Ultimately, as James Carville so clearly said nearly three decades ago, it’s all about the economy. And while the politicians don’t seem to care much about the economy, despite the upcoming election, it has become a total preoccupation with the 12 million people who are still out of work – and their families. That number will be growing as major segments of the economy – from airlines to restaurants to entertainment and small businesses — all shed jobs.
So let’s set politics aside for a moment and look at the economic impact of this latest political standoff. As I write this column, negotiations seem to have come to a halt. Perhaps by the time you read this, sensible minds will have prevailed. But if not, both parties bear the blame for this unconscionable void of concern and action when it comes to getting the economy going.
Yes, growth inspired by confidence requires a vaccine -– but it will come. Until then our leaders need to provide a bridge to a better future. That means economic plans to cover a gap of at least six months before growth resumes at pre-pandemic levels. Agreement on helping the economy is both a philosophical and very practical issue for our leaders.
The Philosophy of Stimulus
On a philosophic level, economists debate whether government help should be used to “bail out” shareholders of airlines, or small businesses struggling to survive. The totally “free-market” view is that the economy depends on “survival of the fittest.” That may be appealing in theory – but our nation is too interdependent to simply let the weakest sink into despair.
A former Fed governor, Neel Kashkari, made the point clearly. Letting the economy fail is like letting a wildfire burn until it burns itself out. It might clear the forest of deadwood, but it will take down living trees and lots of animals with it. That kind of “benign neglect” is possible only if you are insulated from the fires burning around you – as politicians in Washington are.
In fact, the politicians are indeed insulated from the pain of the current economy. They couldn’t agree on any kind of compromise for a new stimulus bill – but two weeks ago they did manage to pass a “continuing resolution” in a bi-partisan effort to keep the government open. That means they continue collecting their salaries, continue receiving the best health insurance, and that their retirement pensions will remain fully funded.
No wonder they can’t get together – both sides – to work on behalf of the ordinary Americans who pay their salaries – even while they don’t do their jobs! Philosophy works well until you’re the one digging into your retirement account or meager savings to pay the mortgage or feed your family or heat your home.
The Economics of Stimulus
There are real economic objections to more stimulus for the economy.. Many voice concern for the national debt. That concern would be more persuasive if we hadn’t added $1 trillion a year to the national debt in the midst of the greatest economic boom on record before the pandemic started. Why draw the line now, when it is really necessary?
A stimulus plan doesn’t have to bail out cities and states that have over-promised and overspent for years, hiding shortfalls in underfunded retirement plans and crumbling infrastructure. Similarly, we know there is technology to sort out and direct individual payments to where they will do the most good. If targeted ads can find you in the Internet, targeted stimulus money can be directed appropriately.
So while the politicians create the headlines, it’s all of us who bear the ultimate responsibility. We elected them – both parties. You can find the email of your elected representative at www.usa.gov/elected-officials. Both parties need to hear from you now. As we vote, they are should pay more attention to our opinions.
The American economy is starting to resemble a Jenga tower, with blocks “hollowed out” as it remains standing but teeters on the verge of collapse. It’s time to stop playing games with our country’s economy. And our citizens’ future. And that’s The Savage Truth.