On Tuesday, President Trump took a trip over to Capitol Hill to personally pitch Republican lawmakers on his ideas for stimulating the economy and propping up industries already feeling the effects of the new coronavirus, COVID-19. Dramatic stock market losses and the looming risk of a full-blown recession has Trump reaching for the panic button, but the solutions he’s peddling would entirely miss who’s going to feel the real pain.
Low-income, hourly workers, without health insurance or paid sick leave are among the people facing the most immediate risk. That’s where our urgent economic focus should be, but the President’s attention is elsewhere.
Trump’s team is floating a range of tax cuts for businesses and bailouts for industries like travel and tourism. What’s more, his singular idea for the people — a payroll tax cut — probably will not provide the needed stimulus effect fast enough and definitely won’t give workers with low incomes the help they need to cope with this growing crisis.
We know who will bear the brunt of the economic fallout in the near term: It’s the people who serve coffee and scrub dishes for $7.25 an hour, clean homes and offices, work retail counters, drive for ride-sharing services, and similar low-wage work. The past decade has seen an explosion of low-paid service jobs and gig work with no benefits, precisely the type of work most likely to be lost if consumers stop spending and school closures become widespread. With not enough pathways to good jobs and economic stability, many North Carolinians have been left extremely vulnerable to even the shortest dip in consumer demand.
Other countries are already moving to make people who lose wages whole, prevent evictions, feed people trapped in their homes, and other measures focused on their most vulnerable residents. Years of tax cuts for rich people and big companies have undermined our ability to help people most exposed to this kind of disaster, so the severity of COVID-19’s health and economic impact is likely to be deeper than in more resilient countries.
Economists are talking about the potential need for a big, quick, stabilizing package for the economy, and Trump would do well stay focused on what will help people first. We’re already woefully behind in supporting health care professionals on the front lines of this crisis and need to be simultaneously preparing if COVID-19 pushes the United States into a recession. People-first policies like food assistance, unemployment insurance, housing assistance, and aid to state governments were essential to pulling the United States out of the Great Recession, and had a larger return on the investment of public funds than tax cuts passed at the time.
Instead of using this crisis as an excuse to give tax cuts to businesses and bailouts to multinational corporations, federal and state governments should be gearing up with a quickness to blunt the immediate effects barreling down on people.
Patrick McHugh is a senior economic analyst at the Budget & Tax Center, a project of the NC Justice Center.