How to Save a Half-Open Economy

Even in states where the virus is less prevalent, some businesses, like indoor bars, movie theaters and concert venues, may not be able to open safely for a long time. Others, like restaurants, will have to operate at a capacity unlikely to turn a profit.

That means that without government help, thousands of businesses are likely to fail in the months ahead. That could have devastating economic consequences, turning temporary furloughs into permanent job losses and slowing the eventual recovery.

Lost jobs “are going to come back very slowly — it’s going to be months and months of hard work,” said Betsey Stevenson, a University of Michigan economist who was on President Barack Obama’s Council of Economic Advisers. “The question is, do we have 30 million people who are going to go through that process, or do we have five million? We don’t have the answer to that yet, but every month it goes on, that number grows larger.”

Experts say Congress needs a new approach to save businesses.

The Economic Innovation Group, a Washington think tank focused on entrepreneurship, has proposed giving interest-free loans to small employers. Rather than providing a temporary injection of cash, they argued, a loan program could let companies invest in improving their long-term prospects. A retailer could buy a building it had been renting, for example, bringing down monthly costs. Or a restaurant could add outdoor space, reducing dependence on indoor dining.

Mr. Wilcox of the Peterson Institute has recommended a more expansive — and expensive — approach, essentially having the government fill in the revenue shortfall created by the pandemic through direct grants to businesses. The government has effectively forced business owners to take a hit, he said, so it should help them survive.

“Start from a social agreement that the government is going to take onto its shoulders the cost of sustaining businesses through the period of intense public health crisis,” he said.