This week it is predicted we will be heading into the peak of the virus, the apex. We have been told to prepare for a difficult week. We pray that the worst of our fears aren’t realized and keep faith with those impacted by the scourge of Covid 19 by closely following the social distancing guidelines in our communities.
At the same time, millions of New Yorkers are struggling with economic uncertainty on an unprecedented scale. The increase in unemployment insurance and the $2 trillion stimulus is important and will temporarily help the millions and millions of workers and businesses that have been impacted by the shutdown, but it is clearly not enough.
The fact is with no income the unemployed and their employers are each day falling farther and farther behind. Landlords still have to pay banks and utilities, banks still have to have enough liquidity to operate, utilities have to pay energy producers and down the line. Even Gov. Cuomo’s moratorium on evictions is literally just buying time for renters and homeowners. It is a vicious cycle.
Worse, too many of the 10 million who filed for unemployment in the past two weeks, likely just a fraction of the number who will ultimately file, face the situation of having to choose whether to buy food or medicine or pay their rent or credit card. For most, it is a situation that was unthinkable just a few short weeks ago.
The economic crisis requires more drastic action immediately, and the what is needed is to literally turn back time.
As much as we all might wish, we can’t turn back the clock to eradicate the coronavirus, but we might just be able to do so to mitigate its economic impact.
Instead of trying to paper over all the debt and loss of economic activity by printing more and more money, pass a federal law that stops time for four months – essentially act as if those months don’t exist. By law, erase the months of February – May and simply add those four months on to the back end of every law, regulation, lease, loan, credit card – every financial and legal instrument. Rather than having the government forgive or pay everyone’s debt, it’s all pushed back, added on to the end of the commitment.
That way when the economy does restart, we can give workers and their employers a fighting chance to reestablish their businesses. It’s not a fresh start or a jump start, it’s a running start. These businesses are in danger, through no fault of their own and will be facing a heap of challenges. But there will be pent up consumer demand and if we can really just try and pick up where we left off, we will have a better chance of avoiding a deep recession. But you can’t pick up where you left off if you are in arrears three months on every bill.
This concept is important for another reason, it will mitigate what I will call the “Bobby Axelrod Effect”. Bobby Axelrod, the fictional protagonist in the show “Billions”, built his fortune trading off the economic disaster of 9/11. There are no doubt real-life Bobby Axlerods, who are sitting home right now, probably holed up in the Hamptons sipping chardonnay, plotting how they are going to take advantage of the crisis to make more money. They believe it is the American way – and for good reason, throughout our history fortunes have been made through weathering and leveraging unexpected events.
This is different. There is no cause, there are no terrorists – our financial institutions are strong it’s not the “Big Short”, there aren’t credit default swaps, companies aren’t ridiculously over-leveraged. And with over 182 countries impacted – our allies and adversaries alike from Italy to Iran – are all in the same boat, it’s the damn virus.
I’m a huge fan of capitalism, it works and has made our nation the envy of the world, but this is just a bad recipe. Simply put, we can’t allow this crisis to create an unfair playing field where businesses that were solvent and working just weeks ago are being scooped up by coronavirus profiteers. It will cause more division and foment real anger. We must take strong action to prevent this from happening.
Is this solution fair to everyone? No, I can think of plenty of instances where it is not perfectly fair. Is it fairer than the alternatives? Yes.
Finally, there will be some who say it’s just not possible to turn back time. But being a New Yorker, I know that it can be done – I’ve seen it done with my own two eyes and no it wasn’t divine – far from it. The New York Legislature used to literally and regularly stop the clock at midnight on April 1 in order to pass the state budget and meet the constitutional deadline, the infamous “on-time” budget.
Riddick’s Rules of Procedure notes, “The official clock is stopped by agreement of the ‘powers that be’ without any motion or announcement one minute before the designated hour.” In essence stopping time is a legal fiction created to actually make more time. In Albany, they would turn back time as a mechanism to allow more time for deal-making, for us it could be the time we need to save our economy.
Finally, I would normally hold on writing about this topic while we are in the midst of the health crisis, but time is moving fast and we need solutions now. Every day that goes by, the debt gets deeper and decisions get made that foreclose other options. Stopping the clock won’t fix everything but ironically it will provide more time necessary to give everyone a better opportunity to restart the economy.
David Catalfamo is a veteran economic development professional who helped to lead business recovery efforts for New York after the attacks of 9/11.