The lessons learned from the COVID-19 pandemic should be an eye opener for leaders on all levels of government. The challenges faced due to COVID-19 are unique. We cannot rely on our neighboring states for help with immediate resources like we do during a natural disaster such as a tornado or hurricane. While our country has responded to the immediate crisis with a wartime approach of building up supplies to ensure that the darkest days are behind us, the challenges faced during this crisis are unique to other wartime responses faced by our nation. This is because our supply chain is global and much of the vital resources necessary to respond are now almost exclusively produced in China, a country that seeks global leadership on the same level that the United States has exclusively held since the fall of the Soviet Union. The response by the leaders of our country and our state in the months and years ahead are vital to our security, economic growth, and position in the world moving forward.
On the national level, our leaders must address the dangers of vital supply chains being controlled by a China which is building up its military strength during this pandemic. In the months leading up to the pandemic in the United States, physicians and other healthcare professionals in the U.S. were discussing the challenges they were facing to get personal protective equipment in hospitals and health clinics. The question now is whether that shortage was an intentional act by the communist regime to cause a shutdown of the U.S. economy. The Chinese actions of building up military strength in the South China Sea while the United States has been focused on the pandemic is also troubling. In recent weeks, China has defied international rulings in their efforts to control disputed islands and reefs in that international water. In addressing these issues last week, United States Senate Foreign Relations Committee Chairman James Risch stated, “The reports of a Chinese Coast Guard vessel sinking a Vietnamese fishing vessel and China’s other activities on illegally reclaimed features in the South China Sea are deeply concerning.” This week’s decision by Beijing to send an aircraft carrier to patrol the region has added to the tension.
Additionally, while the Chinese government has provided some needed medical equipment to traditional American allies who are facing their own challenges with COVID-19, these actions should not be seen as noble or free from self-interest. Rather, these efforts attempt to undermine the strength of the United States as the world’s true superpower.
The Chinese acts must be met with the appropriate response from Washington. A return of manufacturing to the United States, which President Trump has been advocating for years, is appropriate and needed – particularly in regards to vital and essential medical equipment and medications. Tariffs, sanctions, and incentives to support this effort must be enacted. Additionally, we must confront the actions by the Chinese Navy in the South China Sea. Clearly, the Chinese are engaged in an effort to stop the flow of commerce through international waters. Swift and appropriate signals of military strength are surely needed.
On the state level, Louisiana must do more to prepare for major disasters. Our state’s rainy day fund of approximately $406 million (with a $31 billion budget) before the COVID-19 crisis was woefully insufficient to respond to a disaster. Our state must strive to have an appropriate emergency fund. To meet this future challenge, Louisiana should cap spending at 97% of the Revenue Estimating Conference and mandate that at least one-half of any surplus at the end of the fiscal year be statutorily mandated to be placed into the rainy day fund until that fund reaches 10% of the prior year’s state budget.
Our fiscal challenges are not unique. Wallethub.com recently issued a report entitled “State Economies Most Exposed to Coronavirus” that ranked Louisiana #1; however, every state in the Union will face extreme financial challenges in the months and years ahead. Our state cannot simply assume that the federal government will bail us out. Rather, we must put into place long term solutions for economic recovery and progress.
Louisiana’s fiscal challenge is compounded by a broken tax system and a spending problem that has constrained business growth in the state for generations. If Louisiana has any hope of creating more opportunities, better jobs, and higher wages, now is the time for fundamental changes to our tax code and the state’s addiction to spending. Louisiana must create a tax system which mirrors states which have succeeded in growing their economies organically during the national economic expansion of the past ten years. Louisiana’s economy has been stagnant while others have grown tremendously.
It is time to stop picking political winners and losers in the tax code. Providing substantial incentives offered to certain industries with little accountability for overpromising and underperforming in exchange for a lower tax rate clearly is not working. A bipartisan approach must enact bold changes to our tax code. At a minimum, these changes should include lowering base rates for both businesses and individuals and tax code simplification. The Pelican Institute, a nonpartisan think tank and a leading voice for free markets focused on finding solutions to Louisiana’s challenges, has identified these challenges and provided solutions for implementation in the months ahead as the legislature works towards long term solutions rather than another short-term band-aid that will again leave us searching for inadequate short term solutions to raise revenue during the next crisis.
There are challenging times ahead for individuals, businesses, and government. COVID-19 and its disastrous economic impact mandate non-partisan, difficult decisions be made by our state leaders. By enacting solutions that provide a long-term vision and economic stability, leaders will ensure that the next generation is better positioned for the next inevitable crisis.
Thomas A. Pressly is Louisiana State Representative, District 6.