Friday, June 21, 2024

McHugh David: If only the government had been more fiscally responsible

by BIZ Magazine

Imagine, if you will, a world where the United States of America was not facing the debt precipice.

Go back as far as you like, it matters, little – just take a second to believe that, at some point within the past 20 years the three branches of government had come together and put together a budget that produced surplus amounts and not added to the ever-mounting debt.

Now, some might say that debt simply doesn’t matter. The government will continue to borrow and borrow because GDP will grow enough to make up for the difference.

First, it’s important to note that the borrowing rate for the country has increased, to such a point where GDP was – before COVID-19 – already very near not making up for that difference. In 2019 it was reported that the deficit was within 3% of overtaking GDP growth.

Second, thanks to COVID-19, that threshold will probably be marked as ‘passed’ during this fiscal year, as the government had to take what little debt-to-income and debt-to-asset ratio they had and borrowed to fund the paltry coronavirus stimulus and government response.

Why do you think they’re ‘supporting states?’ They don’t have the money.

Constantly the debt ceiling is raised as new governments come in, go out, all the while borrowing more and more money to continue bloated, annual operations.

And this is not new, this level of borrowing began years ago. The George Bush Administration kicked it off to fund costly wars in the Middle East, The Barack Obama Administration perfected it, and the Donald Trump Administration has continued to sign off on it.

But, are their consequences?

Look around you. look at the response from the United States of America to the novel coronavirus as compared to other continents.

Not just countries, continents.

The entire EU reported just over 1,000 new cases on Tuesday – compared to almost double that in Louisiana alone.

What does the EU have that most of America doesn’t? A social safety net. And, no, not the ‘socialist, fascist, terrible work for nothing’ system that many seem so hell-bent to bring up on a weekly basis, but a true financial base level to respond to disasters.

America has tried – and yet the National Flood Insurance Program is, itself, a disaster. The Affordable Care Act was riddled with lobbyist efforts and partisan politics, which sunk any effort for that.

In fact, it probably made this country’s financial problems worse.

But, so many want to talk about disaster response from a partisan standpoint, and that’s a hard product to sell – because a disaster is something that you could spend your whole life preparing for, and still not be prepared for it.

Are we willing to concede that the EU and it’s countries are better at responding to disasters than the United States of America? No, not exactly from a logistical standpoint. Considering the early spread, and then secondary spread of COVID-19, the state and federal government have stood to match the coronavirus with personal protective equipment, testing, and medicine.

However, it was slow to do so, and much of that had to do with population – many of those individual countires do have smaller total person counts compared to the United States – but also with purchasing power.

It was reported early on in the international response to COVID-19 that the United States was doing everything it could to try and usurp shipments of PPE, medicine, and other response implements because of a purchasing power struggle.

Would America have the same purchasing issues if the country was not so over-leveraged, resting on a AA rating and showing no signs of stopping?

Because in the end, that’s what the EU countries did – leveraged balanced budgets, bought what they needed, and told people to stay home until COVID-19 was under control.

As soon as reports started trickling out of businesses closing in the U.S. because of the spread of the coronavirus and that the economy was facing a full depression, suddenly the script was flipped – it was time to go back to work, it was time to go back to school.

And no, there was no more money for businesses and workers. Maybe another stimulus, maybe, but this time it would be restricted to those in lower income brackets (less than $40,000).

Because the federal government can’t afford any more downtime from the economy, any more closures of sectors, any more lost jobs. They need every penny to avoid default.

Which is why businesses are asked to be ‘innovative.’ And schools are told to ‘figure it out.’

Because in the end, when the government was really needed to respond to a crisis, the federal government’s debt outweighed it’s ability to respond.

Imagine if that wasn’t the case, because next time something like this happens – even as small as a flood – there may be no money to help.

McHugh David is publisher of the Livingston Parish News.

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