At this relatively early stage in the coronavirus outbreak, one thing should be abundantly clear to everyone: The Trump administration has done more to try to protect Wall Street from the negative effects of COVID-19 than it has to protect Main Street.
President Trump has done virtually nothing to help ordinary Americans since coronavirus started spreading. In fact, he’s actively harmed our outbreak response on multiple levels. He’s more worried about the public relations impact of the outbreak than he is about the lives of infected Americans. He’s spreading disinformation about matters of public health. And he long ago slashed the federal government’s pandemic response teams as part of his destructive trickle-down agenda.
Compare that to what Trump has done to help his wealthy friends. Just one week ago, Trump was pitching the idea of a tax break for big businesses to help save the economy from a coronavirus-inspired tailspin, and the Federal Reserve slashed rates in a futile attempt to keep the stock market afloat. Neither of these ideas worked, of course — the stock market is declining at levels unseen since the crash of 2008 — but they do clearly identify the Trump administration’s priorities.
Just this week, the Trump administration announced that they would meet with Wall Street leaders in an effort to calm the turbulent markets, at the same time that the White House is barely beginning to consider relief and recovery efforts for ordinary Americans.
I’ve been thinking a lot about what a good national response to the coronavirus outbreak would look like. Of course, we should institute a healthy wealth tax in order to get our public health and scientific research sectors back up to fighting weight. Other nations have provided testing and public health activity that makes America’s response look pathetic in comparison.
But our workers and our entrepreneurs are suffering right now. Everyday Americans can’t make ends meet, and the businesses that they’ve invested their life savings into are going to die without some sort of intervention.
From here on the ground in Seattle — the hardest-hit region in the American coronavirus outbreak so far — I can tell you that Trump’s top-down economic response has it all backwards. My fellow Seattleites aren’t worried about their 401Ks at the moment: they’re worried about their next paychecks, or whether their small businesses can survive another few weeks of social distancing and self-quarantine.
Many Seattleites aren’t leaving the house except for essential supply runs, and as a result, bookstores and movie theaters and restaurants are empty. I’ve seen multiple local entrepreneurs state on social media in the last week that if the region continues to suffer under the shadow of pandemic for much longer, they might go out of business. (Some silver lining: In other parts of the country, workers aren’t sure how they’re going to pay rent if they can’t get to work, but at least Democratic leadership in Washington State recently passed a good paid sick leave law, so that’s less of an issue here.)
In 2008, when a mortgage bubble imperiled America’s largest banks, the federal government came together in a bipartisan effort to prop up the economy with taxpayer money. The stimulus package is largely considered to have curbed the Great Recession, lessening its impact on everyone. But that stimulus money never really trickled down to the average American. Our wages stayed stagnant in the years after the Great Recession, slowing the recovery down by throttling consumer spending across the economic spectrum.
The coronavirus, then, offers us a unique opportunity — a chance to correct one of the biggest economic errors of the last fifteen years. We can restore the economy, improve our communities, and generate wealth for everyone.
It’s time for a middle-out stimulus that prioritizes Main Street over Wall Street.
We know that the American economy is powered by consumer demand. That’s why communities like Seattle which raised their minimum wage have seen their local economies grow: when more people have more money to spend, it’s good for everyone — that money circulates in the community, from business to business, creating more jobs and more wealth for everyone.
If the coronavirus causes a recession, that could create a negative feedback loop: small businesses around the country will close, laying off workers who will then not have any money to spend in their communities, leading to more business closures. Giant banks have proven that they’re unable or unwilling to generate this kind of small-business growth, and giant employers like Boeing have proven that they’re terrible neighbors.
So it’s time for a stimulus that puts individual Americans first, encouraging growth on Main Street that will buoy the entire economy — including Wall Street. The fantastic thing about a middle-out stimulus is that it’s not an either/or proposition; the markets are largely informed by stability and consumer demand, so a stimulus package for low- and middle-income people would naturally help Wall Street stabilize by building economic stability from the ground up.
I don’t have the policy for a middle-out stimulus in my hand right now. It’s something that we’d need to quickly hash out in the next few weeks. But I can tell you that a few good organizations have been working on relief policies that would help soothe the pain of the coronavirus slowdown.
The Economic Opportunity Institute has called for worker protections.
Congress should infuse money into state workers comp and unemployment funds, especially in the hardest hit states, so that these existing systems can provide benefits to all quarantined workers and those forced to work reduced hours (through short-time compensation). The federal government should also immediately increase funding for food stamps, housing, and utilities assistance, and suspend restrictions on access. A temporary reduction in federal payroll taxes would provide a little extra cash for both workers and businesses.
- Preservation of medical benefits.
- Moratorium on evictions.
- Prevent utility shut-offs.
- Emergency income assistance.
And House Democrats are working on legislation demanding paid sick leave for Americans struggling to make ends meet during the coronavirus outbreak.
It’s obvious that we also need to offer low-interest loans and easy-to-access grants for struggling small businesses, as well as make loans available for people looking to start a business in the days after the outbreak.
And I’d also include freelance and gig economy workers in that grouping of small business owners. Here in Seattle, for instance, self-employed artists were dealt a huge blow when the coronavirus shut down the Emerald City Comic Con, which was scheduled for this coming weekend. Shoppers at the four-day convention provided up to a third of those artists’ annual income — and as self-employed businesspeople, they should enjoy at least the same level of security that the oil and shale industry is demanding from the Trump administration.
And here’s where the wails and gasps and moans chime in: “That kind of a stimulus package would cost billions! How on earth are you going to pay for it?”
First of all, I’m not particularly interested in the answer to that question. While Trump and his administration were trying to sell their corporate tax cuts to the American people, they promised that the cuts would pay for themselves. The benefits of the cuts would trickle down to the American people, they promised, in the form of higher wages and better jobs.
A Main Street Stimulus Package, though, would absolutely pay for itself. With more money in their pockets, people would spend that money in their local communities. Business owners would invest in improvements. Competitors would open businesses to get a share of that increased consumer demand. And profits would trickle up the supply chain to the same corporations who failed to share their tax-cut wealth with us three years ago. Everyone benefits.
But as it happens, I do have an elegant solution for How We’ll Pay for It: Just ask Congress to revoke the Trump tax cuts, and then devote the increased tax revenue to employers of small businesses and entrepreneurs. We could be talking about trillions of dollars in stimulus money, depending on how long the program lasts.
The important thing is that we can’t allow the Trump White House to pull off a second tax scam — or, worse, a wholesale gift of billions in taxpayer dollars to the same people who squandered stimulus money last time. Instead, we need to treat this outbreak as an opportunity — a chance to give the American people a shot to rebuild this country from the ground up. Wall Street had their shot at fixing the economy. Now it’s Main Street’s turn.
Originally posted on Business Insider. Re-posted with permission of the author.
DemCast is an advocacy-based 501(c)4 nonprofit. We have made the decision to build a media site free of outside influence. There are no ads. We do not get paid for clicks. If you appreciate our content, please consider a small monthly donation.