An Immediate Relief Plan for Coronavirus-Related Economic Mitigation

Abstract

The Coronavirus crisis calls for an emergency supply-side and demand-side economic mobilization, financed using debt-free mechanisms as were used during the Great Depression and WWII, to prevent catastrophic economic collapse during the Coronavirus crisis. The plan calls for:

• Debt holiday covering all types of short-term debt and rental payments.

• $1,000 biweekly in universal income support, delivered through existing IRS/EITC mechanisms and direct deposits into bank accounts and digital wallets where necessary. (The $1,000/month proposals currently gaining support will still leave many families cutting spending and contributing to the negative demand spiral.)

• Direct support for small businesses, manufacturers and other sectors of the economy to prevent a wave of bankruptcies, protect against permanent destruction of productive capacity, and head-off any inflation concerns.

• Investment in building up stockpiles of needed goods and supplies.

• Temporary suspension of relevant tariffs and other trade impediments.

• Finance using emergency mechanisms such as negative rate Treasury issuance, Fed ‘helicopter money’ for taxpayers and government agencies, and/or ‘rollable’ Fed Discount Window lending to small businesses.

• Suspend requirement that Treasury issue new debt to finance operations.

Keywords: Coronavirus, COVID-19, Demand-Side Relief, Economic Mitigation, Mobilization, Supply-Side Relief