Federal Financial Assistance Will Allow Small Businesses to Retain Employees
R. Glenn Hubbard and Michael R. Strain at the American Enterprise Institute describe a federal fiscal response they believe would effectively support small businesses and workers during the COVID-19 outbreak. Hubbard and Strain state that the goal of federal financial assistance should be to replace revenue that businesses would have otherwise generated had they not been impacted by the coronavirus, not just to replace payroll expenses. In their proposed plan, they suggest that small business owners be encouraged to approach banks for loans backed by the federal government. Should the business owner continue to pay full employee salaries and retain all their workers over the three-month life of the loan, the government would support the business by paying off the loan by the end of 2020. While Hubbard and Strain recognize that this plan will be expensive, costing between $1.2 – 1.5 trillion, they argue that this is an aggressive and necessary course of action to support business owners and workers while mitigating longer lasting economic damage.