Instead of handing out checks, the federal government should allow business owners and workers to hold onto more of the money they already have. Implementing a payroll tax holiday through the end of the year represents an ideal place to start.
Currently, this Social Security and Medicare tax takes roughly 7.5 percent from a worker’s paycheck, with another 7.5 percent paid by employers. Suspending it until 2021 will make immediate cuts to small business’ overhead costs, allowing them to hire more workers and get their operations back on more stable grounds. The payroll tax holiday will bring significantly more opportunity to the one in four people who find themselves on the unemployment line today. By fattening the paychecks of all 150 million U.S. workers, it will also increase economic activity by shoring up demand for goods and services.
While lowering the American people’s tax liabilities will help drive more consumer spending and business growth, lingering health concerns among the public will still remain an obstacle to the circulation of this money throughout the economy. Congress and the White House must also address this issue for consumers and businesses to reap a payroll tax holiday’s full benefits.
In letters to the executive branch, nearly three-quarters of the U.S. Senate and a sizable majority of the House have already expressed their support for fast forwarding government advertising spending during this pandemic. This would help significantly in resolving the current consumer confidence problem throughout the economy, and best yet, it wouldn’t add a cent to the deficit. Historically, advertising has always been one of the leading drivers of economic growth during recessions. Research has shown that every $1 of spending generates $19 in economic activity, but in a pandemic-plagued economy, the informational value of advertising should make the resulting return on investment even greater.
The American people need real solutions, not more Band-Aid measures. Another round of broad-based stimulus spending won’t create economic prosperity; it will prolong the current mediocre state of affairs. By lowering government impediments to job growth and employment and enacting laissez-faire policies that increase consumer demand, Congress and the White House won’t receive the same degree of short-term accolades from the public as they would from sending out more direct payments to individuals. However, choosing to enact thoughtful policy-based reforms over more ballooning of the deficit will cement their legacies as the COVID economic doctors in the months and years ahead.
Ken Blackwell served as mayor of Cincinnati, Ohio Treasurer, a U.S. Ambassador to the UN; he currently serves on the board of directors for Club For Growth.