I am a science and technology futurist. I work for the world’s largest corporations, helping them to stay ahead of what’s coming next.
I use AI-driven predictive analytics, track venture capital investments, keep an eye on global patents, and analyze university and independent laboratory research for disruptive potential. Together, the data paint a picture of how we are destined to work and live in the future.
Normally, I set my sights on three, five, ten and thirty years out. But just for today, let us imagine the government hired me to look two to six months out. No. Let’s go further. Let’s pretend they created a new department whose sole purpose was to keep leaders up to date on what’s around the corner. Let’s pretend they were interested in getting out ahead of change so protective guard rails could be devised, debated, refined and instituted before-the-fact.
Take social media, for example. Imagine having the conversation we’re having today in 1997, before Facebook and Twitter grew unstoppable. Now imagine enacting safeguards today against the potential dangers of nanotechnology, robotics, space flight and other disruptors — rather than after the train has left the station. Imagine using foresight to ''pre-dapt'' before the emergency is upon us.
Along those lines, I present for your consideration four practical measures the government can act on today to head off further economic duress caused by the pandemic shutdown.
1. Make 2020 and 2021 unemployment benefits non-taxable
Talk about a kick in the gut when you’re down. Millions of U.S. citizens are receiving unemployment benefits for which they will be expected to pay taxes in a few months.
The likelihood citizens who are out of work are in any position to pay taxes on unemployment income is near zero. Which clears the way for the IRS and state tax authorities to step in. And by step in, I mean begin collecting interest, lien or seize homes and bank accounts, levy future paychecks, etc. When an individual falls behind paying their taxes, these are all fair game.
But why wait for the first domino to fall? We already know a historic number of Americans are lining up for boxes of food; are months behind in paying their rent and mortgages; are maxing out their credit cards and devastating their savings. The idea of serving people who became unemployed through no fault of their own a tax bill which they cannot pay is just the kind of piling on from which there is no coming back.
But it doesn’t have to go this way. We can head this nonsense off at the pass. State and federal governments can immediately act to make unemployment benefits for 2020 and 2021 nontaxable.
2. Extend mortgage contracts
No one in their right mind believes tens of millions of renters and mortgage holders will suddenly have the money to pay back 8-12 months of missed payments once moratoriums expire. It is likely an unprecedented wave of evictions, foreclosures and displaced families lie ahead. The fact is, the longer it is necessary to extend the moratoriums, the more probable this scenario becomes. Foreclosed properties will flood the market, putting downward pressure on the real estate holdings of big financial institutions that will begin panic dumping real estate for less than is owed. Sound familiar? It’s a re-run of the 2008 subprime mortgage collapse that triggered a global recession.
But it doesn’t have to go this way. Make it legal, easy and cost-neutral for property owners to rewrite the terms of existing loans so missed payments are made up on the back end of a longer loan. If 30-year mortgages could be converted to 32-35 year terms, or longer (without using the rewrite as an excuse to tack on predatory fees, or raise interest rates), families will be able to remain in the homes they own and landlords would not need to force tenants to make up missed rent. No harm no foul — everyone hits the reset button and starts over from scratch. More importantly, we prevent another housing collapse, global recession and government bailout of mega financial institutions.
3. Reign in Credit Bureaus
The long tail of unemployment is the damage it does to the credit score of an individual and business. Those who fell behind in paying monthly bills will be digging out from under a bad credit score for years to come. A credit score that will disqualify them from many opportunities, including conventional loans, and jobs where good credit is a criterion for hiring.
But wait, there’s more. Credit card contracts allow banks to raise interest rates when a card holder’s credit score changes. So, individuals and organizations that cannot pay their bills are suddenly going to be hit with sky-high interest rates. Talk about piling on ...
But it doesn’t have to go this way. The government can work with credit bureaus to adjust their algorithms to accommodate the effect late payments during the pandemic have on an individual’s future creditworthiness. Government leaders can also put a freeze on raising credit card and other loan interest rates based on changes in credit scores throughout 2020, 2021, and as long as the pandemic persists.
4. PPP Lines of Credit
Small businesses employ roughly 47 percent of the U.S. private workforce. So, it follows there can be no economic recovery without them. Doling out one-off PPP loans has only added to the financial insecurity of these businesses rather than stabilizing them. Fact is, even following two PPP programs, most small businesses are so far in debt it’s not likely they will recover. The jobs lost from these business closures will be extremely difficult to replace — driving even more Americans into unemployment lines and homelessness.
But it doesn’t have to go this way. Replace the current on-again-off-again PPP loans with government insured 1, 2 and 3-year PPP lines of credit, at zero interest, for small businesses which have incurred debt as a direct result of a government-mandated shutdown. Not only will this provide access to the long-term capital they will need to get back on their feet, it also buys them time. Business owners will no longer be left guessing. (Will Congress pass another package? When? For how much? Are we eligible?) They will be back in control. A government insured line of credit will allow them to plan ahead and use only the funds they need, for what they need.
I began this article admitting that I am a science and technology futurist, not an economist. But the truth is, you don’t have to be a futurist or economist to see the unintended consequences of the pandemic shutdown. Nor do you have to be one to see that many problems can be quashed before they have opportunity to materialize. To that end, foresight is the greatest advantage before and during any emergency. There is no good reason to wait. Act now.
Rebecca D. Costa is an American sociobiologist and futurist. She is a world-renowned expert in the field of fast adaptation in complex environments. Costa’s work has been featured in The New York Times, Washington Post, USA Today, San Francisco Chronicle and The Guardian. Her first book, "The Watchman’s Rattle: A Radical New Theory of Collapse," was an international bestseller. Her follow-on book, "On the Verge," was released in 2017. For more information visit www.rebeccacosta.com. To read more of her reports — Click Here Now.
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