Republican NC senators: How we can restart the state’s economy after Covid-19

Three matters will require urgent policy attention over the coming months. Priority one is the public health response to COVID-19. Priority two is acute financial support for employees in sectors badly hurt by the economic shock. Priority three is possible assistance for the economic engine when it’s time to restart it.

These three priorities have to be addressed subject to the state’s revenue picture that will emerge in the coming weeks and months. We must balance short-term decisions with the need to avoid volatile swings in the state budget.

Planning is underway for apolitical, consensus responses to each of these matters, but we write here as two legislators to share our thoughts on the third priority.

We expect more conversations between different parties and across different branches of government in the coming weeks about the best path forward. Policy proposals will evolve and, hopefully, improve during that time.

But one overriding theme should be clear: When the dust settles – which it will – the work to rebound will begin in earnest, and the time to plan for that is now.

Leaders of the Council of Economic Advisors under both presidents George W. Bush and Barack Obama have endorsed putting cash on the streets to prime the economic engine’s restart.

Jason Furman, who led former president Barack Obama’s Council of Economic Advisors, wrote in support of a one-time cash payment in the Wall Street Journal.

Glenn Hubbard, a Columbia University economist and former head of the Council of Economic Advisors under former President George W. Bush, told the New York Times, “You want to persuade businesspeople that demand isn’t going to go off a cliff. You need to make a commitment that demand will be there and will continue to be there.”

We agree.

Supply chain interruptions and stock market volatility are generating concern from everyday citizens and small business owners about their economic future. We should reassure them by announcing now a broad stimulus package that would, in effect, send one-time cash to North Carolinians using the substantial surplus we’ve accumulated.

The legislature has been planning for an economic disruption for 10 years through prudent budget decisions. We’ve built a multibillion dollar cash surplus and one of the healthiest unemployment insurance reserves in the country.

We have the means for a proportionate response to an economic disruption. Times like this are exactly why.

Some who read this will argue that any fiscal response should prioritize those hardest hit by the economic shutdown: hospitality workers and the like. We don’t disagree. But there’s a different app for that – unemployment insurance – and planning is underway to adjust that program to deliver acute assistance to those who most need it. It may be that both of these measures – broad efforts to boost consumer demand and targeted measures to assist those most impacted – can be paired together in the same package.

What we’re talking about in this space, though, is a generalized macroeconomic response to the economic slowdown that is sure to follow the extraordinary measures taken to stem the spread of the virus.

Critics of government-sponsored stimulus generally attack the idea that it is debt-financed and directed by bureaucrats. But this proposal would incur no debt and would simply return extra money that the state collected from the taxpayers. Consumers would decide how to use their money, and private market-based decisions are always more efficient than top-down directives.

We don’t need complex programs devised on the fly. The best remedy is the simplest: boost demand at the appropriate time to prime the economy’s engine as it comes back online. There’s no better way to boost demand than to return to the people some of the money they’ve sent to the state over the past few years.

In our opinion, that’s what we should do.

This story was originally published March 18, 2020 at 6:00 AM with the headline "Republican NC senators: How we can restart the state’s economy after Covid-19."