We're all on welfare now

Thursday, May 14, 2020
Star Parker - Guest Columnist

Star ParkerThe only way we're going to get out of this crisis is creativity, doing things in new and different ways. Yet a condition for getting a loan under the feds' Paycheck Protection Program is to run your business as government tells you how to run it and to continue to operate it as you did before – both very bad ideas.

US Capitol White House money backgroundI'm pleased to read that Republican leaders in the White House and on Capitol Hill want to take a pause before enacting more coronavirus stimulus spending.

Thinking about the coronavirus debt that my grandchildren will have to endure is already starting to keep me up at night.

But what really had me in cold sweats was when I found myself anxiously waiting for a Paycheck Protection Program loan, or PPP loan, to provide assistance to my struggling company.

I pondered, with deep angst, that after shedding myself of welfare dependency some 35 years ago, suddenly I find myself back in business with government.

Back when I was on means-tested welfare programs, the rules were "Don't work. Don't save. Don't get married," and my rich uncle in Washington would reach into someone else's pocket and provide me security and stability on his government plantation.

Now politicians are setting up commissions and oversight to allegedly assure compliance with the rules for the trillions of coronavirus stimulus dollars allocated.

I say allegedly because, sadly, it is largely a show with a storyline that we tell ourselves, pretending that politicians can design trillions in spending programs that are targeted and efficient and can be overseen to assure that it's all done right.

The PPP program consists of $659 billion in loans that will go to millions of businesses around the country.

Each of these businesses is unique. What does my Washington, DC, nonprofit have in common with a dry cleaner or a restaurant? What does my organization of 12 employees have in common with a business of 500, the largest that qualifies for PPP loans?

Yet, the rules for using the PPP loan are the same for everyone.

The loans can become grants if 75% of the funds are used for payroll and the business is staffed as it was before the crisis.

But the way we are going to get out of this crisis is creativity, doing things in new and different ways.

Many businesses, including my own, will not and should not be the same. There should be a lot of change and reinventing going on.

Yet the condition for the government money is that you run your business as government tells you how to run it, and that you continue to operate it as you did before – both very bad ideas.

Also consider that the PPP was one part of the $2 trillion CARES Act package. Another part included a $600 weekly payment to the unemployed, over and above unemployment insurance.

So while the PPP demands that employers restore their workforce, many in that workforce are now being subsidized by government to stay out of work.

Of course, we are in unique circumstances that require government action. But the issue is not whether government should act but how.

All this could have been done without vast new expenditures and government micromanagement of our lives.

The point was to get cash to individuals and businesses to get through the crisis without interfering with individual autonomy.

This could have been done through a tax holiday, where individuals were sent back their 2019 taxes. If a business paid $30,000 in taxes in 2019, refund it.

And/or, as Peter Wallison of the American Enterprise Institute suggested, short-term credit forbearance could have been provided. Deferral of rent payments, mortgage payments, car payments, utilities, etc., could have been permitted, providing for payment later at a special low-interest rate.

Brian Riedl at the Manhattan Institute estimates that what we've spent so far in this crisis will add another $8 trillion to our national debt, which was already approaching the size of our entire economy.

We've made a big mistake by dealing with a cash flow crisis by introducing massive new government spending, debt and political intervention into our personal lives.

Let's wait before doing more of the same.


Star Parker is president of the Center for Urban Renewal and Education and author of the new book, "Necessary Noise: How Donald Trump Inflames the Culture War and Why This is Good News for America."

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