Quick Spend Debit Cards: If You Have A Rainy Day Fund, Guess What? It’s raining!

US GDP is 70% consumer driven. Demand collapse is what causes depressions, real depressions.  Goldman Sachs estimates that the U.S. economy could contract by 24% in the second quarter (which starts next week).  Say what you want about Goldman, money is something they’re fairly good at.  That is a Great Depression level of contraction.

If you have any living friends or family who lived through the Great Depression, ask them how that was.  Let’s just say there was no Spring Break for a long time and anyone who had a job was very thankful.  And of course, when you have a Great Depression, demand collapses partly because of high unemployment but also because of fear of buying much of anything at all beyond staples.

So setting aside the lesser of two evils analysis that is beginning to take hold, we need to recognize that if we’re going to have a government stimulus it has to be quick, consumer driven and local.

One way to get after those three goals is if state and local governments distribute debit cards that must be used to buy local and that expire in 30 days.  Austin has a discount card along these lines for local businesses and it’s a short step to an app or physical card charged with cash for spending at specific stores, services, or retail establishments on goods not covered by other programs (like SNAP benefits, Medicaid and unemployment insurance).

Would I like to see a separate music debit card like the French Cartes Musique?  Absolutely, particularly one that could be used to buy directly from local musicians or contribute to GoFundMe accounts set up by artists for a number of charitable purposes.  Roll these cards every 30 days for the next year.  We need to make it very clear to cities that they can’t hide behind the federal government all the time in dealing with this crisis.

Giving everyone a rent holiday may sound good, but let’s face it–the city is the one what shuts down festivals and the city should pay for the harms they caused.  Not push it off onto the next guy, be they tenant or landlord.  It would be better for all concerned if the city got the tenant the means to pay their rent so that the tenant’s City of Austin sanctioned default doesn’t become the landlord’s bankruptcy–or the arbitrage opportunity for real estate developers like Diane Land’s DT Land Group to snap up some bargains out of bankruptcy of small family owned rentals (also known as the First Lady of Austin–see the shenanigans regarding the closing of Blue Star Kitchen).

If the city wants to give tenants a holiday, give them a utilities holiday.  Utilities are a major component of every business’s budget and the city has the power to reduce that bill to zero.  Not deferred, not a loan, but a holiday.  And thank you for your service.

If you want landlords to keep their building’s in good repair and keep rents reasonable, then freeze property tax payments, and roll back property tax rates by at least a year. Where does the money come from?  States and cities have “rainy day” funds. Guess what? It’s raining.

Hardworking people who can’t work hard need cash to spend and be incented to spend it. Right now, before April 1 when the rent, mortgage, credit card defaults will start the cascading effects that lead to what some of the greatest generation called “a real good depression” as in “what this country needs”.

These are simple things that can be done that will socialize the cost of the pandemic and not just simply borrow from Peter to pay Paul.  Let’s come up with these kinds of innovations to give the consumer a government benefit as long as they spend it a certain way within a certain geographic location and time frame.  It does us no good to give someone $100 that they then spend on Amazon in 9 months.  It helps us if they spend their $100 at Maudie’s, Pacha Coffee and People’s Pharmacy this week.  It helps us if they spend their $100 culture card at Waterloo Records, Book People and make a contribution to Health Alliance for Austin Musicians–and they do all their spending tomorrow.  If you get 10,000 or 100,000 people to do that, it helps.  You get the idea.

I’m using Austin examples but it could be Lampasas, Woodstock, New York, or any town USA.

If they register their cards, you could always replenish the money for them.  I think the state could pay for the buy local card and we should be able to shame some companies into supporting the culture card concept.

But we need to pick up the pace.  This needs to happen right now.  I don’t know what the City Council is doing, but they are taking too long to do it.  Pull out the Austin Music Census and start implementing recommendations.  There are a bunch and they cover musicians, studio owners, venues and industry workers.