Harvard political scientist Robert Putnam argued in "Bowling Alone" (2000) that Americans were spending less time together. Today Americans aren't merely alone--they're not even bowling. Sports, theaters, and restaurants are shut down, and the coronavirus is scaring off flyers.” This makes for prudent health policy and a brutal business environment.
Rather than an indiscriminate payroll tax cut that drip-feeds dollars and does not assure recovery in battered sectors, Congress and the White House should target the most vulnerable parts of the economy, which often employ the most vulnerable workers, namely janitors, ushers, baggage handlers, and busboys. The waitress with the dark circles under her eyes has bills to pay and needs customers to sit down at her table.
We propose that the federal government mail to each American household a debit card pre-loaded with $500 that can be used for services in the “out-of-home,” experience economy. Call it a “Menu and Venue Voucher.” The card would have a start date of July 1, 2020 (if public-health officials relax social distancing directives by then) when the effects of the virus will likely have subsided and expire a year later. A school trip to a Picasso exhibit, a bus ride to a bowling tournament, or petting sled dogs from a cruise ship in Alaska would qualify. “Netflix and chill” at home would not. The point is not to make judgments about taste; it’s about nurturing a taste for going out.
Every stimulus plan raises doubts, of course. While this plan, which would cost $64 billion, would not immediately inject cash, it would assure employers and their lenders that a rebound is on the way, so that business owners could receive bridge loans and keep going through the crisis. Usually, targeting industries flounders because lobbyists who make the fattest political contributions often grab the biggest bonuses. In this case, it is obvious which industries are feeling the most pain. The share price of Invesco’s Travel and Leisure ETF has plunged 56% nearly twice as much as the S&P 500's decline over the same period. The same activities targeted by health officials should be beneficiaries of this fiscal offset.
This program is not very difficult to administer, and there are precedents. During the Great Recession, Taiwan sent coupons to its citizens, which spurred buying during a treacherous time. In the U.S., health savings accounts often issue debit cards that consumers use for their medicines and treatments. Food stamps now use debit cards, too. What if some clever person began buying up the Menu Venue Vouchers? That would be fine, for families that sell their vouchers would be choosing to spend that money on priorities they deem more urgent.
Some economists might warn that such a program would kindle inflation in 2021. First, we have been listening to such cries since 2009, with nary a blip, while inflation-protected U.S. Treasury notes are now expecting prices to rise an average of 0.63 percent over the next ten years! Second, industries in the experience economy expanded capacity during the economic recovery, with sleek, new hotels and cruise ships coming online to accommodate demand. It is highly unlikely they will be in a position to jack up prices, even with Menu Venue Vouchers in place.
The government’s first priority, of course, needs to be medical: getting testing, treatment, and aid to those heading to hospitals and clinics. Still, the coronavirus threatens not just our bodies, but the body politic. This proposal would aid those parts of the economy that can lift spirits and bring us closer together once the need for social distancing has passed. It would give Americans something to look forward to. Let's make America fun again, and in the meantime save jobs that depend on it.
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Todd G. Buchholz is former White House director of economic policy and author of "New Ideas from Dead Economists." Victoria Buchholz is director of marketing strategy and special projects at Princess Cruises.
[this oped first appeared in the Wall Street Journal]