Gary D. Cohn served in the Trump administration as director of the National Economic Council from 2017-2018. Follow him on Twitter @Gary_D_Cohn. The opinions expressed in this commentary are his own.
The Trump administration and Congress have finalized a deal that will lead to much-needed relief for American workers, small businesses and the industries that need it most as the coronavirus pandemic ravages the global economy. While this piece of legislation isn’t perfect, as no piece of legislation ever is, it does offer a few critical things that I believe our country and our economy need to get back on track.
I’ve said many times that it’s crucial to keep as many people employed as possible during this crisis through an income replacement plan — which this deal does for small businesses around the country. This approach allows workers to continue receiving a paycheck so they can provide for their families, while also preserving their employment so they can go back to work at the same company when the crisis ends.
At the same time, certain sectors have been hurt more than others, some of which have an outsized impact not only on current employment, but on our eventual recovery. The travel and entertainment industry, which was among the first and hardest hit, is a prime example. I could talk about any number of related businesses that should arguably be included in government support — airlines, hotels, restaurants, car services and many other travel-related services. I will focus on the airlines given their significance in how we operate in a modern business environment and the number of jobs they support directly and indirectly. For the industry, the government support is necessary — it will provide $25 billion in loans for passenger airlines, as well as $25 billion in grants specifically designed to pay airline employees through September 2020.For decades, US aviation has been vital to our economy. Not only do the airlines employ 750,000 people directly, the industry also drives $1.7 trillion in US economic activity and supports more than 10 million jobs across the country — from gate agents and baggage handlers at our 5,000 public airports to manufacturers of airplanes and critical components; to government employees overseeing critical aviation infrastructure; to drivers transporting travelers to and from their flights every day. Prior to COVID-19, America’s airlines flew 2.4 million passengers every single day. In a country as vast as ours, air travel is essential for our way of life. And more broadly, it has supported many millions of Americans working in other industries and small businesses, such as hotels, restaurants, taxis and rideshares. Read MoreUS aviation and related businesses are now facing challenges the likes of which have never been seen. To give a sense of how dire the situation is, the Transportation Security Administration has reported that fewer than 180,002 people passed through TSA checkpoints on March 29th, a 2.3 million passenger drop — or 93% decrease — compared to the same day one year ago.Airlines have grounded the majority of their aircraft, deferred nearly all capital spending (including new aircraft deliveries, which has serious knock-on effects for American manufacturing), suspended capital return to shareholders, tapped into existing debt facilities, established new lines of credit whenever possible and reduced executive pay.Even with such significant self-help actions, companies just aren’t able to sustain operations with little to no consumer demand. This robust stimulus package will not only ensure that millions of jobs are maintained by providing immediate necessary funding to keep workers employed, but will also ensure that the services we need now and in the future are readily available.
To be sure, the politics of government relief to private companies are very complicated, and reasonable people can hold very different opinions on the topic. More support across more industries may in fact be needed. But the bottom line here is that we, as a country, want industries like the airlines to survive, and we need there to be competition to protect the best interests of the consumer. The same holds true for all other businesses in the travel-related industry. Immediate government support is not meant to subsidize operations. It is not meant to be a free handout. Rather, it serves as a temporary bridge in response to a public health crisis so that these companies can continue to operate, support their people, protect employment and be ready to serve as the catalyst that our economy will need to lead the recovery. Through this intervention, our government has saved millions of jobs.