An Alternative Plan for COVID-19 Relief and Recovery

Most of us are now at least vaguely aware of how the government is responding to the COVID-19 pandemic. It’s all very complicated and I won’t go into it here1, but my chief concern is that it really won’t solve the financial disaster facing many Americans. So here’s an outline to an alternative approach that will meet the needs of all Americans, will alleviate financial stress on families and will avoid anyone being faced with mortgage foreclosures, property repossession or bankruptcy due to the pandemic.

    • Extend Medicare to cover 100% of all essential medical costs for every American who is in need and not otherwise protected.
    • Provide shelter for all those without homes or apartments to go to.
    • Place a moratorium on all rents, mortgages, debt payments (credit cards, etc.), interest accrual, foreclosures, and auto or any other property repossession for all Americans in need due to the pandemic.
    • Place a moratorium on all taxes (federal, state and local) for all Americans in need due to the pandemic and reimburse states and localities for the lost revenue.
    • Place a moratorium on all insurance payments and policy cancellations for all Americans in need due to the pandemic and reimburse insurance companies for loss of home owner and auto insurance premiums, but not healthcare premiums.
    • Provide financial assistance to all who are in need due to the pandemic in the amount necessary to feed and sustain their families with all needed essentials to include food, transportation, basic clothing allowance, etc.
    • Shutter all non-essential businesses but apply the same moratoria on debt, interest, etc. to them as to individuals.
    • Provide sufficient relief to businesses remaining open to ensure their financial survivability, but zero profit.
    • Tax 100% of profits from businesses that are profiting from the pandemic for the duration of the pandemic.

Now, consider the impact of this plan.

    • No American would go without food, shelter, healthcare or basic living essentials.
    • No American in need due to the pandemic would have to pay rent, mortgages or loans of any kind for the duration of his/her unemployment. Furthermore, their debt would not increase as a result of interest accrual.
    • No American would lose their home, auto or other property due to the pandemic.
    • No American in need due to the pandemic would lose his/her insurance protection.
    • No business or landlord impacted by the pandemic would lose their property as they would not have to make any tax or debt payments.
    • No business would profit from the pandemic.
    • Banks and creditors would lose much, but not all, interest.
    • Healthcare insurance industry would lose substantial revenue, but would not have to cover medical expenses of those covered by Medicare.2

After the pandemic has passed and Americans have recovered from it, all debt, interest accrual, taxes and insurance payments would resume at the point where they were suspended.

The biggest problem addressed by this plan is relief from debt that will ultimately financially destroy so many Americans impacted by the pandemic. Americans today are saddled with $62,167 debt per citizen, most of which is in the form of home mortgages, car loans, student loans and credit cards. For nearly all Americans, this debt requires monthly payments which, when combined with food, transportation, utilities, insurance and medical expenses consumes nearly the entire income of most. According to a recent report by the Federal Reserve, approximately 1/3 of all Americans are no more than $400 away from financial hardship.

Relieving people impacted by the pandemic of their debt, tax and insurance payments reduces their cost of living to the bare essentials. Providing the healthcare they need and a financial allowance sufficient to cover their remaining costs eliminates all their financial burdens and allows them to focus all their efforts on recovery.

Banks and creditors will lose money, but most of it is money they can afford to lose. This plan provides a means where those who can afford it will contribute substantially to the recovery and all of the burden will not fall on the middle and lower classes, government and future generations.3

It is impossible to estimate the cost of this proposal because we have no idea how many citizens and businesses will be adversely affected by the pandemic. Clearly, healthcare costs are going to be large, but the government is already spending more than $1 trillion on healthcare, much of it going to those Americans who are in the high risk category. A basic subsistence allowance amounting to $6,000 annually per person should cover basic necessities, but the total depends on how many people will need it.  Finally, the “keep-alive” costs for businesses will be a major expense but, again, that depends on how many businesses need it and how much each one needs. What we do know is that the government has already allocated over $2.3 trillion, not counting what it already expends on healthcare. As for the current plans, we can be fairly certain that 1) all that money is not going to go where it’s needed most, 2) many Americans will be financially destroyed by the pandemic and 3) it is not the optimal way for the nation to recover from the pandemic.

1For those who are interested in details, here is a list of sources.

2 This plan only addresses those affected by the pandemic and  for its duration. Any permanent changes in  healthcare protection for Americans would have to be determined after the pandemic is over.

3 Historically, pandemics and other natural disasters have resulted in a massive transfer of wealth from the middle class to the rich. This comes about because assets lost to those striken hardest are acquired at fire sale prices by the wealthy and reap huge profits upon recovery of the economy.