Federal and Massachusetts Coronoavirus Policies Are Killing the Economy; Congress and Beacon Hill Need To Save It — Now

By NBP Editorial Board | March 22, 2020, 18:42 EDT

United States Capitol in Washington D.C., seen from the west side. Photo by Martin Falbisoner, courtesy of Wikipedia.

There are approximately 130 million full-time employees in the United States. Today, U.S. Treasury Secretary Steve Mnuchin on Fox News said that 50 percent of all American employees work in small businesses. This equates to about 65 million citizens. So including their families, this means perhaps 150 million people depend on viable small businesses for their wellbeing.

The federal and state government policies to fight the coronavirus are endangering the livelihood and well-being of perhaps 45 percent of the nation. And that does not include entire industries that are at a standstill such as the airlines, cruise companies, hotels, and manufacturers like Boeing.

With federal and state government responsible for this economic destruction, it is incumbent on our government leaders and policymakers to get their act together and enact policies that take care of the employees, companies, and industries that are so negatively affected by the government-forced shutdowns.

Now.

Not in two weeks or ten days. No more dithering. A package needs to be rolled out tomorrow.

Without immediate action the capital markets will go further into panic mode, leading to another systemic financial crisis Panic of 2008. That would deplete the savings and retirement assets in 401(k) plans and individual retirement accounts of millions more Americans.

The government in the United Kingdom has already announced a loan-guarantee program of 330 billion pounds sterling for U.K. businesses of all sizes. This amount represents 15 percent of the country’s Gross Domestic Product. And many of the loans are forgivable, meaning that if a company cannot repay all or part of the loan, the government will require no further repayment.

The Gross Domestic Product in the United States is more than $20 trillion. A program here comparable to the U.K. program means a loan package of $3 trillion. And this amount will be needed.

It is likely that GDP in the United States in the second quarter of 2020 will be down as much as 20 percent and then perhaps an additional 10 percent in the third quarter, as things begin to come back economically. Six months’ worth of Gross Domestic Product in the United States comes out to $10 trillion. A 30 percent hit means that we need a package of $3 trillion. And it needs to be enacted now.

No more hesitating, no more partisan squabbling and bickering. Politicians in Washington need to work together and get this done.

The point of such a package isn’t to bail out industries that have failed because they have been unable to adapt to changing economic conditions. The point is to keep businesses going and families afloat who have been ordered not to work by the federal and state governments. Government’s power to prop up the economy is most easily justified during a crisis – and this is it.

What can Governor Charlie Baker do?  There are parts of Massachusetts that have not been affected or are barely touched by the coronavirus. There are many towns and counties with no positive cases at all. It makes no sense to have universal lockdowns. Why shut all the businesses in these areas?

Governor Baker should use common sense to differentiate between areas where the coronavirus is spreading and those where there is not a trace of it. Lifting draconian rules and decrees that shut down business in towns and counties where less than one tenth of one percent of the citizens have tested positive for the virus would help the Massachusetts economy greatly in this difficult time.  

The policies of the federal and state governments to combat this virus, which so far in this country has resulted in the death of less than 1 percent of those who contract it, will soon be decimating a great number of small business, affecting tens of millions of people. It is therefore incumbent on government to throw out a lifeline – before the disaster is completed.

This is the time when our politicians need to act swiftly and wisely – in Washington and in Boston.

We are counting on you.