As states and counties begin to open up across the country, the American economy is slowly starting to show glimpses of hope. Now we face the question of how best to aid in getting the country, and effectively the globe, back up to a full head of steam in the shortest amount of time. Regardless of what side you’re looking from, I think we can all agree that getting the economy, and most importantly the small business sector, is priority number one.
There are two schools of thought when it comes to the best way to get America up and running. Nancy Pelosi and the Democrats introduced the HEROS act, which is essentially another $3 trillion in federal spending.
Now before we go on into what works and what doesn’t, let’s have a quick political chat. When the legislature proposes a lofty titled bill, let’s not immediately fall for it. Both sides do it but it’s more common practice with Democrats. Just because the bill is called the “HEROS Act” does not mean that being opposed means that Dems get to say “Oh, so you don’t support heros?” This is a political trick as old as time and I would hope it’s not something you’ll fall for.
Second, know that Nancy Pelosi is shooting for the stars here and hoping to settle at the moon, which is still miles away from where Republicans are likely to want to settle. The bill proposes an additional $3 trillion in spending but she’ll be happy with half that or even just $1 trillion to further chip away at engraining the American people with the democrat wish list through brides disguised as a care package.
Back to your regularly scheduled programming:
Republicans believe that innovation in the private sector is what will pull America out of this COVID-19 funk while Democrats, most of which still don’t entirely believe we’re out of the woods, believe that giving Americans cash is currently the best plan of attack. While the GOP sees loosening regulation as a way to stimulate economic growth (obviously a principle held long before now) the Democrats see this as an opportunity to redistribute wealth among their likely fall voters.
But the problem is that the monetary redistribution that would come from the HEROS Act is not necessarily (and more importantly, not likely) going to jumpstart the economy like Pelosi claims it will. We have to remember that giving people free money is not the same as sparking capitalistic inclination and ingenuity. Instead, the Republicans need to counter the free money ploy with pro-business incentives in hopes that business and economic growth will more quickly, more permanently, and more effectively cover the monetary gap that so many people are feeling.
For example, a pause on payroll tax wouldn’t necessarily send saved money to employees (even though in some cases, it absolutely will) but coupled with a 0% Fed interest rate and massive opportunity caused by the shutdown, it would allow innovative business owners the ability to expand more aggressively than they might have, creating more transactions and jobs.
Redistribution of money to the inactive (by choice or not) only incentivizes inactivity. The way to combat the Democrat’s plan to just keep spending is to incentivize small business owners to create long-lasting jobs for people struggling through this crisis.
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