Thursday’s jobless claims showed that the United States continues to shed jobs at an intolerably high rate, with the weekly moving average of unemployment claims totaling 1.6 million. While last month’s Bureau of Labor Statistics Employment report showed a surprising 2.5 million jobs were added to the economy in May, more than 30 million people continue to collect some type of unemployment insurance benefit, indicating the economy has a long way to go before it is restored to the robust pre-pandemic employment landscape.
This is why it is essential that policymakers act in a way that reflects the unprecedented nature of this crisis, when the economy has been put on ice to protect public health. Although states have begun to reopen, a full economic recovery is in no way assured; uncertainty regarding the looming public health dangers will continue to mute economic confidence.
Data shows that the swift action Congress and the president took in the CARES Act prevented total economic catastrophe for families and businesses in the form of stimulus checks, expanded unemployment benefits, government loans, and unprecedented monetary support to keep the economy from falling into an irrecoverable malaise. But the support in the CARES Act was built on the premise that the most dire of economic consequences of dealing with the coronavirus would have passed by the summer months.
It is understandable that lawmakers wish to be deliberate as the federal and state governments are not only grappling with a public health crisis but with mounting budget crises as well. But these unprecedented circumstances should underscore the need for further action as people look to Washington for leadership in these uncertain times.
The National Taxpayers Union has released a report to guide these conversations and provide an outline for how Congress can sustain the economic recovery while serving as smart stewards of tax dollars that are growing scarce.
At NTU, we believe the adoption of three principles can help members think through the tough policy choices ahead:
Recovery efforts, on the other hand, should make broad changes to the tax code that do not seek to benefit one industry or interest over others and have a material effect that spurs economic activity;
All efforts in a fourth COVID-19 bill should come with prudent guardrails, to prevent taxpayer dollars from flowing to unrelated or unproductive causes or to projects that have nothing to do with the pandemic and recession.
There are many proposals in Congress that merit consideration in a fourth package to confront the economic effects of coronavirus. First, the expanded unemployment benefits are scheduled to lapse at the end of July. Economists from across the political spectrum agree that extending those benefits could further harm the economic recovery. Proposals that provide a bridge from the expanded benefits to getting workers back to work, like the $1,200 bonus proposed by House Ways and Means Committee ranking member Kevin Brady, a Texas Republican, or the time-limited, $450-per-week bonus proposed by Sen. Rob Portman, an Ohio Republican, should be considered.
Building on the success of programs in the CARES Act, such as expanding the employee retention tax credit and continuing to improve the Paycheck Protection Program, could give business owners better agility in navigating how to open their business while keeping their workers and customers safe. Broad changes to the tax code that allow businesses to recover more costs would also provide economic certainty in an overwhelming uncertain environment.
With infection and hospitalization rates rising in some parts of the country, it is all the more important that policymakers look for ways to stabilize economic conditions as we continue to navigate the new normal of life during a pandemic. With the principles outlined in NTU’s issue brief, Congress can provide stability and support while safeguarding taxpayers’ interests.
Mattie Duppler (@MDuppler) is a contributor to the Washington Examiner's Beltway Confidential blog. She is the senior fellow for fiscal policy at the National Taxpayers Union. She's also president of Forward Strategies, a strategic consulting firm.
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