DealBook: A Four-Point Plan for Fixing the Economy

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In many ways, the economic recovery from the coronavirus has defied the worst-case scenarios. Jobs, spending and markets have bounced back more quickly than expected, although they largely remain below pre-pandemic levels. This is mostly thanks to unprecedented government intervention, but many of those stimulus programs are set to expire soon. Then what?

A heavyweight group of economists and former policymakers has a plan. Under the banner of the Aspen Institute’s Economic Strategy Group, the four-member team has published a meaty report outlining a flexible approach to supporting the recovery, tied to the strength of the rebound and not to any specific date. (High-level details are in this Washington Post op-ed.)

• The group behind the plan: Jason Furman of Harvard, who chaired the Council of Economic Advisers under President Barack Obama; Timothy Geithner of Warburg Pincus, who was Treasury secretary during the Obama administration; Glenn Hubbard of Columbia University, who chaired the Council of Economic Advisers under President George W. Bush; and Melissa Kearney of the University of Maryland, the director of the Economic Strategy Group.

Their proposal has four parts:

1️⃣ Income support for the unemployed. Provide a weekly benefit of up to 40 percent of wages for the jobless as long as a state’s unemployment rate is above 15 percent, phased out until the rate hits 7 percent, when it is eliminated.

2️⃣ Additional incentives to return to work. Subsidize lower-wage jobs, which become less attractive when enhanced unemployment benefits are on offer and many of the roles are at higher risk of exposure to the coronavirus. Incentives could include a more generous Earned Income Tax Credit or direct hiring bonuses.

3️⃣ Lending to small and midsize businesses. A “much more aggressive use” of the funds already allocated by Congress to support loans — not grants — to target viable businesses, at better rates, understanding that the government could face more potential losses.

4️⃣ Support the states. Issue grants for general use (and especially education), along with federal funding for Medicaid tied to the unemployment rate.

It won’t be cheap. At best, the group reckons that its plan would cost just under $1 trillion. If the recovery drags on, it could cost something like $2 trillion. “Rather than misleading or pretending the recovery will be cheaper, for example by covering only a few months of unemployment insurance or only a fraction of the ultimate cost of the Paycheck Protection Plan,” the group writes, “we believe it is better to be upfront about what the total costs will ultimately be and legislate them today in a contingent fashion that depends on economic circumstances.”

In other news on recovery and reopening:

A virus surge in Sun Belt states. Arizona, Florida and Texas reported their largest one-day increases in Covid-19 cases yet. And it’s not just because of more testing: The rate of positive test results is also rising. But Gov. Ron DeSantis of Florida said, “We’re not shutting down.”

Beijing goes back into lockdown. A rise in cases led to the closing of schools and cancellation of flights to the capital, as authorities raised the coronavirus threat level just 10 days after lowering it, which had allowed more economic activity to resume.

Prepare for negative interest rates in the U.S., Bloomberg advised users of its data terminals. The company recommended that subscribers ensure their financial models wouldn’t break, Y2K-style, if the Fed pushes rates below zero. The central bank says it won’t … but experience suggests that it’s best to be prepared.


Today’s DealBook Briefing was written by Andrew Ross Sorkin in Connecticut and Michael J. de la Merced and Jason Karaian in London.


Protests over racial injustice following the killing of George Floyd first prompted companies and their leaders to pledge support for combating racism. Now, Business Roundtable, which represents American blue-chip companies, is speaking out on policing policies.

Business Roundtable urged changes,
saying in a statement that “among the most urgent challenges is the need to protect our citizens and address unwarranted, excessive and even lethal force, especially against unarmed black men and women.”

The call to action shows Corporate America responding to the public conversation on race, specifically the debate over the “defund the police” movement. National polls show growing support for overhauling law enforcement.

But the group didn’t suggest specific changes, instead saying that lawmakers should “come together and seize the opportunity for real solutions,” with its members promising to support “significant reforms.”

In other news on social inequality:

Morgan Stanley’s former diversity chief sued the firm, alleging that she was fired in December after pushing a plan to diversify the bank’s ranks of financial advisers. The firm denies the allegations.

Black founders face a litany of humiliations in Silicon Valley, Bloomberg reports after speaking with 20 leaders. Among them: others mistaking their white deputies as the C.E.O. of their companies, and visible discomfort on the part of white venture capitalists in business pitch meetings.

Transgender people worry they are falling behind during the coronavirus recession, The Times reports. They were already facing adversity, with transgender people of color six times more likely than the national average to be unemployed. With Jay Powell, the Fed chairman, already warning that the pandemic will widen inequality, there’s concern that things will only get worse.

The iPhone maker is the latest tech giant to face scrutiny over its competitive practices, as start-ups and regulators say that the Silicon Valley giant hasn’t been playing fair.

The latest controversy is over an email app. Basecamp had submitted an update for Hey, a new email service already approved by Apple, for review by the company’s App Store team. But Apple rejected the app because Hey didn’t accept subscriptions in its app — which would have let Apple take a cut, Protocol reports.

• The revelation came after the E.U. began investigating the App Store for potential antitrust violations, an inquiry stemming from complaints by Spotify.

Others are now piling on. Match Group, the parent company of the dating service Tinder, criticized Apple’s demands for a cut of apps’ revenue. It told Axios in a statement that “Apple squeezes industries like e-books, music and video streaming, cloud storage, gaming and online dating for 30% of their revenue, which is all the more alarming when Apple then enters that space, as we’ve repeatedly seen.”

PG&E pleaded guilty to 84 counts of involuntary manslaughter. The rare acknowledgment of corporate wrongdoing, which also came with a $3.5 million fine, came at the end of a two-year trial over the utility’s role in the deadly fire that destroyed the town of Paradise, Calif. in 2018.

A common steroid appears to help severely ill coronavirus patients. Dexamethasone reduced deaths in patients with severe cases of Covid-19, according to a study of 2,100 patients by the University of Oxford.

  • Updated June 16, 2020

    • What is pandemic paid leave?

      The coronavirus emergency relief package gives many American workers paid leave if they need to take time off because of the virus. It gives qualified workers two weeks of paid sick leave if they are ill, quarantined or seeking diagnosis or preventive care for coronavirus, or if they are caring for sick family members. It gives 12 weeks of paid leave to people caring for children whose schools are closed or whose child care provider is unavailable because of the coronavirus. It is the first time the United States has had widespread federally mandated paid leave, and includes people who don’t typically get such benefits, like part-time and gig economy workers. But the measure excludes at least half of private-sector workers, including those at the country’s largest employers, and gives small employers significant leeway to deny leave.

    • Does asymptomatic transmission of Covid-19 happen?

      So far, the evidence seems to show it does. A widely cited paper published in April suggests that people are most infectious about two days before the onset of coronavirus symptoms and estimated that 44 percent of new infections were a result of transmission from people who were not yet showing symptoms. Recently, a top expert at the World Health Organization stated that transmission of the coronavirus by people who did not have symptoms was “very rare,” but she later walked back that statement.

    • What’s the risk of catching coronavirus from a surface?

      Touching contaminated objects and then infecting ourselves with the germs is not typically how the virus spreads. But it can happen. A number of studies of flu, rhinovirus, coronavirus and other microbes have shown that respiratory illnesses, including the new coronavirus, can spread by touching contaminated surfaces, particularly in places like day care centers, offices and hospitals. But a long chain of events has to happen for the disease to spread that way. The best way to protect yourself from coronavirus — whether it’s surface transmission or close human contact — is still social distancing, washing your hands, not touching your face and wearing masks.

    • How does blood type influence coronavirus?

      A study by European scientists is the first to document a strong statistical link between genetic variations and Covid-19, the illness caused by the coronavirus. Having Type A blood was linked to a 50 percent increase in the likelihood that a patient would need to get oxygen or to go on a ventilator, according to the new study.

    • How many people have lost their jobs due to coronavirus in the U.S.?

      The unemployment rate fell to 13.3 percent in May, the Labor Department said on June 5, an unexpected improvement in the nation’s job market as hiring rebounded faster than economists expected. Economists had forecast the unemployment rate to increase to as much as 20 percent, after it hit 14.7 percent in April, which was the highest since the government began keeping official statistics after World War II. But the unemployment rate dipped instead, with employers adding 2.5 million jobs, after more than 20 million jobs were lost in April.

    • Will protests set off a second viral wave of coronavirus?

      Mass protests against police brutality that have brought thousands of people onto the streets in cities across America are raising the specter of new coronavirus outbreaks, prompting political leaders, physicians and public health experts to warn that the crowds could cause a surge in cases. While many political leaders affirmed the right of protesters to express themselves, they urged the demonstrators to wear face masks and maintain social distancing, both to protect themselves and to prevent further community spread of the virus. Some infectious disease experts were reassured by the fact that the protests were held outdoors, saying the open air settings could mitigate the risk of transmission.

    • My state is reopening. Is it safe to go out?

      States are reopening bit by bit. This means that more public spaces are available for use and more and more businesses are being allowed to open again. The federal government is largely leaving the decision up to states, and some state leaders are leaving the decision up to local authorities. Even if you aren’t being told to stay at home, it’s still a good idea to limit trips outside and your interaction with other people.

    • What are the symptoms of coronavirus?

      Common symptoms include fever, a dry cough, fatigue and difficulty breathing or shortness of breath. Some of these symptoms overlap with those of the flu, making detection difficult, but runny noses and stuffy sinuses are less common. The C.D.C. has also added chills, muscle pain, sore throat, headache and a new loss of the sense of taste or smell as symptoms to look out for. Most people fall ill five to seven days after exposure, but symptoms may appear in as few as two days or as many as 14 days.

    • How can I protect myself while flying?

      If air travel is unavoidable, there are some steps you can take to protect yourself. Most important: Wash your hands often, and stop touching your face. If possible, choose a window seat. A study from Emory University found that during flu season, the safest place to sit on a plane is by a window, as people sitting in window seats had less contact with potentially sick people. Disinfect hard surfaces. When you get to your seat and your hands are clean, use disinfecting wipes to clean the hard surfaces at your seat like the head and arm rest, the seatbelt buckle, the remote, screen, seat back pocket and the tray table. If the seat is hard and nonporous or leather or pleather, you can wipe that down, too. (Using wipes on upholstered seats could lead to a wet seat and spreading of germs rather than killing them.)

    • Should I wear a mask?

      The C.D.C. has recommended that all Americans wear cloth masks if they go out in public. This is a shift in federal guidance reflecting new concerns that the coronavirus is being spread by infected people who have no symptoms. Until now, the C.D.C., like the W.H.O., has advised that ordinary people don’t need to wear masks unless they are sick and coughing. Part of the reason was to preserve medical-grade masks for health care workers who desperately need them at a time when they are in continuously short supply. Masks don’t replace hand washing and social distancing.

    • What should I do if I feel sick?

      If you’ve been exposed to the coronavirus or think you have, and have a fever or symptoms like a cough or difficulty breathing, call a doctor. They should give you advice on whether you should be tested, how to get tested, and how to seek medical treatment without potentially infecting or exposing others.

Some lawmakers benefited directly from small-business rescue loans. At least four members of Congress have family ties to firms that received funds, which is allowed by the program but nonetheless awkward as lawmakers fight over the Treasury Department’s refusal to release information about recipients of the loans.

Uncovering details in the data. Home renovations have become a popular pandemic pastime: Sales of building materials and garden supplies were up 16 percent in May versus the year before, one of the few categories doing better after the outbreak. But clothing sales have collapsed, down more than 60 percent from last year. There’s a joke to be made about naked gardening, but we’ve learned that, in fact, World Naked Gardening Day has been held on the first Saturday in May for the past 15 years. Did economists fail to factor that into their models?


• The stock market’s sudden recovery has start-ups scrambling to revive I.P.O. plans. (NYT)

• SoftBank reportedly plans to sell up to two-thirds of its stake in T-Mobile, which is valued at about $20 billion. (CNBC)

• Companies are asking lenders and bondholders to substitute their profits last year for this year’s — basically, to “pretend the coronavirus hasn’t happened” — to avoid breaching debt covenants. (FT)

Politics and policy

• The Trump administration sued John Bolton, the former national security adviser, an attempt to delay publication of his tell-all memoir. (NYT)

• Should lawmakers stop trading stocks to avoid accusations of insider trading? (NYT)


• Facebook will let American users opt out of seeing political ads, though it won’t take action against ads with misleading information. The company is also trying to register four million new voters. (NYT, Recode)

• Google banned ZeroHedge from its ad platform over policy violations in the user comments on stories about Black Lives Matter protests. (NBC News)

Best of the rest

• Reed Hastings of Netflix is reportedly building a 2,100-acre luxury training retreat in Colorado for teachers. Meanwhile, WeWork is in talks with New York City private schools about holding classes in its co-working spaces. (Recode, CNBC)

• California name regulations forced Elon Musk and Grimes to rename their baby: Goodbye X Æ A-12 Musk, hello X AE A-XII Musk. (TMZ)

📞 Remember that story about the weird world of pizza arbitrage? (If not, treat yourself and click the link.) A panel of writers and editors from The Times will discuss it with the author, the former trader Ranjan Roy, in the latest edition of “This is Good.” R.S.V.P. here to join the call, which will be held today at 12 p.m. Eastern.

Thanks for reading! We’ll see you tomorrow.

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