I get it. We hear bailouts and are triggered. The reality is that if a large share of American companies go bankrupt we are all going to be hurt and the workers in them will take it in the teeth. The best form of social support is a good paying job. As such the U.S. should bail out most of these companies but we should get some things in exchange. What are those things:
1. Passage of the bill already in the Senate and follow ups on the issues contained as needed.(more cash for nutritional assistance, unemployment etc.)
2. A “money bomb” UBI for every american adult so people can keep paying their bills during the crisis. By the way this is also a banking and real estate bailout. If 30% of American workers can’t pay their mortgage, car payment or rent we are in a Great Depression IMMEDIATELY. Everything pops, I mean everything.
3. Labor involvement in corporate decision making on the German model(i.e. board seats on publicly traded or large companies taking the bailout).
4. Federal takeover of student loan debt to inject capital in the system(current lenders have loans bought by the Fed).
5. Non Voting equity positions in bailed out companies. Government eventual sale of shares(when they increase in value and can be sold safely) will pay down student loan debt and go to fill Social Security trust fund. This will be trillions of dollars at current share prices.
6. A fiscal stimulus to expand employment in any way that we can. Services are getting hit hard and the only way they survive is employment in government, healthcare, construction, and manufacturing. Commissary contracts for restaurants to deliver prepared food for first responders and home bound people would be really helpful right now.
7. Make sure no one has to pay medical bills related to this crisis.
8. Think of some more in the comments.
On payroll tax relief: I’m an employer and I’ve already spoken to my bankers on postponing debt payments if need be(I’m a real estate investor and operator). I don’t give a flying shit about my payroll tax rate, I’m keeping my employees on the payroll. My payroll tax is about 1% of my expenses. The thing that scares the hell out of me is how many of my tenants pay rent on the first. They are already cutting employee hours due to lack of revenue(especially restaurants). That lack of hours has a knock on effect of those employees buying stuff from my other tenants who pay rent. In other words I need folks to have money in their pocket to put money in my tenant’s so they can put money in mine. I can cut my expenses super fast and by more than 1% if I want to but it’s just going to come around and bite me and everyone else in the ass. For example firing the exterior cleaning company saves me 5%. I got plenty of people and expenses to cut far bigger than payroll tax. What I need is revenue.
On general business tax cuts: Businesses need to turn a profit to pay taxes. Given what’s happening I’ll be thankful and glad to pay tax on any profit I turn this year. We actually need to encourage people to not make a profit this year by keeping people working and investing. If anything on this front would be helpful it would be allowing longer time periods on carry forward loses due to employment and investment expenses or better rules on accelerated depreciation for new investments that create employment. Since I’ve never run negative in a year I got to admit that I don’t know much on this front but I do know that a tax cut doesn’t do anything to help a business that is losing money.