Tags: cares | executive | pandemic | mcconnell

Next COVID-19 Relief Must Also Promote Business

business and economic stimulus

(Mohamad Faizal Ramli/Dreamstime)

By Monday, 13 July 2020 02:35 PM Current | Bio | Archive

Since the coronavirus pandemic is showing no signs of cessation, Congress has been negotiating over the next relief package with one eye on the economy and the other eye on the November election.

Democrats would very much like to extend the $600 weekly federal unemployment insurance supplemental benefits beyond July, since it would simultaneously keep people without jobs happy while obviating their need to return to work should their employer recall them. Its extension would sabotage any real economic recovery until sometime after the election, which would, of course, just be a weird coincidence.

The most popular response for Republicans at the moment has been to suggest the suspension of payroll tax obligations. U.S. Senate Majority Leader Mitch McConnell reportedly opposes the idea, and for good reason: it would be a pricey and scattershot way of stimulating the economy.

A tax break that would benefit everyone currently working and make it less expensive to employ someone may very well boost spending and employment, but the cost per job created will be steep. Because it would not undo the constraints imposed by the virus that has limited economic activity, like visiting restaurants or entertainment venues that have driven much of the job losses, it would be akin to pushing on a string.

However, another incentive might prove to be much more effective at job creation policies to make advertising more accessible to businesses, and the government doing more advertising itself.

Although advertising supports nearly $5.8 trillion in economic output, businesses' ad spending fell off a cliff in the second quarter of 2020. It’s one of the primary reasons that 30 local newsrooms across the country and counting have already closed their door for good during this pandemic.

The implosion of print advertising has undoubtedly hastened the demise of local and regional newspapers — destroying jobs and reducing the availability of local news for millions. Those living in rural areas have been among the hardest hit.

Not only would boosting the advertising marketplace help to protect local news and the 600,000 jobs that currently exist in the advertising sector (and the more than 20 million jobs supported as a result of advertising), but it would also stimulate economic demand and create jobs in other industries of the economy as well.

Nearly a century’s worth of studies have shown how advertising can boost consumer sentiment in weak economies.

There are a couple of tractable ways for the government to stimulate the advertising marketplace; for starters, Congress could consider some form of advertising tax credit in the next stimulus package. Alternatively, Congress can make advertising a forgivable expenditure in the liquidity programs created by CARES Act. Each would spur more spending on advertising, which will, in turn, fuel economic growth.

Finally, the government should turbocharge consumer confidence by using existing funds to launch robust public awareness and information campaigns. This would keep the public up to date on the latest health and state reopening data — by providing up-to-date recommendations on safety precautions the government can help inform citizens throughout the country how ti improve safety, which would serve to boost the economy.

In letters to the executive branch, 74 senators and 240 plus U.S. House members have urged the executive branch to accelerate the operational speed of each agency’s pre-existing, pre-funded advertising budgets to help boost consumer optimism during this crisis.

Given the division and uncertainty across the country, a fact-based, bipartisan message across radio, TV, and print media in every market in the country that instills confidence and harmony while driving business demand would achieve a lot of good, in more ways than one.

The government could also consider targeted advertising partnerships with industries that were particularly affected by the pandemic, which would boost confidence and help in spurring airline travel and more dining out.

For example, now might be a propitious time to promote interstate tourism to Hawaii, Montana, and Alaska — the states with the lowest incidences of COVID.

While suggesting that the government should create more advertising during an unprecedented global pandemic and in the aftermath of riots in major U.S. cities might seem crazy to some, advertising is an effective lever at the government’s disposal for increasing consumer confidence and demand.

Jared Whitley is a long-time politico who has worked in the U.S. Congress, White House, and defense industry. He is an award-winning writer, having won best blogger in the state from the Utah Society of Professional Journalists (2018) and best columnist from Best of the West (2016). He earned his MBA from Hult International Business School in Dubai. Read Jared Whitley's Reports — More Here.

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Not only would boosting the advertising marketplace help to protect local news and the 600,000 jobs that currently exist in the advertising sector (and the more than 20 million jobs supported as a result of advertising), but it would also stimulate economic demand.
cares, executive, pandemic, mcconnell
Monday, 13 July 2020 02:35 PM
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