Uncertainty and unemployment are crushing our economy and working people’s sprits right now.
The depth of government distrust, economic inequality, and health disparities exposed by the current crisis compels us to act immediately and decisively. Our government and its institutions are broken and we must make significant changes. More importantly, the American people must have faith that it can work for us and that it will be there in our time of greatest need.
Over the past 35 years, I have gotten things done by bringing people together to help address Arizona’s most pressing problems. We must put principles over politics and must change the way government functions, to ensure that it works for us and not against us. We must pursue policies that bring our economy back, strengthen our healthcare system, and protect seniors, families, and our most vulnerable populations.
The Trump tax cuts of 2017 have proven to only benefit big corporations and the wealthy. We must stop this administration’s erosion of the institutions we depend on to support us during the good times and the bad. This requires real change and leadership, as the last several months has exposed the significant structural weakness of our economy. Long before COVID-19, we could see the social and economic inequalities driven deeper by the policies of the current administration. Former World Bank chief economist Joseph Stiglitz recently cited how the COVID-19 virus has exposed much of the socioeconomic inequalities that already existed as it has become clear that many of the essential workers that our economy depends on are those that are not paid or treated well (1).
Today, we find ourselves worrying that our children cannot afford to rent a decent home much less buy one. Our economy seems better at creating financial shelters for billionaires than shelters for the homeless. Our international supply lines are too fragile and offshore sources for critical goods are too distant. We are facing shortages like never before. We need leadership that is not afraid to challenge the status quo and the norms of our economy, and to chart a new way forward to reverse the permanent tax cuts given to corporations and to make the tax cuts given to individuals permanent instead of temporary. These economic goals are within our reach. It is not rocket science. We need to understand that it is about how the government is supposed to work for us and not against us. We can have both successful companies and prosperous people but we will have to work at it.
The interrelationships between having a good job, career, or a successful small business is foundational to an economy. We must be intentional in recasting a better tomorrow through lessons learned today.
The Gentles Economic Agenda will put our nation on the path to a better economic future by:
- Improving family financial stability and economics
- Protecting seniors and retirement incomes
- Strengthening wage and income growth for our economy’s frontline and essential workers
- Developing a more vibrant small business and entrepreneurial ecosystem
- Investing in economic infrastructures that drive job creation and economic revitalization
- Improve family financial stability and economics
- Make the temporary relief provisions in the 2017 tax cut for individuals and families permanent. Many of the tax benefits set up to help individuals and families will expire in 2025. Child tax credit, the standard deduction, lowering of personal tax rates, and mortgage interest deductions are just a few.
- Make health insurance portable and not tied to one’s job. Portability is a necessity as many workers will have to change jobs and industries as the economy recovers. This should include guaranteed coverage of pre-existing conditions. This COVID-19 pandemic has demonstrated just how fragile our health care delivery system has become.
- Provide homeowners with protections including mortgage forbearances without fear of foreclosure or large balloon payments during times of national or local disaster.
- Ease credit reporting so that the loss of a job and a missed payment does not lock people out of the economic recovery due to a poor credit rating.
- Provide a rental expense tax credit that goes towards homeownership if a home is purchased within a five year period. Though no federal rental tax credit is in place, there are several states that have small renter’s tax credits, including some that are refundable (2).
- Provide a tax credit for time out of work or loss of a job. This could be expanded to include, cover, or provide a guaranteed minimum income (GMI) which would provide individuals an income sufficient to live on, provided they meet certain conditions.
- Reduce or waive capital gains taxes for individuals up to a specified cap or ceiling – up to $1,000,000 for a period of 1-2 years. This will help individuals and small business owners build up savings and help capital reserves to help mitigate future economic downturns.
- Following the Peace Corps or Americorp model, use community service work to help reduce student loan debt. At the minimum, let’s provide relief in the form of forgivable loans in exchange for community service or a commitment to work in a high need or low-income community. For every year of community service, the student can receive one year of loan forgiveness or waive tuition for the first two years of university work or community college. This is a win-win as graduates need opportunities to thrive without the burden of long-term debt, and our community needs skilled workers in communities that struggle to attract talent.
- Protect seniors and retirement Incomes
- Penalties for not staffing for acuity (level of illness) must be sufficiently severe to deter. Understaffing is the number one cause of death in senior living and rehab facilities. Cutting corners on staffing requirements to meet required care. Funds for the state to do inspections and to hold senior care accountable. Centers say they are staffing at two to three times but not actually doing so to increase reimbursements.
- Provide relief and support to senior citizens during this pandemic and eventual recovery. Senior citizens are the most vulnerable demographic now and are frightened for good cause. Many are struggling to make ends meet.
- Make means-tested social security benefits tax free for the next three years puts more money in senior’s pockets and provides some additional sense of security.
- Eliminate taxes on mandatory IRA withdrawals. Current taxes that are deferred until withdrawal then become taxable income. With the passing of the CARES Act, individuals that are typically required to have a mandatory withdrawal have the option to stop those withdrawals, which will save the individual from a tax perspective (3). My proposal exempts the first $100,000 for the first three years of withdrawals and gives people some relief while keeping more money in their pockets supporting their retirement instead of penalizing their hard work to build the savings for when it’s needed. Withdrawals will be tax-free and not subject to capital gains so long as they are using it for medical or other approved hardship related expenses.
- Currently, social security benefits are federally taxable as income (up to 50% of benefits are taxable if your income is above $25K for an individual and $34K for a married couple. Up to 85% of your benefits are taxable if your income is over $34K as an individual and $44K for a couple). Under my plan, tax-free social security benefits for retirees with income below $100,000 improves well-earned retirement security for seniors.
- Ease and expand rules around 401k hardship withdrawals and repayment to eliminate penalties.
- Strengthen wage and income growth for our economy’s frontline and essential workers
- Support a federal livable wage indexed against the local cost of living and inflation or a federal minimum wage, whichever is greater. Having a livable wage at the federal level will provide a baseline across the country in order to provide stability to Americans (4). This is important. Prior to the pandemic, we were creating plenty of jobs, but low wages often require workers to have more than one job to make ends meet.
- Restore medical equipment and pharmaceutical manufacturing to the US. There is growing support for a federal medical equipment manufacturing initiative in the economic development arena to provide forgivable loans to manufacturers to locate their manufacturing plants in zip codes of greatest economic need and to offer employment to underemployed or unemployed workers to produce in-demand medical equipment such as PPE.
- Encourage students and retrain professionals into health care and other front-line fields by providing scholarships and immediate job placement with incentives to work in the hardest-hit areas upon completion of training and coursework.
- Develop a more vibrant small business and entrepreneurial ecosystem
- Implement a tiered-funding approach to all future stimulus support to ensure small businesses get their fair share of funding by providing 75% of all funding to companies with revenues of $1 million or less, and 25% to small businesses with revenues of more than $1 million up to $5M cap.
- Require greater transparency and accountability for bank credit and lending practices to underserved communities.
- Make certain small business loans forgivable for keeping people employed for more than six months.
- Invest in entrepreneurial and social enterprise development programs that encourage new business formation to address local market gaps.
- Invest in economic infrastructures that drive job creation and economic revitalization
- Increase investment in local community development agencies including Community Development Finance Institutions (CDFI) whose mission is to invest in distressed communities.
- Eliminate matching requirements for grant funding for economic development programs under the disaster assistance program. This would provide local communities more flexibility in channeling funding to locally based programs to create small business jobs and employment.
- Reform Opportunity Zone policies and close loopholes to increase private investment to truly direct capital investments into economically disadvantaged or underinvested communities.
- Invest in economic development infrastructure including universal and affordable access to high-speed internet and broadband. These services will be essential as we rethink how we deliver services and keep people connected living in underserved communities.
The importance of trust in our government institutions is more important now more than ever. Countries around the world have done a better job of managing economic downturns in part because their people have faith in their institutions, their leadership, and each other. Without trust, you can’t have family economics that is sustainable, retirement benefits that deliver the outcomes we’ve worked hard for, salaries you can live on, water supplies that are clean, medicines that are safe, and hospitals that have sufficient capacity to care for us when needed. Our society is vulnerable and at-risk in many ways. We have to trust each other and we have to trust our government to be there when we need it.
- Pound, J. (2020, April 14). Economist Joseph Stiglitz says coronavirus is ‘exposing’ health inequality in US. NBC News. Retrieved from https://www.cnbc.com/2020/04/14/economist-joseph-stiglitz-says-coronavirus-is-exposing-health-inequality-in-us.html
- Kimberlin, S., Tach, L., & Wimer, C. (2018). A renters tax credit to curtail the affordable housing crisis. RSF: The Russell Sage Foundation Journal of the Social Sciences, 4(2), 131–160. doi: 10.7758/rsf.2018.4.2.07
- Ebeling, A. (2020). Congress Suspends Required Minimum Distributions For 401(k)s And IRAs For 2020, Opening Window To Tax Savings. Retrieved from https://www.forbes.com/sites/ashleaebeling/2020/03/27/congress-suspends-required-minimum-distributions-for-401ks-and-iras-for-2020-opening-window-to-tax-savings/#6ffef5102cb6
- Ravenscraft, E. (2019, June 5). What a ‘Living Wage’ Actually Means. The New York Times, Retrieved from https://www.nytimes.com/2019/06/05/smarter-living/what-a-living-wage-actually-means.html