The direct-to-worker approach

In the Daily Caller, James Pinkerton likes the ideas of Missouri Senator Josh Hawley with regard to getting the economy going again.

Less than a year and a half into his freshman term, Sen. Josh Hawley has been best known for his bold stance against the hegemony of Silicon Valley.

Indeed, Hawley, by defending the family, as well as ordered conservatism, against the continuous gale of digital intrusion, has earned the enmity of many libertarians. For instance, Tech Liberation has slammed his efforts as “elitist and highly paternalistic.”

Hawley has taken up another cause, defending the incomes of American workers in the face of the coronavirus threat — and once again, libertarians are up in arms. For instance, one columnist at The Washington Examiner declared that Hawley has gone “literally full socialist.” And the Koch Brothers-ish FreedomWorks jibed, “The Missouri Republican has repeatedly attempted to cast aside the @GOP’s commitment to limit government.” (RELATED: Hawley Hits Small Business Administration For Saying Religious Orgs Are Not Eligible For Coronavirus Aid)

On the other hand, Hawley has gained some high-level fans, who can hardly be called liberals, let alone socialists. One such is Arthur Laffer, the dean of supply-side economics. That was the tax-rate-cutting thinking — summed up in the Laffer Curve — that Ronald Reagan used to lift America out of the stagflation of the 1970s, making America great again in the 1980s.

As an aside, the author of this piece, who worked as a junior domestic policy aide in the Reagan White House, well recalls that the Gipper’s innovative policy ideas were, at that time, often derided by fellow Republicans. Back then, one top GOPer called Reagan’s plan a “riverboat gamble”; another called it “voodoo economics.” So we can see: Over time, the invective of the moment can have little bearing on the validity of an idea.

Hawley’s idea, which he calls Getting America Back to Work, can be stated simply: During this emergency, the federal government should support wages up to 80% of the national median. It’s an expensive program, to be sure, and yet it’s worked well in places such as the United Kingdom and Denmark.

To which, of course, critics might say, “Aha! Those two countries have elected many leftists! So that’s proof that Hawley is an ideological rogue!” We might pause to note that Reagan himself was once a liberal Democrat, and his famous tax-cut plan was explicitly modeled — as Larry Kudlow, an economic adviser to both Reagan and Trump has explained — after the plan of another liberal Democrat, John F. Kennedy.

Yet it’s probably best if we hear from Laffer himself, directly addressing Hawley’s proposal. On April 20, he and co-author Jonathan Hartley wrote an op-ed for Fox Business endorsing Hawley’s idea.

As the co-authors put it, the $2 trillion CARES Act, which President Donald Trump signed into law on March 27, is well-intentioned, but circuitous. For instance, the loan money for one of the bill’s key elements, the Paycheck Protection Program, aimed at aiding businesses and their employees, can only come after an application to a bank — all overseen by the Small Business Administration.

What’s simpler and faster, Laffer and Hartley argue, is a direct infusion of cash into people’s pockets. As they put it, “Why not deliver a faster and less operationally challenging stimulus through the payroll system that will incentivize employers to keep their workers on payroll and for them not to leave?” And as they note approvingly, that’s exactly what Hawley wants to do.

The two economists further explain, “A recurring biweekly payroll subsidy (rather than a one-time tax credit) would be faster and likely help boost spending because of what behavioral economists call ‘mental accounting,’ that is people are more likely to spend something that they see as a permanent income boost to their income.” (RELATED: Poll: Almost One In Three Americans Have Seen Employment Or Income Disruptions Because Of Coronavirus)

Yes, Hawley’s idea is aimed at getting money into the economy quickly, so that we don’t spiral down into a depression. And okay, it’s not a tax-rate cut, but Laffer likes it because supply-siders have always thought broadly about the general well-being of the nation — they have never been slaves to one or another sectarian ideology. And after all, you can’t have supply without workers.

Indeed, supply-siders such as Reagan, Laffer and Jack Kemp were pragmatic doers; like JFK before them, what they wanted most was to get the country moving again.

To be sure, just as they did with Reagan’s plan, some will worry about the impact of Hawley’s plan on the deficit. And yet in light of the current crisis, the fate of the nation matters more. Indeed, as Treasury Secretary Steven Mnuchin said in March, there’s never been a better time to borrow: “Interest rates are incredibly low, so there’s very little cost of borrowing this money. In different times, we’ll fix the deficit. This is not the time to worry about it.”

Like Hawley himself, the Getting America Back to Work plan is unprecedented in U.S. politics. In fact, just on April 24, Trump signed an additional $484 billion in coronavirus relief, most of the money being dedicated to PPP as opposed to the direct-to-worker approach that Hawley and Laffer prefer. Yet after that, as Americans take stock of where they are and think about what’s needed next, they might wish to take a closer look at Hawley’s plan. And why not? After all, the godfather of supply-side thinks it’s a great idea — and when it comes to greatness, he has a proven track record.