12 Urgent Actions to Reopen America and Prevent an Economic Depression

COMMENTARY Markets and Finance

12 Urgent Actions to Reopen America and Prevent an Economic Depression

May 14th, 2020 4 min read

Commentary By

Paul Winfree @paulwinfree

Director, Roe Institute for Economic Policy Studies

Charmaine Yoest, Ph.D.

Visiting Fellow, Institute for Economic Freedom

The steps we take won't just be critical in restarting the economy; they could help increase the soundness of the economy coming out of the COVID-19 crisis. Photo by Rafa Elias/Getty Images

Key Takeaways

Every day that passes increases the amount of time that it will take to get the economy up and running again.

The National Coronavirus Recovery Commission has put forward 179 recommendations for governors, local leaders, federal officials, and the private sector.

As we talk specifically about getting America back to work, here are 12 of the most urgent actions that policymakers should take to prevent an economic depression.

The steps we take to reopen America safely will determine whether the United States has to contend with an economic depression—regardless of whether COVID-19 is suppressed in the next several months or the next year.

How we build on those steps will not just be critical in restarting the American economy, but also could help to increase the soundness of the economy coming out of this crisis.

The Heritage Foundation’s National Coronavirus Recovery Commission has put forward 179 recommendations for governors, local leaders, federal officials, and the private sector on the steps necessary to reopen America.

The full report from the commission takes a comprehensive approach to combating this crisis and includes many facets of the challenge we face. It reflects a strong belief that saving lives and saving livelihoods are inextricably connected. 

But as we talk specifically about getting America back to work, here are 12 of the most urgent actions that policymakers should take to prevent an economic depression.

1. Allow businesses in counties with low incidence of COVID-19 to reopen. Just five states—New York, New Jersey, Massachusetts, Illinois, and California—account for 54% of all of the confirmed COVID-19 cases in the U.S. and 61% of all related deaths. Most counties (80%) have had less than five deaths related to the new coronavirus.

2. Use stay-at-home orders sparingly and only where necessary. Better, more targeted approaches should focus on infection hot spots, isolate the sick from work, and protect the more vulnerable (those who are elderly, in nursing homes, or have preexisting conditions).

3. Establish a national portal with accessible data on the spread of the coronavirus as well as the modeling used to support decisions made by governments at all levels. Access to information is absolutely critical for governments, medical professionals, businesses, and individuals to make the best decisions on how best to respond. Specifically, the availability of this information will reinforce consistency in standards that can be carried out locally and helps physicians. More access to information  also will help to eliminate uncertainty about the virus that hurts the confidence of businesses and consumers. 

4. Immediately allow all medical offices to reopen. Many states shut down health care services considered “nonessential” to prepare for projected massive surges in patients infected by the coronavirus. This government-created impediment has hindered the ability of medical professionals to meet Americans’ ongoing health care needs, and many medical workers are being unnecessarily furloughed. Amid an unprecedented health crisis, over 1 million health care workers face unemployment.

5. Review all regulations that have been waived or modified in response to COVID-19 and consider permanent changes. Such a clear statement by President Donald Trump to executive agencies would provide more long-term confidence and stability for businesses by ensuring regulatory regimes work in good times and bad, facilitate innovation and market advancement, and still protect health and safety.

6. Expand liability protections with a safe harbor for businesses and workers that follow guidance by the Centers for Disease Control and Prevention in good faith. A safe harbor by Congress would provide much-needed confidence and stability that encourages business owners to reopen.

7. Liberalize future Paycheck Protection Program loans to broaden eligible expenditures, extend the relevant period, and limit the loans to businesses that were hit hard. Businesses that were forced to shut down must rehire and retrain employees, secure inventory, reestablish vendor relationships, and settle balances. Congress should broaden what can be paid for and forgiven with new PPP loans for businesses that suffered a substantial decline in gross revenues because of the coronavirus.

8. Reduce small-business tax liability with a “physical presence” standard. Every small business that sells online, no matter where physically located, is subject to the more than 10,000 different taxing jurisdictions around the country—each with its own tax rates and rules. This burdensome, complex requirement threatens to bankrupt many small retailers and prohibit others from retooling to ship new products. Congress should protect vulnerable retailers by codifying a physical presence test for tax collection.

9. Make legislative and regulatory changes to expand access to capital for small businesses. Entrepreneurs will drive recovery by reopening existing businesses and taking on new risks to fill new needs in the post-crisis world. Congress and the Securities and Exchange Commission should remove barriers for small businesses to access peer-to-peer lending, credit unions, and investment finders. By simplifying exemptions and disclosure frameworks, and working to simplify regulations, small public companies will find it easier to recover and grow.

10. Incentivize research and development and infrastructure investments with permanent full expensing. Starting in 2022, research and development expenses and new spending on machinery and tools no longer will be fully deductible, discouraging innovation and investment. R&D spending is critical as the private sector develops new remedies and reorganizes to meet the needs of a post-coronavirus recovery.

11. Honor and enforce contractual insurance obligations. The virus has caused extensive property damage, and many businesses aren’t getting the business interruption coverage for which they contracted. Insurance coverage should be honored to the fullest extent agreed upon in the individual terms of contract, which should be enforced fully by the courts if necessary or resolved through legal arbitration.

12. Eliminate all tariffs imposed since 2018. Trade freedom is vital to economic recovery and to build certainty in supply chains. Countless U.S. jobs depend on materials from Great Britain, the European Union, and around the world—and vice versa. The Trump administration should remove Section 201, Section 232, and Section 301 tariffs to benefit all parties.

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Every day that passes increases the amount of time that it will take to get the economy up and running again.

If broad-based lockdown policies are continued much longer, we face a real prospect of a depression with economic suffering and social and public health effects that could last for years.

For the complete list of recommendations, visit the National Coronavirus Recovery Commission’s website at CoronavirusCommission.com.

This piece originally appeared in The Daily Signal