Thread by @SHamiltonian

Today, @stanveuger and I are releasing a one-page plan to support businesses and jobs through the crisis. The economic crisis stems from a large fall in business revenues due to a contraction in demand and restrictions on supply. Our plan fills that gap.

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The government should provide immediate funding for emergency loans to any small- and medium-sized business in America. These loans would:

• be offered via private lenders but facilitated by the Federal Reserve;
• cover the shortfall in revenues by participating businesses;

• come with tax credits from the federal government to cover the loan amount if they maintain their FTE on payroll through the crisis (or scaled proportionally);
• cap the net income (after tax credits) of participants to a proportion of prior-year net income;

• be available only for the period of the crisis; and
• include provisions to ensure borrower behavior is consistent with the intent of the program.

The economic crisis stems from the fall in business revenue due to a contraction in demand and restrictions on supply.

Our plan fills that gap in revenue. By requiring businesses to maintain FTE, they are incentivized to use the loans to pay their workers through the crisis. By capping net income, the plan prevents businesses from being overcompensated due to a fall in their non-labor costs.

Our plan would help millions of American businesses to stay afloat and indirectly fund the incomes of millions of workers. It would prevent the failure of many firms and discourage the detachment of workers from firms, helping the economy bounce back quickly after the crisis.

We see our plan as a key part of a broader government response to the crisis, next to the immediate health response, broad cash payments and expansions to targeted welfare programs, and actions by the Federal Reserve to support the financial system.

We are very keen to hear your views.