Tuesday, May 28, 2024

McHugh David: when the dust settles, COVID-19 will still be here – and it’s economic impact

by BIZ Magazine

To begin, it’s important to cover a few points of interest that are, in many cases, considered opinion – but are definitely the topics of the day.

George Floyd’s death was declared a murder. It was a heinous act, it was avoidable, and it has caused fire to extend through America.

There are simply, as Chris Rock put it, some professions that just cannot have ‘bad apples.’ Society wants to believe there’s some room to play in that regard, but only when it comes to mistakes.

Rock said it best – when comparing bad apples, he said imagine if there was a bad apple as a plane pilot. Sometimes he decides to land on the tarmac… and sometimes he just doesn’t feel like it.

Unfortunately those bad apples exist in law enforcement, all over the country, and most good cops despise them. It puts those who chose to uphold the law – to serve and protect – in danger, for no reason other than they’re unsure how to process their job other than through hate.

From that event, protests have broken out across the country, pushing for equal rights between white people and those with different color skin.

Unfortunately, those protests have sprouted riots – also nationwide – that have resulted in deaths, bodily harm, destroyed property, and decimated communities.

And, just like the officer who decided to kneel on Floyd’s neck until he asphyxiated and died, those who have started and participated in these riots deserve to face justice.

Because the peopel left behind deserve justice.

Because, in the end, we’re all going to fall right back into the same place before this all started – the spread of COVID-19 has slowed, but it’s still here, and it’s economic impact is still relevant.

Last Friday, Congressman Garret Graves addressed the Livingston Parish Chamber of Commerce via a Zoom conference to discuss the Paycheck Protection Program, and potential changes that would help businesses find forgiveness for their loans a little easier to obtain.

The changes made sense, as information rolled out since the program’s inception changed the viewpoint of many lawmakers. Businesses would be given more time to pay off the loan if they couldn’t meet forgiveness requirements. They’d be given more flexibility in its use – while the majority still went to employees – and the burden on how to report for forgiveness was lessened.

Adapting the law made sense, as the PPP program rolled out and the marketplace adjusted to the new loans, lawmakers saw that it would be nearly impossible for most small businesses (especially those taking $350,000 and under) to complete, leaving them wide open to another debt service they could not afford.

But what other choice was there? Go out of business? As the government was offering loans which could be forgiven?

Not on your life.

So Congress adjusted, as both houses seem to be doing on this second, new stimulus proposed by the democrats which would be $3 trillion and has a lot of things that simply are not effective in treating the economy symptoms of COVID-19.

Many points don’t have anything to do with COVID-19 at all.

Some good things, to be sure, albeit too early for a lot of them as much of the first round funding – especially for governments – is still in the ‘deliberation’ phase. This includes much of the $1.8 billion for Louisiana government.

But, as Graves said very definitively, the $3 trillion potential stimulus package “wasn’t going to see the light of day” in the Senate chambers.

Instead, Graves said Republicans on Capitol Hill were discussing the secondary stimulus package to be directed investment in supply chains and industries that would reclaim production from China.

It’s a good move, for two reasons.

First, it takes time to truly see how the markets will rebound on their own as economies begin to reopen. With the exception of places like New Orleans, wherein Mayor Latoya Cantrell has said the city will remain in Phase 1 for the foreseeable future, many places throughout the country are either beginning to open back up, or have moved into the federal guidance of stages three, even four.

During these stages, through at least mid-June, government can see which industries struggle to reopen, where the pressure points are, the pain points, and attack those directly.

Second, it allows more time to gather data on the industries which would directly benefit from direct investment to enter into direct competition with China.

This is no east feat, and much as Graves would like to make it sound. As mentioned in previous columns here in the News, China has worked diligently to integrate themselves into many different American industries.

In some cases, like pharmaceuticals, the People’s Republic basically runs the show.

The first step will be getting people back to work, as a glut of unemployment ravages most state economies – wherein Louisiana places roughly 5th nationwide, at 38%.

Perhaps that direct investment will help spur the driver along, but without people paying the federal income tax and businesses paying their payroll taxes, the federal government is losing out on billions in revenue during this time – and for however long the unemployment surge lasts.

That means that more money will have to be borrowed, as the government was already at the revenue limit, which is a bad sign for Americans. Because who gobbles up most of the American debt service?

Outside of the American people themselves, it’s China.

That’s why holding off as long as possible is so important.

It’s a difficult situation, to be sure, so many need new funds to help get businesses propped, to return to work, just to pay bills – and it’s safe to say that, at some point, that money will come from the federal government.

But it’s important to try and take the time necessary to analyze how both the labor and consumer markets react to the reopenings before the government spends more money.

Because there’s very little room for error this time around, no analysis period while the loans are being rolled out to see what works and what doesn’t.

The money is borrowed, it is given, and then what happens, happens.

In the mean time, the very Chinese in which America is looking to combat will loan more money to the United States, acquire more T-Bills, and consolidate more power.

While some people hate it, and others understand it, the opinions don’t matter – those of us here in Livingston Parish know the score as we are still recovering from the flood.

The game has just started, and it’s far from over.

J. McHugh David is editor and publisher of the Livingston Parish News.

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