My Dumb Idea on How to Save the US Economy
Updated: Mar 23
I am a CPA in Sandpoint Idaho. My clients are all doing the same thing right now….laying people off. They have no choice.
The current “rescue” package being hammered out in DC is ridiculous. Giving everybody some nominal amount of money is stupid. For those who have a job, they just got extra savings. For those who lost their job, how much good can $1,000 or $2,000 possibly do?
I submit that the payroll tax system in this country is one of the most efficient things federal and state governments administer. Why not reverse the flow and use the existing infrastructure to keep everyone employed? It would go something like this:
> Employers would pay 100% of their normal payroll
> Using a ratio based on lost gross revenue, employers would immediately be reimbursed the net cash cost of payroll based on a self-certified application subject to audit and severe criminal prosecution.
> The payroll tax reporting and transfer infrastructure would be used to reverse the normal flow of cash, where money would instead go from the government into business’s payroll accounts.
Think about it. By using a reimbursement ratio based on lost gross revenue, grocers, governments, utilities and Amazon, wouldn’t get much if any aid – they don’t need it, their revenues aren’t down. Others, be it the local hotel on Lake Pend Oreille in beautiful Sandpoint Idaho, or American Airlines, well they at least get to keep their workforce intact, doors open and airplanes flying. If we take the single largest expense line item, payroll, out of the equation – survival for all employers becomes a lot more realistic.
Yes, this is an epic bailout, but it is a bailout of the American worker, which by extension, is the American consumer, which is the American Economy.
I cannot even guess what flooding the economy with this much stimulus would do. That is for the really smart people at the Fed, Treasury and on Wall Street to figure out. But keeping payroll flowing during this outbreak would keep folks in their jobs, in their homes, paying their bills and out of the unemployment line. It would avoid countless bankruptcies and business would be able to crank back up the moment we are done with this insidious COVID19 nightmare…. And…. the mechanism to make this equitably happen is already in place!!
We are slamming a GIANT butterfly valve shut on the US economy. As a former Navy Officer, I learned that doing so on any high-flow, high-pressure system, especially one like the US economy, results in a horrific rupture, one that will take a long, long time to repair.
So finally, my question: Why can’t we do something like this?
Will Crook, CPA