By Steve Ellis
March 24, 2020 at 5:00 am ET
As the nation, and the world, faces the global COVID-19 pandemic, the health response must obviously come first. But an economic response in the form of a multi-trillion dollar emergency spending package is also taking shape as the country stares at the growing financial hit — layoffs, closing businesses, disruption to travel and business. And as long as the scale and scope of the health crisis are unknown, the depth and duration of the economic crisis are unknowable. Which means although the health response comes first, it can’t — and shouldn’t — be the exclusive focus.
With that in mind — and based on our extensive history with federal approaches to large natural disasters, plus lessons learned from the 2008 financial crisis — Taxpayers for Common Sense offers the following principles to guide the nation’s economic approach and evaluate policy proposals in the wake of the pandemic. Because Congress and the administration need to ensure our response to this immediate national health emergency doesn’t lead to a long-term fiscal crisis.
First, do what’s necessary, not what’s advantageous. Federal disaster response can mitigate damage and save lives. But it shouldn’t be designed with the goal of making everyone whole or even better off. The first and immediate step should be to address the present crisis so that recovery can begin. But relief should also “pre-spond” to future disasters, and build a bridge to better times, not put an industry or individual in a better position than they would have been without the crisis. That calls for incremental, thoughtful, targeted assistance that will be meted out as needed, rather than large catch-all packages that are difficult to track and administer, and ripe for wasteful spending, fraud and abuse. This matters because…
Deficits still matter in the long run. As Congress considers trillion-dollar stimulus packages, it needs to take an economic Hippocratic oath — first, do no harm. Large amounts of debt and persistently high deficit spending during the nation’s longest economic expansion has made it more difficult to maneuver this crisis. The 2017 tax cut and successive legislation increasing spending caps without offsets for FY2018-21 exacerbated the situation. And amassing large federal deficits for non-critical spending will compound this harm by hampering future flexibility, while not delivering effective disaster response or stimulus in the near-term. Finally, undercutting already challenged entitlement programs through payroll tax holidays or shortsighted policies like letting the airlines keep the flight ticket tax instead of its purpose — funding airport improvements — makes little sense in the long term.
Congress should prioritize the response on mechanisms with the greatest positive effects. Not all safety nets are created equal. SNAP, WIC, unemployment and SBA low interest loans provide immediate disaster relief and economic stimulus and have existing delivery systems to work efficiently. It makes far more sense to prioritize the types of programs that have immediate impact over those generating long-term demand. Further, cut taxes only if they provide cost-effective immediate relief — even retroactive ones. The economy is better off if Congress creates incentives and tools to direct U.S. manufacturing and development industries to create products and tools to help mitigate and fight the health crisis.
Emergency legislation, despite the temptation and opportunity, should not make permanent changes or create long-term liabilities — which the taxpayer will end up funding. Temporary responses need to be temporary. Emergency programs need to sunset and emergency funds must have expiration dates. Unfunded mandates or unbudgeted federal programs without debate should be avoided. Take for example a new permanent federal guarantee for paid sick leave — it would either be a.) an unfunded federal mandate, or b.) a new unfunded mandatory entitlement. Neither will get the type of debate they deserve if done through an emergency spending bill. Aid should come with strings attached, in order to ensure best long-term results. And if an entity or individual doesn’t want strings? Don’t accept the aid.
Speaking of strings, transparency and accountability are key. TCS has learned to follow the money. Funding, loans, loan guarantees and tax relief must not only be targeted but tracked to ensure it is either alleviating the health or economic crisis. We’re glad to see additional money for agency Inspectors General to help boost oversight of this influx of spending. Assistance must be continuously evaluated to determine if it is effective or warranted, because assistance regardless of need or impact is ineffective and wasteful. And a trillion-dollar package deserves a dedicated watchdog. Congress should emulate the Recovery and Accountability Transparency board that monitored the 2009 stimulus and Superstorm Sandy response. Not to track individuals or micromanage accounts, but to ensure dollars are going where they are needed most, in both real time and retrospectively to provide lessons for the future.
Hurricane Katrina, the 2008 financial crisis, Superstorm Sandy, recent wildfires — none of it was that long ago, and the lessons aren’t ancient history. While this crisis is broader than any of those previous disasters, Congress must keep their lessons in mind. As a nation we will do what we must, but not every action is a must. Policymakers must be willing to do more, or less, or simply something different if our first actions don’t work. But you must prioritize actions on those most likely to provide the greatest benefit to the most. The primary goal will be to stop a health crisis from turning into a continuous economic crisis. When the health crisis and economic crisis are under control (the patient is stabilized), then we can discuss how to direct and pay for the economic recovery. Put out the fire before you try to rebuild the burning house.
Steve Ellis is president of Taxpayers for Common Sense, a national nonpartisan budget watchdog. Ellis, a former U.S. Coast Guard officer, has been with TCS for 20 years, monitoring spending, serving as spokesman and testifying before 11 different congressional committees.
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