In the halcyon days before the COVID-19 virus, the United States government was nearly $25 million in debt and was projected to spend $1.1 trillion more this year than it collected in taxes.
Ah, the good ol' days.
Now, in the last two months, Congress has approved about $2.4 trillion in four relief bills to alleviate the collapse of the economy from stay-at-home orders due to the virus. For perspective's sake, $2.4 trillion exceeds the individual economies of Italy, Brazil and Canada. And $240 trillion in $1 bills would stack 140 bills high on the 68.3 miles that comprise Washington, D.C.
But, wait. Speaker of the House Nancy Pelosi and her fellow Democrats want to spend more than the combined total of the first four bills on a fifth bill, a $3 trillion package that would add more more money to projects in the previous bills and tack on additional pet projects.
This from the party that only a few months ago in an irony itself chided President Donald Trump for the increased debt incurred in his first three years in office.
Last week, Federal Reserve Chairman Jerome Powell seemed to indicate that spending more was the preferred remedy with a record number of people out of work.
"Additional support could be costly," he said in an interview with the Peterson Institute's Adam Posen, "but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery.
"It's not the time to prioritize" concerns about fiscal spending, Powell said.
The problem with the Fed chairman's statement is that "additional support" meaning additional debt is what we would suggest is long-term economic damage.
Even without a fifth virus bill, the U.S. would be looking at a $3.5-$3.7 trillion increase in the debt in 2020, which, as a percentage of gross domestic product (the sum of all goods and services produced in the U.S.), would push it to levels not seen since World War II.
Pro-additional stimulus advocates argue that the debt be darned that putting even more money in the hands of Americans and certain businesses now is what's more important.
The Great Recession offered a few lessons there. During that time, only a dozen years ago, even with a financial stimulus, the U.S. lost around $10 trillion from savings drawdowns and the falling values of homes and investments. And it hit people in lower socio-economic groups harder because they couldn't or didn't save as much and had to deplete their reserves.
Despite the end of the recession in 2009, people stayed out of the workforce, the labor market lagged and the economy grew slowly. Not until Trump was elected and put an emphasis on jobs did people return to the workforce in droves. Indeed, prior to the virus, the U.S. could cite record numbers in the workforce. If former Vice President Joe Biden is elected president in November, the country would likely to return to what former President Barack Obama said would be the "new normal" of slow growth.
Without a strong recovery, many small businesses won't make it, and those who do especially those with government-support packages structured as loans will have to restrict spending and hiring to concentrate on repayment. This also is likely to redound on the real estate market, which again would see little growth.
Continued financial packages also could change attitudes. Instead of seeing loans and bailouts as a last resort, Americans would see the federal trough as the first place to turn after the virus is fully under control. Such attitudes, with no thoughts toward the long-term financial future of one's children or grandchildren, would likely lessen the incentive to save or even dampen the desire to work.
For others, perhaps for those who have kept their jobs during the virus but who have become cautious about what they do have, it would cause them to reduce spending in fear of a prolonged recession or the next virus.
The uncertainty about the staying power of the virus and the length of time until a vaccine is perfected are the great variables. If we knew all businesses could reopen on June 1 and stay reopened, the limited-duration financial packages with low rates of borrowing make some sense. But the country's economy and its future sustainability cannot stomach four (or five) recovery packages every few months until the last American feels safe enough to return to work. Such is the key to financial ruin.
Read the original here:
Cooper: Higher debt a foe now and an even bigger one in the future - Chattanooga Times Free Press
- Modern Survival Manual Surviving the Economic Collapse - December 18th, 2016 [December 18th, 2016]
- What Explains the Collapse of the USSR? - E-International ... - January 13th, 2017 [January 13th, 2017]
- Where Should the External Priorities of the Visegrd Lie? - Visegrad Insight - February 7th, 2017 [February 7th, 2017]
- PH gov't, communists urged to pursue talks even without ceasefire - Inquirer.net - February 7th, 2017 [February 7th, 2017]
- New Texts Out Now: Helga Tawil-Souri and Dina Matar, eds. Gaza as Metaphor - Jadaliyya - February 7th, 2017 [February 7th, 2017]
- Kazakhstan Going Into Soft Power Overdrive - EurasiaNet - February 7th, 2017 [February 7th, 2017]
- Economic Crash 2017 and How the Next Financial Crisis Could Be Worse Than 2008 - Lombardi Letter - February 7th, 2017 [February 7th, 2017]
- Mass incarceration and the perfect socio-economic storm - OUPblog (blog) - February 7th, 2017 [February 7th, 2017]
- Give peace a chance, not 'all-out' war, say solons, Leftist Cabinet members - InterAksyon - February 7th, 2017 [February 7th, 2017]
- Celebrating Black History: Detroit Techno icons - Mixmag - February 7th, 2017 [February 7th, 2017]
- Why 'financial inclusion' may be the wrong terminology - NewsDay - February 8th, 2017 [February 8th, 2017]
- 'Conspiracy' in peace talks collapse seen - Inquirer.net - February 8th, 2017 [February 8th, 2017]
- 2017 and beyond: Future unpredictable - Zimbabwe Independent - February 10th, 2017 [February 10th, 2017]
- Zuma's interventions will deal with white monopoly capital - Office of ANC Chief Whip - Politicsweb - February 12th, 2017 [February 12th, 2017]
- Lobster crash erodes West Coast way of life - GroundUp - February 13th, 2017 [February 13th, 2017]
- Hopes remain for revival of peace talks - Manila Bulletin - February 13th, 2017 [February 13th, 2017]
- Lobster crash erodes West Coast way of life - News24 - February 15th, 2017 [February 15th, 2017]
- Financial Black Swans Could Rock 2017 Stock Market Forecast - Lombardi Letter - February 16th, 2017 [February 16th, 2017]
- Zimbabwe: A Crisis Unfolding - Zimbabwe | ReliefWeb - ReliefWeb - February 16th, 2017 [February 16th, 2017]
- 'Bumper harvest to stop aid politicisation' - Nehanda Radio - February 16th, 2017 [February 16th, 2017]
- Zimbabwe: A Crisis Unfolding - New Zimbabwe.com - New Zimbabwe.com - February 17th, 2017 [February 17th, 2017]
- Who We Play For saving lives through athlete heart screenings - Tallahassee.com - February 18th, 2017 [February 18th, 2017]
- Terrorist resurgence - Daily Times - February 18th, 2017 [February 18th, 2017]
- Seeing Sabon Tasha in new light - Daily Trust - February 20th, 2017 [February 20th, 2017]
- Facing tragedy with courage - The News International - February 28th, 2017 [February 28th, 2017]
- Socio-Economic Collapse | Prometheism.net - Part 3 - March 1st, 2017 [March 1st, 2017]
- Rethinking Nonviolent Resistance In The Face Of Right-Wing ... - Huffington Post - March 3rd, 2017 [March 3rd, 2017]
- Vladimir Putin Isn't a Supervillain - Foreign Policy (blog) - March 3rd, 2017 [March 3rd, 2017]
- First ceiling collapse at Charlotte Maxeke in January already, claim staff - News24 - March 3rd, 2017 [March 3rd, 2017]
- Rethinking Nonviolent Resistance in the Face of Right-Wing Populism - The Wire - March 4th, 2017 [March 4th, 2017]
- Historical Materialism Versus Historical Conceptualism - Dissident Voice - March 6th, 2017 [March 6th, 2017]
- World Bank, Sokoto Govt commit N9b for rebuilding of collapsed ... - THISDAY Newspapers - March 8th, 2017 [March 8th, 2017]
- Nigeria: Sokoto Govt and World Bank pledges $28.8million for rehabilitation of collapsed Dam - Ecofin Agency: Economic information from Africa - March 9th, 2017 [March 9th, 2017]
- Time for a rebirth of Zimbabwean politics - Bulawayo24 News (press release) (blog) - April 8th, 2017 [April 8th, 2017]
- This Brexit battle is cold, hard capitalism vs. civilised, co-operative order - The New European - April 8th, 2017 [April 8th, 2017]
- Swet Shop Boys: Why white skin is no longer a safety net - Deutsche Welle - June 6th, 2017 [June 6th, 2017]
- Impact of Prez Akufo-Addo's W/A tour on economy - Graphic Online - June 6th, 2017 [June 6th, 2017]
- Important meeting for our nation's future | Deniliquin Pastoral Times - Deniliquin Pastoral Times (registration) (blog) - June 8th, 2017 [June 8th, 2017]
- Creating a Better Economy with Data Science - Stanford Social Innovation Review (subscription) - June 8th, 2017 [June 8th, 2017]
- TB Joshua : 'Investigate Fani-Kayode's claims on Synagogue building collapse' - Analyst - Pulse Nigeria - June 11th, 2017 [June 11th, 2017]
- Integration and security: Estonia's Russian-speaking minority - New Eastern Europe - June 12th, 2017 [June 12th, 2017]
- Late Matanzima celebrated as a visionary- Education, development described as his legacy - Daily dispatch - June 16th, 2017 [June 16th, 2017]
- Prof. Guy Standing: Every country can afford Universal Basic Income - EURACTIV - June 16th, 2017 [June 16th, 2017]
- Climate, social equality also behind collapse of govt formation talks: Green leader - NL Times - June 17th, 2017 [June 17th, 2017]
- Country needs USDA Rural Development - Iowa Farmer Today - June 17th, 2017 [June 17th, 2017]
- The downgrade and retirement funds: what does it mean? - African Independent - June 18th, 2017 [June 18th, 2017]
- National priorities defy convention in St Lucia - St. Lucia Times News - St. Lucia Times Online News (press release) - June 20th, 2017 [June 20th, 2017]
- Use of harmful chemicals for fish preservation harmful to consumers - Ghana News Agency - June 20th, 2017 [June 20th, 2017]
- Use of harmful chemicals for fish preservation harmful to consumers ... - BusinessGhana - June 22nd, 2017 [June 22nd, 2017]
- Op-Ed: South Africa's central bank row points to dangerous levels of intolerance - CNBCAfrica.com - June 22nd, 2017 [June 22nd, 2017]
- Collapsed bridge cut off over 5000 residents in llorin - National Accord - June 22nd, 2017 [June 22nd, 2017]
- The Wonderful World of Binary Categorizations - Geopoliticalmonitor.com - June 23rd, 2017 [June 23rd, 2017]
- Dangerous levels of intolerance exposed in Reserve Bank row - Independent Online - June 23rd, 2017 [June 23rd, 2017]
- South Africa's central bank row points to dangerous levels of intolerance - eNCA - June 24th, 2017 [June 24th, 2017]
- Reserve Bank battle points to dangerous levels of intolerance - Mail & Guardian - June 26th, 2017 [June 26th, 2017]
- There is a strong economic case to preserve future of traditional fishing - Alfred Sant - Malta Independent Online - June 27th, 2017 [June 27th, 2017]
- Empowering Women in Developing Economies - HuffPost - June 30th, 2017 [June 30th, 2017]
- Is this the end of Daesh? - Arab News - July 2nd, 2017 [July 2nd, 2017]
- Nkomo could have saved Zim: Zapu - NewsDay - July 3rd, 2017 [July 3rd, 2017]
- Govt completes inspection 1.6 lakh bridges, plans new tech - Zee News - July 3rd, 2017 [July 3rd, 2017]
- Centre claims to have completed safety audit of 1.6 lakh bridges; to work on 147 dilapidated structures - Firstpost - July 3rd, 2017 [July 3rd, 2017]
- Collapse of UT and Capital banks A case of a collective national failure (Article) - Citifmonline - August 24th, 2017 [August 24th, 2017]
- UNZA vice-chancellor lays down marker - Zambia Daily Mail - August 24th, 2017 [August 24th, 2017]
- What Makes a Terrorist? - The New York Review of Books - August 24th, 2017 [August 24th, 2017]
- How the Collapse of Venezuela Really Happened - The ... - February 18th, 2018 [February 18th, 2018]
- Socio-Economic Collapse in the Congo: Causes and Solutions - October 3rd, 2018 [October 3rd, 2018]
- Sick Bees Part 18F8: Colony Collapse Revisited ... - April 25th, 2019 [April 25th, 2019]
- Classic Maya collapse - Wikipedia - April 25th, 2019 [April 25th, 2019]
- Great Civilizations Aren't Murdered, They Commit Suicide ... - May 5th, 2019 [May 5th, 2019]
- Dollar Collapse Predictions: What Will Happen When It Happens? - May 5th, 2019 [May 5th, 2019]
- 10 Steps to Prepare for Americas Economic Collapse - May 31st, 2019 [May 31st, 2019]
- Do you really think NDC faithful would ever condemn a coup dtat? - Modern Ghana - October 1st, 2019 [October 1st, 2019]
- Economic and Institutional Restructuring for the Next Nigeria - Soludo - Proshare Nigeria Limited - October 1st, 2019 [October 1st, 2019]
- ET CEO Roundtable: Build a wealthier nation with state help, industry execution - Economic Times - October 1st, 2019 [October 1st, 2019]
- Ghanaians could well face the wrath of God should they betray the Free SHS provider! - Modern Ghana - October 1st, 2019 [October 1st, 2019]
- The Return to Power of Local Hotel Brands? | By Robert Govers - Hospitality Net - October 1st, 2019 [October 1st, 2019]
- Brexit: Systemic Risk and a Warning - Resilience - October 1st, 2019 [October 1st, 2019]
- Why is Poland's Law and Justice party still so popular? - EUROPP - European Politics and Policy - October 1st, 2019 [October 1st, 2019]
- Presidential elections in Tunisia: who are the globalists betting on? - United World International - October 16th, 2019 [October 16th, 2019]
- Kevin Taylor, youre a reporter, not an opinionist; youre guided by the rule of impartiality! - Modern Ghana - October 16th, 2019 [October 16th, 2019]