July 8, 2020 Issue, Page 4 of 8

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Page 4 The Elk City News, Elk City, Oklahoma Wednesday, July 8, 2020 Point: ‘Return to work’ bonus a tempting Opinion Page “ElkCituNews solution with significant pitfalls Serving Western Oklahoma since 1901 By Ross Marchand, In- the $600-per-week benefit ployment benefits and merits survive on. Employers could sideSources.com that the Congressional Bud- the careful consideration of Costs at the pharma- still choose to furlough their The U.S. economy is get Office estimates would lawmakers and the White employees, but not without slowly getting its groove result in unemployment ben- House. But, these respective the costs and problems as- back as millions of business- efits being higher than previ- “fixes” fail to address the cy are spiraling, but es are beginning to call back ous take home pay for more underlying problem with the sociated with demoralizing their employees. But for the than 80% of recipients. current unemployment ben- their workforce. price controls are the millions of Americans who continue to receive unem- And, as a result, the CBO. predicts that “the extension efits system. Plenty of busi- nesses are still shuttered and Economic evidence sug- gests that businesses are typ- ployment benefits, it may ac- of the additional $600 per hanging by a thread. Owners wrong solution ically reluctant to cut wages tually pay more to stay away week would probably reduce of businesses such as restau- from work than to go back to employment in the second rants and small retail stores (out of concern for morale) their jobs. half of 2020, and it would can choose to retain their and will dip into savings if By Karen Kerrigan A temporary provision in reduce employment in cal- employees for the time be- need be to maintain current Congress is considering two plans to reduce high drug the Coronavirus Aid, Re- endar year 2021. The effects ing or furlough them. compensation levels. The prices. lief, and Economic Secu- from reduced incentives to The $600-per-week un- Paycheck Protection Pro- rity (CARES) Act states that work would be larger than employment benefit makes gram was designed to help Senators Ron Wyden (D-Ore.) and Chuck Grassley (R- laid-off Americans are eligi- the boost to employment employers far more likely Towa) have spent the past several months promoting their ble fora new, $600-per-week from increased overall de- to proceed with furloughs, maintain worker pay by Prescription Drug Pricing Reduction Act. flat federal benefit on top of mand for goods and servie- awarding businesses forgiv- since that option will have Meanwhile, Sen. Mike Crapo (R-Idaho) is push- existing state benefits. Law- es.” taxpayers paying workers’ able loans based on payroll ing his alternative, the Lower Costs, More Cures Act. makers such as Rep. Kevin Fortunately, lawmakers salaries instead of the com- costs. Lawmakers should Brady, R-Texas, want to fix are hard at work trying to pany footing the bill. That be encouraging employers Both would certainly cut drug prices - but they’d do so in this problem by converting prevent this situation from calculus doesn’t change un- to lean on PPP, rather than vastly different ways. The Wyden-Grassley bill embraces a part of these benefits into playing out. Brady’s Re- der Brady’s or Portman’s heavy-handed government price-setting, which wouldcrip- a “return to work” bonus for opening America by Sup- plans because workers will unloading workers onto the ple biotech businesses and their vendors across the country. recipients re-entering the la- porting Workers and Busi- still be better off temporar- unemployment insurance bor force. While this would nesses Act would let rehired ily taking unemployment system that could be extend- By contrast, Crapo’s bill would ease patients’ pain at be an improvement over the workers keep two weeks’ and then nabbing rehiring ed at the whim of Congress. the pharmacy counter - without hamstringing the private status quo, a true fix would worth of federal unemploy- bonuses a few weeks later. Only Buck and Budd’s pro- sector and innovation. At a time when the world needs tether benefits to previous ment benefits after taking a As is the case now, employ- wages. posal will accomplish this, a new treatment for the coronavirus, his proposal offers job. This $1,200 “hiring bo- ers could have a well-com- the best way forward for drug consumers, innovation, Millions of Americans can nus” would expire on July pensated, temporarily fur- and ultimately save taxpayer return to work, but only with 31, which is also the cur- loughed workforce without dollars over the long term. investment and the business environment in general. the right incentives from rent end-date of the CARES having to pay for the incon- The economy will con- As a 25-year advocate for entrepreneurs and Uncle Sam. Act’s $600 weekly benefit. venience. tinue to limp along for some small businesses, T’ve long been wary of gov- In their rush to pass The White House is report- A far better and more sus- time, but lawmakers can at ernment encroachment on free _ enterprise. through the CARES Act, edly looking at this proposal tainable solution would cap least make things easier for lawmakers failed to consider “very carefully,” along with federal unemployment ben- The Wyden-Grassley proposal offers a massive expan- the consequences of bloated a similar proposal intro- efits to 100% of employees’ workers and struggling busi- sion of government power. The bill would slap de facto and prolonged unemploy- duced by Sen. Rob Portman, previous wages, as proposed nesses by reforming the bro- price controls on drug manufacturers by forcing com- ment benefits. Even in a pan- R-Ohio, that would give by Reps. Ken Buck, R-Co- ken unemployment insur- panies to pay Medicare back for price increases past demic, unemployment ben- Americans headed back to ance system. lo., and Ted Budd, R-N.C. work a $450-per-week tem- Their Getting Americans efits set at a high level will Ross Marchand is the vice the rate of inflation. That could drain the industry of a deter workers from going porary stipend (in addition Back to Work Act would president of policy for the staggering $50 billion over the next decade if it becomes back to their previous jobs. to their wages). make the temporary fed- law, according to a Congressional Budget Office score. That hasn’t stopped House Either of these wage sub- eral unemployment benefit Taxpayers Protection Alli- We've already seen what government price-setting Democrats from proposing sidy proposals is far better less attractive than ordinary ance. He wrote this for In- an eight-month extension of than simply extending unem- wages but still sufficient to sideSources.com. has done to research companies in Europe. Half a cen- tury ago, European labs invented the vast majority of medicines, according to a Milken Institute study. That Counterpoint: If the pandemic remains out is not the case currently. European governments have imposed ever-stricter price controls, which has contrib- uted to the decline of R&D in Europe. The U.S., by con- of control, people need to stay home trast, has largely maintained its market-based approach. By Dean Baker, Inside- the coronavirus in the United is not true of states that im- spread out of control. That very approach is why companies in America are lead- Sources.com States, just as it did in other posed less stringent lock- This suggests that we ing the way on a COVID-19 treatment. Moderna, a small In recent weeks, many countries. It would make downs and reopened busi- would want the continuation members of Congress have sense to reverse this policy nesses earlier. In these states of supplemental benefits to biotech based in Massachusetts, entered human trials for been arguing against extend- and encourage people to go the pandemic is more out of depend on the success in its COVID-19 vaccine only 10 weeks after the virus’s ge- ing the $600 weekly supple- to work, if the pandemic control than ever, controlling the pandemic. In netic code was sequenced, according to a Guardian report. ment to unemployment in- were under control. Unfortu- For example, Texas is states where the pandemic Unfortunately, the Wyden-Grassley blunt force approach surance benefits that was put nately, this is not the case in now seeing more than 6,500 has been largely contained, it would impact more than innovative cures and U.S. drug into the original pandemic large parts of the country. cases a day. At its worst makes sense to at least scale leadership. In 2017 alone, biopharmaceutical firms di- relief package. In the areas that had the point in April or May, it had back the supplement. (There rectly employed over 811,000 people and supported 3.2 Some members of Con- strictest and longest shut- just over 1,600 cases a day. are still economic consider- gress have even argued for downs, like Michigan, Il- Florida now has over 5,000 million additional jobs. The industry could potentially extra payments to encourage linois and New York, the ations, which may warrant cases a day compared to a see large job losses as a result of the legislation. That’s unemployed workers to re- pace of the spread did slow peak in early April of just an expanded benefit.) How- the last thing these firms need when small businesses turn to work. sharply. At its peak in early over 1,200. Arizona has now ever, in states where the pan- are suffering under the economic impacts of COVID-19. These proposals miss the April, Michigan was report- has almost 2,800 cases a day demic is still out of control, A little over half of pharmaceutical firms have fewer than logic that led Congress to ing more than 1,600 new compared to a May peak of the supplements are needed 20 workers, and about four in five have fewer than 100. originally put the supple- cases a day. In recent days, less than 400. Adjusted for more than ever. These businesses would flounder if the Wyden-Grassley ments in place on a near the figure has been just more the relative size of their pop- The positive test rate unanimous vote. The Con- than 200. Illinois hit a peak ulations, the growth of infec- should provide a simple bill became law. The less money companies have to spend gress members who want of almost 3,000 cases a day tions in Arizona today is not measure, which is difficult to on research, the fewer people they can employ. Nearly half to end the supplements and in mid-May. It’s now around much lower than it was in game, of the extent to which of drug firms say that reductions in research and develop- provide return-to-work bo- 500 a day. In early April, New York at its peak in early the pandemic is under con- ment spending could lead to layoffs and facility closures. nuses quite explicitly are ar- New York was seeing over April. trol. For example, we can Fortunately, Crapo has proposed a strong alternative. guing that we want people to 10,000 cases a day. In recent Given that many states say that if the positive rate is The Lower Costs, More Cures Act would cap out-of- return to work. days it has had close to 500 have far higher infection less than 4 percent, we can pocket spending for Medicare beneficiaries at $3,100 a However, the whole point new cases a day. rates now than they did dur- scale back the supplement, year. The bill would also allow patients to pay their drug of the $600 weekly supple- In these and other states, ing the periods of the lock- but otherwise it remains at ment was to make it possible governors made the tough down, how can it make sense its current level. bills in monthly installments, rather than all at once. for people to not work. The call to force businesses to to say that we want people to The basic point here is a This approach would make a big difference to patients idea was to give workers close. These decisions faced go to work now, risking their facing costly copays or other out-of-pocket liabilities. simple one. If the pandemic enough money to keep them opposition both from people own health and the health of is out of control, we should Most importantly, unlike the Wyden-Grassley bill,Crapo’s more or less whole during within the state and from those around them? proposal would not resort to statist price-setting. That’s a period in which they are President Donald Trump. Tf Congress felt that the be encouraging people to good news for American business. Unsurprisingly, the U.S. not getting a paycheck. We But they paid off in sharply spread of the pandemic war- stay home, not to return to Chamber of Commerce has strongly endorsed this bill. wanted people to be able to lower infection rates. ranted people staying home work. stay at home rather than go While these states can when it passed the initial Dean Baker is a macro- High out-of-pocket drug costs are a serious prob- economist and senior econo- to work in order to limit the safely reopen, with rules on pandemic relief package, lem. But mimicking Europe’s failed _ policies spread of the pandemic. face mask wearing, social then it should follow that mist at the Center for Eco- by resorting to price controls is not the answer. This was a sensible policy. distancing and other mea- it still wants people to stay nomic and Policy Research Karen Kerrigan is president and CEO of the Small Busi- The shutdown of most busi- sures to prevent a resurgence home in the areas where the in Washington. He wrote this ness & Entrepreneurship Council. nesses slowed the spread of of the pandemic, the same pandemic is continuing to ‘for InsideSources.com. Have a letter to the editor to share? Send your letter to the editor to [email protected]