Former Trump adviser Gary Cohn on moving from COVID-19 rapid response to “sustainable recovery”
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Putting out a fire is one job. Repairing the damage it caused is another, longer and much more challenging, one. When it comes to rebuilding an economy battered by COVID-19, the policies that helped us respond to the initial crisis aren’t necessarily the same ones that’ll help us in the long-run, says Gary Cohn, former director of the National Economic Council and chief economic advisor to President Donald Trump from 2017 to 2018.
Cohn’s message to lawmakers is to forget the partisan games in favor of swift action.
“This is not a partisan issue,” Cohn told “Marketplace Morning Report” host David Brancaccio in an interview. “Our citizens did a great job in removing themselves from the economy and flattening the curve. Now we owe it back to our citizens to help them return their lives to as much normalcy as we can.”
In order for that to happen, Cohn says we need to rethink many aspects of the Coronavirus Aid, Relief and Economic Security Act that made sense in the throes of the coronavirus pandemic, but could hamper sustained economic recovery going forward.
The expanded unemployment benefits authorized by the CARES Act in March might discourage workers who lost work due to the pandemic from returning to their jobs as businesses reopen, Cohn said.
“We have jobs that need to be filled, and the key to an economic recovery is getting people back to work. Now, I understand there are some real issues here and it’s not as simple as telling everyone to go back to work. We have children that are out of school. We don’t have daycare. We don’t have the normal support infrastructure that people would rely upon,” Cohn said. “But if we’re going to get ourselves moving forward, the most important thing we can do is getting people back in the normalcy of getting up and going to work and performing their services and getting paid for their service.”
While he acknowledged the challenges that would prevent many Americans from returning to work immediately, Cohn said that those who are “ready, willing and able to come back to work” should have to forfeit their unemployment benefits if they turn down a job offer.
“We have to return to the normal definition of unemployment,” Cohn said.
Another policy Cohn says we could do without is the payroll tax holiday President Trump has advocated for. For most employed Americans, such a holiday would mean a 7.6% bump to their paycheck — the amount typically withheld by the federal government.
But it wouldn’t help the tens of millions of Americans who have lost work during the pandemic.
“A payroll tax holiday is for those people already getting a paycheck,” Cohn said. “I want to use the tax system to create jobs, not to give those people that have a job a windfall.”
A sales tax reduction, on the other hand, would increase Americans’ purchasing power across the board.
Cohn pointed to a tariff holiday as another way to boost consumer spending.
“Remember, tariffs are a consumption tax,” Cohn said. “The consumer, when they show up and buy that imported good, they pay the price of the good plus the tariff. If we get rid of those tariffs, consumers have a lot more purchasing power. They would be able to buy more goods and services. And that would, in turn, put more people back to work. And ultimately, that’s how we’re going to drive real economic growth.”
Cohn is also proposing a safe harbor policy that would protect businesses from liability if employees or customers contract the virus, so long as employers make a reasonable effort to prevent transmission.
“Because, to the extent that [business owners] are going to have liability, businesses are going to open much, much slower. And even to the extent they open, they’re going to open in a much smaller capacity. So again, we’re not going to have the ability to bring back as many employees as we’d like to bring back if there were a safe harbor,” Cohn said. “And I’m not asking for anything radical. We don’t want to have a second wave of the disease. But we have to come up with something that’s rational.”
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COVID-19 Economy FAQs
Pfizer said early data show its coronavirus vaccine is effective. So what’s next?
In the last few months, Pfizer and its partner BioNTech have shared other details of the process including trial blueprints, the breakdown of the subjects and ethnicities and whether they’re taking money from the government. They’re being especially transparent in order to try to temper public skepticism about this vaccine process. The next big test, said Jennifer Miller at the Yale School of Medicine, comes when drug companies release their data, “so that other scientists who the public trust can go in, replicate findings, and communicate them to the public. And hopefully build appropriate trust in a vaccine.”
How is President-elect Joe Biden planning to address the COVID-19 pandemic and the economic turmoil it’s created?
On Nov. 9, President-Elect Joe Biden announced three co-chairs of his new COVID-19 task force. But what kind of effect might this task force have during this transition time, before Biden takes office? “The transition team can do a lot to amplify and reinforce the messages of scientists and public health experts,” said Dr. Kelly Moore, associate director for the Immunization Action Coalition. Moore said Biden’s COVID task force can also “start talking to state leaders and other experts about exactly what they need to equip them to roll out the vaccines effectively.”
What does slower retail sales growth in October mean for the economy?
It is a truism that we repeat time and again at Marketplace: As goes the U.S. consumer, so goes the U.S. economy. And recently, we’ve been seeing plenty of signs of weakness in the consumer economy. Retail sales were up three-tenths of a percent in October, but the gain was weaker than expected and much weaker than September’s. John Leer, an economist at Morning Consult, said a lack of new fiscal stimulus from Congress is dampening consumers’ appetite to spend. So is the pandemic.
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