C4 FRIDAY, MARCH 13, 2020 S LATIMES.COM/BUSINESS
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people in the hard-hit coun-
ties of King (Seattle), Pierce
(Tacoma) and Snohomish.
There’s also the alarming
outbreak of sycophancy
among federal officials such
as Vice President Mike
Pence, Centers for Disease
Control and Prevention
Director Robert Redfield
and Surgeon Gen. Jerome
Adams, who seem to spend
more time telling us what a
great leader Trump is than
hunkering down and fixing
what’s broken about the
nationwide response to a
crisis.
But never mind. Here are
the do’s and don’ts, and
some hows, for the crisis.
Pay for sick leave
As we’ve reported, the
social Darwinism of the
American employment
environment leaves millions
of workers unable or unwill-
ing to stay home from work
even when they’re sick. This
undermines calls for “social
distancing” and promotes
the spread of the novel
coronavirus that causes the
disease COVID-19.
About a quarter of all
American workers have no
access to sick leave, accord-
ing to the Bureau of Labor
Statistics. In service indus-
tries — where employees
must report to their places
of employment to work and
are most likely to come in
contact with the public —
more than half have no sick
leave.
There are two answers to
this problem. In the near
term, the government must
pay to cover people staying
home. In the longer term,
it’s long past time for a
federal mandate that all
workers be entitled to ac-
crue sick leave.
Both are addressed in
the crisis measure put forth
Wednesday by House
Democrats. The bill would
pay for two-thirds of a work-
er’s average monthly earn-
ings, up to a cap of $4,000,
covering up to three months
in which the worker had to
stay home for 14 days or
more. The program would
be administered through
Social Security, but it would
be funded separately, with
no call on Social Security’s
existing revenue or its trust
funds.
The program would
apply to workers who are
diagnosed with COVID-19,
quarantined or self-quaran-
tined on the advice of a
healthcare provider, em-
ployer or government offi-
cial, or caring for others who
have the disease or are
under quarantine.
The House bill also
would require all employers
to allow their workers to
accrue up to seven days’ sick
leave over time, based on
their hours worked, plus 14
days during public health
emergencies, including the
current one. The cost of the
14-day emergency sick leave
would be reimbursed for
small businesses with fewer
than 50 workers. But that
provision is opposed by
Republicans, and report-
edly may be dropped so the
emergency bill can be
passed with bipartisan
support this week.Expand food stamp and
low-income nutrition
programs
Amazingly, the U.S.
Department of Agriculture
says it’s going ahead with a
rule change to tighten eligi-
bility for food stamps for
adults without dependents.
The rule, which goes into
effect April 1, is expected to
drive 700,000 recipients off
the program. The USDA is
also going ahead with two
other rules expected to end
benefits for an additional
3 million people.
In congressional testi-
mony this week, Agriculture
Secretary Sonny Perdue
evinced little sympathy for
the targeted population. He
said the rules were designed
to encourage people to go
look for employment. Work
rules already exist for adult,
childless recipients, but the
April 1 change would make
them more stringent.
The House bill would put
the kibosh on these punitive
measures, suspending all
work requirements for food
stamps during the current
emergency and giving states
more flexibility to provide
nutrition help to families.
The bill would also loos-
en regulations governing
the delivery of subsidized or
free breakfasts and lunches
to children already receiving
them at school. If schools
are closed, authorities
would be permitted to deliv-
er meals at other public
locations without facing a
mountain of paperwork to
do so.
The bill also provides
$1 billion for food banks and
food programs serving
low-income pregnant wom-
en or households with
young children.Cover Medicaid costs
100%, and declare an
emergency already
Some states such as
Washington are already
facing spending constraints
in dealing with the co-
ronavirus. The drain on
resources is bound to be-
come more severe as the
contagion spreads.
Trump should make
clear that coronavirus costs
incurred by Medicaid, in-
cluding not only testing but
treatment of infected enroll-
ees, will be covered 100% by
the federal government.
That may require congres-
sional approval, but itshould be on Trump’s
agenda. Currently, the
federal match of traditional
Medicaid expenditures is
50% to 75%, with more going
to poorer states. Medicaid
expansion costs are 90%
covered.
An emergency declara-
tion under the federal
Stafford Act would further
free up federal funding for
states. Washington’s Gov.
Inslee has been especially
anxious for the declaration
to be signed, because it
would give his state more
flexibility to deploy health-
care resources and bring the
Federal Emergency Man-
agement Agency in to assist
with logistics and funding.
White House officials say
Trump is considering issu-
ing the declaration, but thus
far he reportedly has re-
sisted because it would
contradict his own efforts to
minimize the crisis.Issue a stimulus check for
middle- and low-income
households
The economic impact of
the virus isn’t yet clear, but
it’s a fair bet that it will
provoke a slowdown in the
economy. Tax cuts won’t
help, in part because they’re
generally delivered through
paychecks and therefore
have a diluted effect week by
week.
Economists found that
in recent slumps, the big-
gest bang for the buck came
from anti-recession pro-
grams that delivered sizable
checks directly to house-
holds. The most recent case
involved one-time govern-
ment checks of up to $1,200
for married couples, includ-
ing $300 per child in 2008.
The payments were phased
out starting with household
income of $150,000 (for cou-
ples), but even low-income
households that owed no
federal tax were eligible for
at least $300, provided they
earned at least $3,000 dur-
ing the year.Give small businesses a
credit guarantee
The lesson of the last
recession is that small busi-
nesses suffer in economic
slumps from a contraction
in their access to credit. The
Small Business Adminis-
tration played a modest role
at that time in protecting
these drivers of employ-
ment by issuing loan guar-
antees covering 50% to 85%
of principal.
SBA loans came to only
about 1.3% of total small-
business loans and 4.1% of
total loan amounts. Since
then, however, the SBA has
been endowed with a $30-
billion lending fund to en-
courage small community
banks to lend to small busi-
nesses and increased loan
limits, from $2 million to
$5 million, for two SBA
programs. The government
should stand ready to in-
crease the funding and
liberalize the programs.
Small businesses will need
them.
Trump, to his credit,
announced Wednesday
night that the SBA would
open a lending window to
small businesses in affected
areas, and called on Con-
gress to pump $50 billion
into the agency. A couple of
things notto do:Don’t bail out the cruise
ship lines
Cruise ships, as well as
hotel companies and air-lines, have been mentioned
as possible recipients of
government bailouts
through tax cuts or other
help.
One can hardly imagine
a less deserving industry.
Cruise ship companies
such as Carnival Corp. and
Royal Caribbean have been
swimming in profits in
recent years. Carnival re-
corded net income of
$3.1 billion on revenue of
$20.8 billion in 2019, a healthy
profit margin of 15%. On this
profit, it paid taxes of
$71 million, or a mere 2.9%.
What did Carnival do
with its take? It repur-
chased $1 billion of its
shares and raised its share-
holder dividends.
The cruise lines dodge
strict regulations by regis-
tering their vessels under
“flags of convenience” such
as Panama and the Baha-
mas, which aren’t inclined
to ride them too strictly. A
Caribbean enforcement
official lamented last year
that some countries, such as
the Bahamas, had only one
inspector for all the cruise
ships docking at their
ports.
Tighter regulations
might not have averted the
notable spread of co-
ronavirus infections aboard
cruise ships in recent weeks,
but it’s proper to observe
that these aren’t the first
cases of mass illness. Royal
Caribbean’s Explorer of the
Seas set a record in 2014 for
the largest mass illness on
any cruise ship in two dec-
ades, according to the CDC
— 700 passengers and crew
sickened by a virus.
Airlines are likely to be
the companies most heavily
affected by the crisis, but
whether they need bailouts
is also questionable. Since
9/1 1 and after a wave of merg-
ers, big legacy airlines have
been solidly profitable.
Delta Air Lines booked
more than $16 billion in
profits in 2016-19, American
Airlines more than $7 billion
and United more than
$9 billion in the same time
span. They’ll take a hit, but
once travel recovers so will
they.Keep your hands off the
payroll tax
In his Wednesday TV
appearance, Trump once
again saddled up his hobby
horse of a payroll tax cut. As
we reported, this would
undermine Social Security
and Medicare, which are
dependent on the payroll
tax, without delivering
significant help to workers.
Not only would the tax
cut be regressive, mostly
helping better-paid work-
ers, it would do nothing for
those thrown out of work by
the crisis or its attendant
economic slump; those
who don’t receive pay-
checks don’t pay the tax
anyway.
Unlinking Social Securi-
ty from its No. 1 revenue
stream would weaken its
finances and leave it vulner-
able to political tampering,
always a danger for pro-
grams serving the working
class.
In promoting this idea,
Trump has once again
resorted to outright lying.
Referring to the opposition
to the payroll tax cut voiced
by House Speaker Nancy
Pelosi (D-San Francisco),
he tweeted that she “all of a
sudden doesn’t like the
payroll tax cut, but when
Obama proposed it she
thought it was a brilliant
thing.”
This is pure revisionist
history. The payroll tax cut
was shoved down Obama’s
throat in 2011 by a Republi-
can House majority that
flatly refused to deliver a
working-class stimulus any
other way. (The Democrats
still controlled the Senate
but had lost their filibuster-
proof majority.)
The Obama White House
found the idea unpalatable,
but had no choice. “The
Obama administration was
desperate to pass any stim-
ulus at all,” recalls Nancy
Altman, president of Social
Security Works and a long-
term Social Security advo-
cate. “They gave in to Re-
publican demands and
pushed congressional
Democrats to back the
reduction in payroll contrib-
utions.”
It was a bad idea then,
and a bad idea now. If
Trump wants to help work-
ing families, he should deliv-
er the assistance directly,
and in bulk.Keep up to date with
Michael Hiltzik. Follow
@hiltzikm on Twitter,
see his Facebook page or
email michael.hiltzik
@latimes.com.Here’s how Trump can fight the virus
ONE THING the president could do is make clear that coronavirus costs incurred by Medicaid, including not
only testing but treatment of infected enrollees, will be covered 100% by the federal government.Bill ClarkCQ-Roll CallA HOUSE bill would suspend all work requirements
for food stamps during the current emergency.Scott HeinsGetty Images[Hiltzik, from C1]