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Staying calm

The economy is scary right now. What would Republicans do to fix it?

By ANNEMARIE SCHUETZ
Posted 3/18/20

I’m writing this on March 12. By the time you read this, everything could be totally different.

Such is our mood-swingy economy: growth stutters, the Fed cuts interest rates, the market goes …

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Right Here

Staying calm

The economy is scary right now. What would Republicans do to fix it?

Posted

I’m writing this on March 12. By the time you read this, everything could be totally different.

Such is our mood-swingy economy: growth stutters, the Fed cuts interest rates, the market goes up, people are happy, coronavirus spreads, market slips (but it’s still up from this time last year), more people get sick, the Saudis start an oil price war (because Russia) and the market totally tanks. The next day up, the next day down.

The economy affects all of us, we Real People who eat, drink and buy stuff. When we get scared (like, say, during a pandemic), our buying shifts. My friend, Maureen, went shopping the other day and the store was out of toilet paper, probably due to the looming fear of quarantine. Shipments had been coming in and selling out with blinding speed; they couldn’t keep up. “Target had toilet paper,” she said. “But not bleach. Not Lysol. You know how people usually buy natural cleaners? Those shelves were full.”

Supply has been affected too. The Craft Industry Alliance has reported on how Chinese factories have shut down due to coronavirus, and what that’s done to small craft businesses, owned mostly by women, that rely on supplies made in China. Those people will make less and will buy less, as will others who rely on Chinese materials or products.

A recent jobs report looked great—nonfarm payroll was up 273,000 jobs in February!—but 53,000 were in restaurants or drinking establishments. Will that hold up if people are afraid to go out? Forty-two thousand were in construction. If the economy continues down, will houses be built? Never mind tourism or general retail. They didn’t add jobs, but they still employ a lot of people who are now remembering 2008 and worrying.

Thus, the effects ripple out.

Supply will get back on track and the virus will run its course, leaving a human toll. But economically, those small businesses will struggle in the meantime.

Maureen and other Republican friends worry about the economy, just like Democrats do. What can a Republican president do to reverse the slide, especially with an election looming? The GOP prefers less government interference, but they’ll manage the money supply and remove as many regulations as they can to encourage new business start-ups. Loans, tax credits and debt forgiveness, many say, can help get businesses over the slump. At the moment, President Trump is hinting about paid sick leave.

Keep in mind too that Republicans prefer to give state and local officials the responsibility to deal with problems as much as possible. The idea, says my friend Katherine, is that local government understands the needs of its residents better than the federal government does (and often, as Michael Gerson pointed out recently in the Washington Post, federal agencies like FEMA are weaker than we think, relying on contractors to deal with an emergency rather than keep a staff on tap.)

Further measures will likely be needed, and some conservative writers are calling out for more. “What we know,” writes Erick Erickson at The Resurgent, “is that restricting travel will restrict the spread of the virus.” Not that people would like it, but the toilet-paper spree suggests they’re already preparing for it. Stimulus (like tax cuts) is a start, but, he says, “The economic fallout is going to grow far worse than the virus unless the Trump Administration [becomes] very publicly aggressive and gets a buy-in from Congress.” Stop thinking about the election, basically, and start thinking about people. Cooperate.

Over in the National Review, Robert Verbruggen writes, “If people are staying away from work on account of the virus, the government needs to keep them afloat financially. And yes, if industries go bankrupt because of the virus, and not because of their own mismanagement, bailouts make a lot of sense.” Where stimulus is concerned, Verbruggen recommends checks in the mail rather than tax cuts, assisting low-income workers and investing in infrastructure as ways to create jobs. Poor people are more likely to spend an extra dollar, he says, so it makes more sense to give it to them and get spending going.

For us, in the meantime, “We all need to calm down and wash our hands,” says Katherine. “We are all in the same boat. Just keep rowing!”

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