Mo' Money, Mo' Money, Mo' Money
Those of a certain age get the reference in the title. It was from a skit from that groundbreaking show, “In Living Color”. If you have never seen it, go on YouTube and watch some of the videos. They are hysterical.
Anyway, we are in a period where the Federal government feels obliged to inject the economy with tons of cash to make sure we will be still afloat after the pandemic has ebbed and we are in full recovery mode, emotionally and financially.
I have to say, even though I am a fiscal conservative, I felt that the economy was severely in need of government intervention during the first six months of this outbreak. I even felt that the last bill in December would, net net, be a positive.
Even with the billions of BS additions that the Democrats so skillfully added, the last stimulus package had enough in it to get the economy over the hump of elevated infections and grease the wheels of commerce as people went back to work full time. Savings rates increased, debt payments increased and household balance of payments decreased slightly. Considering the damage this virus has caused, this is a fairly substantial accomplishment and Federal aid, either directly or indirectly, was responsible.
The passing of this last bill has got me more than a little worried. I don’t think the need for such a large spending bill is actually there.
Let’s start with the states first. With the loss of tax revenue, increased cost of dealing with the complexities of this pandemic, it’s clear that many states will have some substantial budget shortfalls and I am not against the Federal Government stepping in and helping to some extent but there should some very specific limits as to where this money goes. Unfunded pension liabilities? There are more than a few states that prior to this pandemic, were dealing with major obligation issues and this “Free Money” should not be used to close those gaps. States like New York, Illinois, California, all have substantial problems with their state funded pensions and they should have taken responsibility long ago for correcting those problems. Instead, they kicked the can down the road and now Uncle Sam is knocking at the door with big checks. Seems like those billions could be better used but, dare I say it, a Democratic Congress is handing out large checks to Democratic Governors, how well do you think that will turn out?
Now, lets take a quick look at individual payments. Before I ramble on about this, I have always felt that individual checks, while it’s nice to receive money in the mail for nothing, just don’t have the impact that we think they do. In the beginning, I am sure it closed a small gap for a very short time but at the end of the day, was the impact as great as the media attention it got? I don’t think so. The point I believe, was to tell the American people, “Hey we have your back”, without actually truly having their backs. Another $1400 check (or whatever it ends up being) is needed less and less as more people are going back to work and really, will it actually jump start anything? Highly doubt it. The enhanced unemployment payments are another feature that has some controversy attached. Here is where I may differ from others in that I really don’t think that people aren’t going back to work because their combined pandemic relief payments and state unemployment benefits are equal to or more than they were making while they were employed. Maybe I am naive but I do believe most people would rather work and receive a decent wage than stay at home and let the government subsidize 100% of their living expenses. Given the choice between working and not working, most people would rather be productive. You may hate your job, but it is YOUR job and there is some satisfaction that comes with that. Granted, there will always be some element of society that believes the government needs to help them because they believe they can’t help themselves. Unfortunately, that segment of the population is growing and there are outspoken members of Congress that are more than happy to help continue that cycle of government dependence.
Without diving too deeply into the PPP and other affiliated relief packages for small businesses, I do think these were a success. While big business gets all the headlines, it is actually that small businesses that run this country and they are the ones that struggled early and continue to struggle now. When the PPP has been effective, it has been a Godsend to struggling small businesses and the continuation of these features has, without a doubt, prevented a much larger catastrophe. I get it. Its not perfect and the complaints are many, but, considering the scale, it has been a success.
The issue now is restrictions by local and state government agencies that prevent many of these small businesses from reopening at full scale and getting back to the business of business. Some may never reopen but as we have seen in past business cycles, new businesses will open and take their place. When old ideas fail, new ideas create new industries and new job oppurtunities. It’s known as Capitalism.