There’s a movement afoot in Congress to subsidize employees, lost employees, and prospective employees through employers and prospective employers.
The House plan would give employers enough money to cover up to 80% of their wages and benefits, up to $45,000 per worker, plus a credit for fixed expenses like rent. Eligible companies would simply keep taxes withheld from employees’ paychecks. If that isn’t enough to equal the credit, they could get additional money from the Internal Revenue Service.
Smaller businesses would get the subsidy for all workers, while larger ones would get it only for furloughed workers still receiving wages or benefits. The break would be scaled to each employer’s revenue loss during the coronavirus pandemic.
There are a couple of tweaks needed, stipulating purely arguendo that this is a useful idea:
Don’t make the thing a one-size-fits-all arrangement. Weight the $45k by the regional- or MSA-based cost of living.
Put a milestone-based (not calendar-based) automatic expiration on the subsidy and credit, something along the lines of the unemployment rate in the region/MSA falling below a specified threshold that’s consistent with the region’s/MSA’s [5-yr pre-Wuhan Virus average] unemployment rate multiplied by a greater-than-one factor or a return of the region’s/MSA’s GDP to [80%] of its pre-Wuhan Virus level.
Such a move, reducing revenue flowing into government as it would, should come with a parallel: a reduction of government spending commensurately. After all, the only Constitutional purposes for Federal spending are three: to pay the Debts and provide for the common Defence and general Welfare of the United States.
The long pole in that is defense spending—an especially important pole in an environment of aggressively acquisitive Russia and the People’s Republic of China and of a nuclear and nuclear wannabe northern Korea and Iran.
General Welfare spending, limited as it is (for all that the limit has been winked at for too long) to the 16 purposes enumerated in Art I, Sect 8, doesn’t take many dollars.
Our Debts will become much more manageable and repayable with spending held within revenues.
Encourage employers to hire—with, of course, that caveat of an automatic expiry to the incentive—but spending cuts must be done in parallel with the revenue reduction.
