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Both Left And Right Have Solutions For A Wuhan Virus Crash, But Can This Grand Bargain Survive?

Donald Trump and Nancy Pelosi. Shane T. McCoy - U.S. Marshals, US Office of Public Affairs/Wikimedia.

It won’t be comfortable in a city that has grown used to substituting talking points and campaign ads for governance, but the nature of the coronavirus crisis demands answers, and here’s why.


Washington, D.C. — Washington’s politicians are frightened for the economy and for their health, but in all this fear and the rush to flee the city there might be room for a political bargain — the kind of bipartisan bargain the working class and small and mid-sized business owners need to get through what’s coming.

Speaker of the House Nancy Pelosi and Secretary of the Treasury Steven Mnuchin are the two people tasked with hammering out a deal in two days to keep the economy from a coronavirus crash. Two days, because they have a recess scheduled, and despite the threatened economic tailspin and their duty to the country and their constituents, their advanced ages leave them particularly vulnerable to dying from the virus and makes them very, very eager to leave the city.

“I wouldn’t say it’s a negotiation,” Mnuchin told reporters after a half-hour Tuesday meeting. “We’re having discussions about various different policies. There’s a lot of interest on a bipartisan basis to get something done quickly.” Pelsoi seems to agree.

Neither party has all the ideas necessary to handle the scope of the economic impact. Both will need to support policies they ideologically oppose. It won’t be comfortable in a city that has grown used to substituting talking points and campaign ads for governance, but the nature of the coronavirus crisis demands it, and here’s why.

Democrats have prescribed a number of liberal favorites, including government-backed paid sick leave and more money toward unemployment insurance. Republicans have their own favored solutions, including a suspension of the payroll tax that hits both employers and employees. Conservatives are loathe to appear to back a Bush-era TARP-type bailout, but all sides are worried about the airline and travel industries, which are massive and have been hit hard, and both sides seem amenable to interest-free loans.

The parties have reasons to be suspicious of the other’s proposals. Handouts for business are against Democrats’ philosophy (unless those businesses are in Democrats’ favorite few, such as green energy) and are often unhelpful to workers. And Republicans know programs like paid sick leave are rife for abuse. But both sides must reconcile that in the case of a global pandemic, they each have something essential to offer.

The aspects of the economy that will be hardest hit and least able to recover (beyond simply the travel industry, which has the power to carve out its own relief in Washington), are blue-collar men and women, small businesses, and mid-sized businesses.

Blue-collar workers, because unlike their white-collar friends who are already being asked to work remotely, they need to come to their post to earn their pay and many cannot miss a single paycheck. Small companies, because so many rely on steady business and employees at their posts, while lacking the capital reserves to go weeks or months without revenue. Mid-sized companies, because while they too lack a lot of the resources the big guys have to weather the storms, they also rely on international supply chains more often than smaller companies while lacking large companies’ resources to those chains disrupted by the virus. All three of the above are essential to the economy and to the already tenuous American middle class.

Outside of industries like travel, which carry such high operating costs, large companies are the best positioned to handle this crisis. These companies generally have the capital reserves to get through recessions and while they take a hit, their existences are rarely threatened by fluctuations, dips, and dives.

Mid-sized companies, a major part of the U.S. economy, are far less able to weather international storms on this level for the reasons above. While most people don’t know the names of the one or more in their towns, they would know the employees from their community, and they would feel the effects of these companies going under. Interest-free loans, backed by government and distributed by banks, will go a long way toward helping these companies make payroll and stay afloat while shifting supply routes.

Small companies need help too, and rapidly. The problem for them is that even for interest-free emergency loans, banks will require them to show how they will pay it back, and many lack the capital stores and assured profit projections to satisfy bank criteria. These types of companies are situated to benefit most from a payroll tax cut, which would offer immediate relief without forcing them to get in line, having to ask the bank, or having to deal with a bureaucratic process.

That leaves employees. Emergency paid sick leave, combined with tax credits to ease the burden, offers quick assistance to employees, gives strained employers the ability to sustain it, and contributes directly to the country’s ability to curb the spread of the virus.

While most white-collar workers already have decent sick-leave policies, federal data shows 47 percent of those earning in the bottom quarter of wages are not offered it. Only 45 percent of workers in food and hospitality have paid sick leave, despite taking care of clients and preparing and serving their food. We won’t solve Democrats’ and Republicans’ strong disagreements on government’s role in this, but maybe can agree that during a pandemic especially, employees leaving home and coming to work sick are a threat to public health and will increase the rate of the virus’s spread.

Still some workers have already been laid off or had essential hours cut, and more will come. These people won’t benefit from paid sick leave, but they will benefit from reinforcements to unemployment insurance programs, another Democratic favorite. Neither of these will be popular with Republicans and Pelosi knows it, but both are important and could lay a path for compromise.

A payroll tax suspension, such as the six-month suspension, won’t be popular with Democrats either. There will be hesitancy and mistrust on both sides. There is guaranteed to be waste, fraud and abuse. But both parties have something to offer here, neither has the whole necessary package, and swift action is absolutely necessary.

Small and mid-sized businesses need a hand to keep their balance in the face of an unforeseen act of God, and hard-working American workers are already feeling it. It’s a grand bargain, no doubt — typically a Washington word for “doomed” — but in the face of a the coronavirus health crisis and the recession it threatens with it, there might be a chance. Let’s hope they take it.