waiting in line

No payroll tax cut. No immunity. If you really want to help the economy, help the unemployed.

Sometimes your choices just suck. When it comes to what Congress should do in the next round of bailout money, that is definitely the case.

As a kid, I remember standing in front of an ice cream display counter and making one of the hardest choices a kid can make: how many scoops?

Two scoops on a waffle cone was reasonable, but a third scoop meant 33% more ice cream and the chance to indulge in an exotic (for the time) flavor like strawberry shortcake or banana chocolate chip. But three scoops were harder to navigate, and extremely hard to eat in the California sun. I could accidently push one or two scoops off and get stuck with the loser base scoop that had become contaminated with other flavors from its now defunct siblings. What to do?

My mother, growing frustrated, gently (call child services!) smacked the back of my head, pushing me to make a decision. “This is an easy choice, Ron. As an adult you may have to make tough choices like pay the rent or buy food, so get on with it.”

And she was right. People make tough choices every day, and Congress is back in session and will be making one soon. Here is my two cents on how it can make the right one.

Everyone Can’t Get Everything

Congress has authorized more than three trillion dollars in relief. That’s trillion with a T, that rhymes with B, that stands for bankruptcy. It is a lot of money. And that doesn’t include the amount the Fed has spent to shore up the markets (and explains why stocks haven’t crashed as they logically should have by now).

Some of the relief has been good, and some has gone to people and companies that didn’t need it, or used it inefficiently. The point is, when you combine large outlays with the ill timed and (in my opinion) unnecessary tax cut approved earlier, the US is in no shape to handle this kind of expense. I mean, I know the tax cut was going to bring in more money because it utilized the piddle down theory of economics, but it didn’t. We all knew it wouldn’t. But now we are faced with even less money to help the country when it really needs it.

It is time to make hard choices with less resources. And instead of arguing why I need it more, I want to argue why someone else should get help first.

Make The Choice To Make The Biggest Difference

If everyone can’t get everything, where do you draw the line? My vote: the most efficient money is spent on the unemployment enhancement program which expires next week. That money was targeted and has helped the country from reeling any deeper into the abyss. The PPP loans were nice, but were filled with lots of pork (banks got up to $100k for processing these loans, and helped out their favorite clients first).

The stimulus checks were welcome and needed by many, but the homes that had layoffs needed the money the most.

Another Tax Cut? Really?

The president has asked for a payroll tax cut. I, along with a lot of actually qualified economists, argue that will do nothing more than just drain the treasury further.

Some companies (mostly large ones) are begging for accelerated tax credits; in other words, pay me today for money I have not spent yet. Other than large companies looking to maximize investor money, I have never met a business owner that bases his/her employment and growth decision more on tax cuts than on market demand, customer acquisition and genuine profit and loss.

If you want to help businesses right now, bring stability as soon as you can, and one way to bring stability is to make certain that consumers don’t go into a freefall that dominoes into evictions, loan defaults, bankruptcies and horrible debt cycles. We have seen this before.

The 2008 crash would likely have had a softer landing if Congress and the president had let banks take a loss for their bad loan decisions and instead helped homeowners stay in their homes. They would have paid more property taxes, spent more to fix and maintain their homes and helped their communities. Instead we helped Chase, Wells, BofA and other big banks maintain their profits. Yay team.

The Program Can be Improved

Adding $600 a week to every unemployment check brings in money exactly where it is needed, into the hands of those who have been unemployed by the Coronavirus and its economic effects. Sure, you can tinker with the program — how about paying someone what they made before they were let go, up to $600 a week plus regular unemployment — so that we don’t pay people more to not work? By the way, I am not opposed to paying people more, but I see this as a logical compromise.

Yes, There Are Other Worthwhile Ways To Help

I recognize that schools need money; they are being asked to do more during this pandemic with less resources; states and cities are seeing their budgets decimated. And I think we should make cases for putting the money where it is most needed. But realistically, if you help the people most affected (the ones unemployed by the current slowdown), you will also indirectly help communities, states and schools. I am not saying this is the only way to help, but it should be the first.

We have to make hard choices with limited resources. And we have to remember that when we give ourselves needless and inefficient tax breaks during good times, we limit our reserves and options in bad times. In fact, we do exactly the opposite of what prudent business owners, heads of households and smart everyday people do. When times are good we fail to build a rainy-day reserve; when times are bad, we go deeply into debt.

Have A Different Opinion?

Let me know. Tell me what you would add to help someone other than you, and what you would cut. Let’s have this conversation. I’d rather we were all doing it, rather than having lobbyists do it.