Congress picks which companies thrive or die in the “new” economy
Michael Grunwald wrote an excellent assessment of the federal government’s reaction to the COVID-19 panic.
“Washington is about to pick which companies survive,” was published by Politico magazine March 22, several days before Congress passed the latest porkulus bill aimed at propping up the American economy.
Since then, Congress passed the $2 trillion bailout bill on a voice vote with barely a quorum of U.S. representatives present to yell their “yeas” and “nays.” How convenient. The federal government goes $2 trillion further in debt and no representative has to go on record formally supporting or opposing the spending.
Grunwald described the bill as an economic band-aid, and he’s right.
“Triage is about priorities, and Washington’s top priority is as spectacularly obvious as it has been largely absent from the stimulus debate: It needs to do everything it can to contain the coronavirus right now,” he wrote.
“The first rule for getting out of a hole is to stop digging, and that means throwing money at any business that can make more tests, masks or ventilators, provide more hospital beds or medical supplies, or otherwise help get the pandemic under control.
“Trump’s two-page stimulus proposal did not specify one dime for these industries, but it’s the length and severity of the pandemic itself that will determine the ultimate fate of the airlines, the hotels and every other American business. Any aid that isn’t directed toward ending the pandemic is a Band-Aid,” Grunwald wrote.
“Any aid that isn’t directed toward ending the pandemic is a Band-Aid.”
The stimulus money is basically a grant to help big businesses cover current expenses until the economy is allowed to re-open.
But, if the economy can’t reopen until government proclaims the threat from COVID-19 has ended, then we will need to change the dressing again in 30 days by applying even more band-aids to stop financial bleeding.
Where will people spend money?
The cornerstone of the stimulus package was direct payments to taxpayers. Single taxpayers can receive up to $1,200 each, while married couples get $2,400. A dependent child can garner $500.
That won’t go far if the government-imposed shutdowns continue to idle businesses around the country.
If companies aren’t allowed to open before the checks arrive, then where will people spend the money if their only options are government-sanctioned “necessary” businesses?
And that is where government is picking which firms survive and which die.
I am still convinced the media and government severely overreacted to the COVID-19 panic. Yet, if they truly believe this illness is a dire threat to the population, then government should be throwing every dollar it can toward containing or resolving the problem rather than handing over money to firms, like airlines and casinos, that have been taking advantage of people for years.
If all the small business retail stores are forced to close and only big box stores like Walmart and Costco — or the online behemoth Amazon — are able to function effectively, then firms with big pockets to pay politicians and lobbyists are the only firms allowed to continue.
The rest of small businesses die after being starved for customers and cash.
Who else needs cash?
By giving money to cruise companies and airlines instead of the medical sector, Grunwald asks, “Are any other sectors so critical to the economy that ordinary taxpayers should bail them out?”
For example, why is it more critical for government to assist big employers than it is to relieve than the adversity experienced by shuttered barber shops, retail stores or movie theaters? Far more people are self-employed or work for small business than work for big corporations.
JP Morgan Chase reported, “Over 99 percent of America’s 28.7 million firms are small businesses. The vast majority (88 percent) of employer firms have fewer than 20 employees, and nearly 40 percent of all enterprises have under $100k in revenue.
According to the Small Business and Entrepreneurship Council, there were 5.6 million employer firms in the United States. Of that, 98.2 percent employed fewer than 100 people. There were also 24.8 million self-employed people.
Other than a $1,200 one-time “stimulus” check, none of the self-employed or small business employers get much, if any, government bailout money. They were designated “losers” in the new economy.
One of my favorite small businesses is a firm called Despair. It provides funny, satirical posters and notecards that look similar to motivational posters, but with dream-crushing sayings.
Despair’s poster regarding government is right on the money: “If you think the problems we create are bad, just wait until you see our solutions.”