Tom McClintock: Our choice – 3rd quarter rebound or a lost decade
The anguish in people’s voices as they call our office every day is heart-breaking. Many are wondering how they can pay their bills, whether their job will still exist in a week, whether their retirement savings have been decimated or whether they’ll lose the shop they’ve spent their lifetimes and life savings to build.
Immediate financial relief is of paramount importance to staunch the damage done to the millions of American workers and businesses pushed to insolvency by forced closures and a panic that has emptied grocery shelves across the country. How that relief is extended will determine whether we save or destroy what just one month ago was one of the most promising economic expansions in our nation’s history.
Businesses must have immediate access to capital to keep their assets intact and their employees’ jobs preserved.
The answer that has worked for centuries is to make capital easily available through low-cost, emergency loans so businesses can stay intact. The Federal Reserve is doing that by throwing open the discount window and Congress needs to guarantee emergency loans to all businesses to stay afloat until the crisis passes.
For struggling families a payroll tax holiday could quickly boost incomes through the end of the year, maximizing the incentive for businesses to reopen and individuals to return to work. This would put far more cash in workers’ pockets than $1,000 checks, allowing them to recover the losses they are now suffering.
The $800 billion cost of such a stimulus does not need to be added to the nation’s staggering debt — and future taxes — if individuals are given the choice to forego paying the taxes now in exchange for delaying their retirement date by a few months.
By these means — ample emergency loans and deficit-neutral payroll tax relief — businesses can survive, workers can recoup lost income and the nation can get quickly back to work.
These measures would provide immediate relief while preserving what should be a strong third quarter rebound. Yet, making bad choices now threatens to deepen the crisis and prolong our distress.
Limiting the economic damage requires a rapid return to normalcy. The February job numbers tell us that the American economy is fundamentally sound and poised to restore our losses — provided we can get Americans back to work as quickly as possible.
Yet rushed legislation recently adopted by Congress moves in the opposite direction: guaranteeing paid leave for up to three months and extending unemployment benefits to a full year.
Some propose to spend trillions of dollars more, which will crowd out capital needed for expansion and cost us the future. The same policies failed miserably during the 2008 mortgage crisis. Cash grants under Bush and a trillion dollars of stimulus spending under Obama did little to stimulate the economy. Enhanced and extended benefits delayed many from returning to work. The sum total of these blunders turned the recession of 2008 into a decade of lost economic growth and stagnant wages.
Have we learned nothing?
Families and businesses are hurting and need immediate help in the present while preserving our future.
How Congress reacts to this crisis will have long-lasting implications to the future prosperity of our country and determine whether Americans can bounce back in coming days, or whether we are hobbled for a decade to come. Sound policies and sober legislation can get everyone through this crisis without forsaking what should be a historic recovery for our nation.
Congressman Tom McClintock represents California’s 4th Congressional District.
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