Politics & Policy

Josh Hawley Has a Good Idea for Phase Four

Senator Josh Hawley (R., Mo.) listens as acting Homeland Security Secretary Kevin McAleenan testifies before the Senate Homeland Security and Governmental Affairs Committee in Washington, U.S., May 23, 2019. (James Lawler Duggan/Reuters)

To protect public health, governments throughout the country are shutting businesses down. It is not just morally right, but also important to a quick recovery, that those businesses be kept afloat and connected to their workers.

That is why we supported the $2 trillion “Phase Three” relief bill, and it’s why we support efforts to improve these policies or replace them with something better. Lawmakers should especially study a new proposal from Josh Hawley that would take an entirely different approach to the rescue.

The Phase 3 bill makes loans available to struggling businesses and promises to forgive those loans to the extent the companies retain their payrolls. There are some early snags, though things seem to be getting better with time: Some of the banks charged with administering the loans were slow to start lending; the Small Business Association, which oversees the program, scrambled to clarify the rules; and some businesses are finding that their employees would rather get expanded unemployment benefits than stay on the payroll. It’s also likely the program’s money will run out before the lockdowns are over and businesses have recovered, and 10 million people have already filed for unemployment.

There are two ways forward.

One option is to stick with the current system and make sure it works. Whatever else happens, the Trump administration should do everything it can to smooth out this process within the limits of the law. And if the current system lasts, Congress should pass whatever further tweaks are needed — such as more funding when money runs out, and changes to the formula for unemployment benefits (to keep unemployment from paying more than work) as soon as states have the capacity to implement such a change.

The other option is Hawley’s. He would have the federal government directly administer aid to businesses, including tax rebates that cover 80 percent of payroll (up to a cap), real-time payments to help businesses immediately, and a bonus for rehiring previously laid off workers. In theory, this sounds incredibly attractive. In practice, Congress first needs to make sure a program like this is administratively feasible; if there are serious obstacles, it may be unwise to start a new approach from scratch just as the old approach hits its stride. Lawmakers and staff need to reach out to the relevant agencies and private actors, especially the Treasury Department and payroll companies, to make sure they can handle payments such as these quickly, accurately, and with the appropriate vetting.

Hawley’s proposal also raises important longer-term issues that the U.S. will need to confront. For one thing, businesses may need help restarting when this is over. For another, this pandemic has demonstrated that many countries will block exports of important medical supplies in an emergency, which is an obvious problem for countries that import such supplies. We are hardly protectionists, but this outbreak demands a full accounting of what crucial products we aren’t able to procure when we need them most, and a plan to either stockpile those products or ensure we can make them here.

But back to the immediate crisis. Let’s get Phase Three up and running as best we can, and let’s be open to trying something new in Phase Four.

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