waste..."
Me too. Weirdly, I was talking with a neighbor who is in the hotel biz and he was parroting the lines (”whatever the government says”) and then as we were getting ready to go back to the yard tasks we were working on, he said to me very softly “I agree with you.” But it was as if he was afraid of being overheard.
Very strange and disturbing.
It would be the time to do it..
I am crossing my fingers. Want to stimulate the economy even in a crisis? That’d be WAY better than giving out cheap money.
BTW, They are considering closing ALL interstate truck stops to fuel only. That, from one of the truck stop people on I 40 near here. I have a neighbor who works there.
Truckers are already refusing loads. The local Travel stop in the valley here ran out of gas-no truck delivery yesterday. Yesterday, they ran out of diesel.
We are about to see something none of us thought we would never see.
I do hope the hysterians are really happy. They got their man made disaster.
No sweat. Have a good day.
That includes our neighbor.
Our sons play together. But not now, because I took him to get a badly-needed haircut today (I’m afraid they will shut down them, too). They are scared of everything, and texted the other day about “the moms here decided it would be best to not play together because it might hurt someone they know who is ______” He was originally allowed because they thought being a single child not going anywhere and not playing with other kids (separate ‘hood, they back up to us), he would be OK.
Now I’m the bad guy because I must be irresponsible not shacking up at home (don’t even go to the store!) and I’m going to kill old people. Which BTW includes my 82yo mother, 10 min away, whom I’m trying to help through all kind of financial/bureaucratic crises after my father died Thanksgiving. But we’re vectors/domino effect for ALL kinds of diseases which also tend to kill these people!
When does this logic end?
I’m just kind of mad and sad for our son.
My question is the swine flu killed 14ooo Americans and the stock market and economy was fine and the hysteria was very low if not at all, why?
“...national retail sales tax...”-
That would require a constitutional amendment, which takes a lot of time.
Why would that require a constitutional amendment?
There are already federal excise taxes, on tires for example, that look a lot like sales taxes.
“...Why would that require a constitutional amendment?...”
-
Unless you want BOTH an income tax AND a national sales tax.
Trump says we are at war with this virus. Do a symbolic speech and get a vote to declare war on the virus and grant Trump and the CDC powers to do fight it. Once he gets it, slash the government to the bone as well as any in-flight discretionary spending, and funnel it to speed up wall Construction and provide tax relief.
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