Next to defeating the coronavirus pandemic, the highest priority is rescuing our economy from free-fall.
Today, Congress is expected to approve a $2 trillion measure that will extend a lifeline to businesses and employees. And, the President is expected to sign it into law.
It will be the biggest economic initiative since the Great Depression. And, unfortunately, it will probably be the first of several, because the pandemic’s impact on the economy is going to last far longer than we’d hope.
Who’d have thought, in 2016, that the newly-elected President would, within three years, be presiding over a welfare state?
(With all of those newly-printed greenbacks heading out to corporations, small businesses, and working folks, it would be interesting to see how they use them. Since this novel “flood the economy with cash” experiment was so hastily thrown together, there will likely be little follow-through on how effective this bailout really was: transparency is not a hallmark of the Trump Administration.)
Viable businesses need the money to recover, and their employees need to get back to work. If those businesses can stay afloat, and the money sent directly to employees can help them pay the bills until their employers call them back to work…that would be a great expenditure of Federal funds.
But, what about businesses that were failing before the crash?
Approximately 30 percent of new businesses fail in their first year, and approximately 50 percent fail within five years. So, this means that quite a few, fairly-new businesses were in deep trouble before the crash. Will they get bail-out funds, even though they are not viable?
There are a number of industries in America that are failing, as a whole, like movie theaters, because they have been replaced by technology. Will they get bail-out funds?
What about multi-national corporations? A good example is the cruise industry. It’s not an American industry and its employees aren’t U.S. citizens. And, it is not a critical industry…like manufacturing. Are they going to get bailed-out, too?
That brings to mind the concept of what is a “critical industry”. Most of our economy nowadays is service oriented, and many of the services we can do without. For example, bars and restaurants. Sure, we enjoy going there, if we can afford to. But, we could live without them…as the recent “shelter-in-place” quarantines are proving.
(Perhaps a few billion dollars should be spent building a couple of large factories in the U.S. that would manufacture personal protection equipment (like face masks, sterile gowns, etc.), ventilators, and hand sanitizer that the government could stockpile for the next pandemic? Then, we wouldn’t be so dependent upon China, Thailand, and Malaysia for supplies when the next virus poop hits the fan!)
I read today that there is special language in the bailout legislation (that Congressmen won’t even see because the bill is being rushed to the President) that will send billions to Boeing Aircraft. Interestingly, Boeing was doing very poorly before the pandemic and market crash because of its problems with the 737 Max aircraft…the one that was involved in several crashes due to instrumentation and flight control issues. Mad management and bad decisions led to the problem. Orders were being canceled right and left. Question: should this company be bailed out of its core problems…none of which has anything to do with the economic crash?
I guess that my concern with the bailout giveaway is that a whole lot of money could be wasted; dollars that may be more effectively used elsewhere.
In the last bailout, in the wake of the 2008 financial meltdown, billions of dollars went to the very financial firms and key players whose greed caused the crisis: they were rewarded for their gross negligence. And, instead of strengthening companies that were suffering, a large amount of the bailout went, instead, to stock buybacks, which only made stockholders richer.
I think the Trump Administration is doing the best it can under these extraordinary circumstances to save the economy from free-fall. Flooding the country with cash right now is probably a good move, as it relates to the working stiffs and their families. Let’s hope they can hang on.
However, there is the opportunity for untold billions of dollars to be wasted as we proceed through this crisis.
I am very uneasy, based upon his track record of dishonesty, corruption, and self-dealing, with carte blanche control of the Nation’s currency printing presses being handed over to Donald Trump.
The image of a “fox in the hen house” comes to mind.