‘First, Do No Harm’: Club for Growth Pleads for Pandemic Relief that Respects Taxpayers, Economic Freedom

WASHINGTON, D.C. – As Speaker of the House Nancy Pelosi and Treasury Secretary Steve Mnunchin ready a massive stimulus package filled to the brim with bail outs that both sides of the aisle find themselves willing to get behind during this pandemic crisis, the Club for Growth is putting forth policy alternatives for the Senate to consider. True to the Club’s mission, these alternatives are more respectful of the taxpayer, the business owner, hardworking employees, and the proposals respect economic freedom.

According to Club for Growth president David McIntosh, the “memo below was sent to Senators, the media, and key opinion leaders to help communicate a conservative alternative to the Pelosi/Mnuchin Coronavirus Stimulus with the American public. We encourage you and all conservatives to speak out in the press and on social media.”

It is during times of crisis that we must stand tallest for certain inviolable principles, and so it behooves us to speak up now, even if it’s hard to hear above the cacophony of chaos at the moment.

The Memo:

Conservatives believe economic freedom is essential to limiting the current economic crisis and accommodating a fast recovery following the economic turmoil caused by the coronavirus. And above all, whatever Congress does, it should first and foremost follow the Hippocratic Oath and “DO NO HARM.”

a. As the federal government determines how to save important American industries from possible collapse, it is important that the taxpayer is also protected as much as possible. Any financial rescue of industry should be in the form of a government loan, even if the interest is zero, and not as a grant or bailout. These loans should be available to all businesses – do not pick and choose winners and losers. But no business would be required to take the loan. The federal government should not provide grants.

b. Do not use mandates to provide relief for out of work Americans (See below). Instead, use the existing Unemployment Insurance structure to provide funds to workers. Make temporary enhancements to the Unemployment Insurance system –workers that become unemployed should receive $1,000 per week from the unemployment insurance state agencies. No waiting period. Rather than having to lay-off employees to become eligible for this temporary expanded unemployment insurance, workers will become eligible if employers provide up to 6 weeks leave of absence policy due to Coronavirus. We do not want sick people feeling that they should be forced to show up for work, so the temporary expansion of unemployment insurance to employees taking leave of absence would help the sick.

c. Paid leave mandates on small businesses should be fully eliminated (Senator Ron Johnson). The unintended consequences of this mandate will be: 1. Drive many small businesses that are at the margin to file for bankruptcy. 2. Any business that has seen a decline in sales (travel, entertainment, restaurants, etc) will chose to lay off employees rather than have to pay cash up front for employees who are not working. Even government handouts, loans, and promised deferred taxes or credits will not change this. Congress should not ask employers to rely upon a refundable tax credit that won’t be available until quarterly filings; this policy will not stop massive layoffs as employers see unemployment insurance as a more viable alternative than employing workers it cannot immediately pay wages or salary.

d. Payroll tax cut – the federal government should eliminate payroll taxes for 3 months through June 15, 2020. At that time, the President can extend the payroll tax cut one month at a time for up to three months if he determines that the economic crisis has not begun to turn around. Congress can vote on a resolution of disapproval in order to halt subsequent relief. (President Trump)

e. SBA Loans – Expanded SBA loan authority- freeing up capital for entrepreneurs will allow for a more stable workforce, and give job creators the ability to be more flexible with their workers than they could be otherwise. (Senator Marco Rubio)

f. Tax cut for job creators – Congress should further reduce the C-corp rate from 21-15%. More importantly Congress should bring tax rate parity between corporations and pass-through entities with a maximum tax rate of 15% This will create additional international competition through the tax code, while treating all U.S. businesses with the same flat tax rate, regardless of the type of business. It is important to get unemployed people back into the labor force as fast as possible to recover domestic productivity, and decreasing the tax burden facing employers is one of the best ways to quickly move forward.

g. Temporary deregulation in order expedite the economic recovery. Require every agency within in one month to identify and suspend significant regulations that will reduce cost in the American economy – both compliance costs and economic social costs. Upon approval by the President, such regulations (except those needed to protect human health and safety) shall be suspended until the President (or Congress) determines that the suspension is no longer needed to provide relief of the economic crisis. Notice and Comment and other APA provisions shall not apply to the suspension of the regulations, but shall apply to the re-establishment of the regulations. (This will reestablish the President’s goal of eliminating 2 regulations for every new regulation.)

h. Some Republicans have embraced cash stipends for families so they can afford to buy food and pay bills. The White House is reportedly considering this policy. (Senator Mitt Romney/President Trump) This policy should be opposed. It provides a giant transfer payment system that imposes net costs on the economy. Relief for families should be provided through existing government welfare programs and the enhanced unemployment insurance program above.

i. Ensure universities reimburse students and families for room and board/tuition when the universities are closing and sending students home. These are real expenses that will make a big difference for many students and families. Many universities have large endowments that can help offset some of this expense, rather than creating a complicated reimbursement process through financial aid/federal student loans. (Senator Rick Scott)

j. President Trump should move to unilaterally end all tariffs, which are taxes on U.S. consumers. Tariff relief should apply to all effected entities; government should not provide special waivers to various industry by picking winners and losers in the marketplace. (Senator Pat Toomey) [At a minimum tariffs on non-consumer goods – raw materials equipment and services – should be eliminated to reduce the cost of US manufacturing.]

k. President Trump can immediately help the stock market by indexing capital gains to inflation. (Senator Ted Cruz) This is preferable to lowering the capital tax rates, because that change would effectively harm investors who already have suffered losses in the market.

l. The IRS should move the tax deadline from April 15 to July 15 (and extension deadline to December 15) and completely waive interest or penalties on late payments for the 2019 tax filing period. Tax filing requirements for quarterly filers should also be delayed. (Senator Rand Paul)

m. Congress should provide funding to ensure at minimum every county in America has a mobile testing site; counties with more than 250,000 people will receive additional funding to ensure it can accommodate larger populations. (Senator Rick Scott)

n. Do not close the stock markets. It will create great economic harm and could cause panic as people hold assets they no longer want to own. It is the private sector equivalent of the private sector failing to pay on its debt. And it would sideline potential investment in companies. Keep the federal government out of the stock market’s decisions.

There is plenty of relief the federal government can provide in reaction to this crisis, especially as a function of how heavy the burden of government already is. Relieving the burden not compounding it, maybe our quickest way out of this mess.



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