When you have a flat tire, you don’t fix it by reinventing the wheel.
While cases of COVID-19 continue to increase, we know that soon, the numbers will begin falling. Our efforts at social distancing and staying at home will pay off, and we’ll begin to focus on economic recovery efforts.
But we must begin now to plan for and shape that recovery. And we mustn’t begin by reinventing the wheel. While many plans being floated involve new means of providing relief to American families (such as stimulus checks) and recovery for American businesses, we should instead identify existing programs and proven means to provide that help.
That’s why the Texas Public Policy Foundation has proposed a Workforce Recovery Act to restore confidence in the American economy at all levels.
The act would implement a national business-interruption insurance plan that can help solve the crisis that has already cost millions of American jobs. The plan follows and expands on existing precedents for national coverage of risks that are uninsurable by the private sector, such as the Terrorism Risk Insurance Act. By utilizing existing avenues and structures for payment of claims, funds provided to businesses can allow them to remain viable until the shutdown ends.
And we must marshal the proven power of public-private partnerships. The Workforce Recovery Act would pair the resources of the federal government with the expertise and vast claims processing functions of the insurance industry.
Our plan would pay for 90 percent of operating-revenue losses by businesses for time periods beginning March 1. Claim funds would be earmarked and restricted to pay payroll, operating costs, and rent and debt payments. There would be no coverage for lost profits.
The Act would have two main components. The first would be business-interruption payments, which would go to businesses that currently have commercial business insurance. The federal government would come alongside insurance carriers to fund those payments (the carriers would provide claims services).
Not all businesses have insurance, or at least not the right kind of insurance. But we don’t leave them out. The second component of the Act would utilize the Federal Disaster Unemployment (DUA) system to process and pay claims submitted by businesses without insurance. For the purposes of this program, the DUA would be expanded to include business claims, and would use the same qualification and payment structure as the Business Interruption program.
And the Act would use other existing structures to further speed the recovery along. For example, the Small Business Administration has a new loan program that we can refine and enhance. The program has been funded with $350 billion for forgivable loans, but there are limits to who can receive those funds. The program allows only small businesses to participate and is irrespective of business losses.
Under our plan, all businesses would be eligible—but only if they’re truly experiencing losses due to COVID-19. And the loans would only be forgiven if the businesses stay open and keep their workers on their payrolls. In short, the Workplace Recovery Act will be aimed at business continuity and employee retention.
The American economy runs on confidence, and the Workplace Recovery Act could help to restore that confidence at every level. Citizens will have confidence in the capability of the government to effectively address this crisis, and business owners will have confidence that they will be able to re-open after the crisis. Their workers will have confidence that they will be able to pay their bills during the crisis and that their jobs will be there when it passes.
We can get there, and we don’t need new agencies, new programs or new layers of bureaucracy. Using existing structures and public-private partnerships, we can help keep businesses in business and our workforce healthier and stronger than ever.