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1/ The American economy is shutting down. An insta-depression (effectively) encouraged by government to stop the spread of #COVID-19. But the ongoing collapse of 30m small businesses will cause mass unemployment today and painfully slow recovery tomorrow.
2/ The economic support package being discussed in Congress will be helpful: a $300-$350 billion lifeline pushed by Senators Rubio, Collins, and Cardin.…
3/ BUT IT MAY NOT BE NEARLY ENOUGH. We need an economic recovery package of at least $1.2 trillion for small businesses in the service sector, and maybe more.
4/ Consider: Analysis from JPMorgan Chase finds that the average small business has a cash buffer of 27 days. The average restaurant has 16 days. Time has already run out for too many. And more every day.
5/ THE PLAN: Replace 80% of small-biz revenue for 3 months through bank loans, backed by the feds, that would be COMPLETELY FORGIVEN conditional on not laying off any workers and continuing to pay full wages, salaries, and benefits.
6/ The proposal was devised by Columbia University economist and former @WhiteHouseCEA chair Glenn Hubbard and my @AEI colleague and economist @MichaelRStrain. Here are the complete details:…
7/ Cutting checks to people is a necessary part of a $2.5-$3.0 trillion support plan, but it isn't sufficient. If we let small businesses disintegrate, putting them back together once the virus is contained means a longer downturn and a weaker rebound.
8/ If you care about cost, remember that keeping workers in their jobs during the shutdown means less spending than otherwise on unemployment insurance, Medicaid, and food stamps later.
9/ If you think this is socialism, reconsider. Most of these lost businesses were viable if not for a once-in-a-century pandemic. They were passing the market test. This isn't creative destruction, just destruction.
10 and final/ I hope that $350 billion to stop the vaporization of American small business is just a start and more will come. I fear it will need to be. #NoDepression…
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