Full disclosure: I am not an economist.
I do not fully understand how a complex global economy operates. My comprehension is limited to the basics: money in, money out, final balance.
When Congress approve the two rounds of stimulus money we saw disbursed since the start of the COVID-19 crisis. I suspect my thoughts matched those that many of you adopted: I don’t know how we (America) can afford this, but if they’re giving it out I’ll take it.
Truly, I have had my doubts during the handful of times in my adult life that money went out in a stimulus deal. Under George W. bush, I remember a round of checks going around, the justification being the same as these most recent payouts: for the government to directly place money into the hands of citizens with the intent that the funds can both provide relief during difficult economic times and inject cash back into public circulation. The money finds its way back to Uncle Sam through sales and income taxes, and everybody wins, right?
Now, I’m perhaps showing my limited understanding of the economy, but what happens when a wealthy person gets a stimulus check? Does she spend it at a retail store? Does he buy groceries and clothing for his family? Or does that individual bank the extra cash and forget about it? I suspect I know.
I have also read about the Great Depression and the scholarly debate that has continued ever since FDR’s New Deal. Does government intervention fix things? Or does it take something as catastrophically lucrative as a global war to break an economic drought? It depends on whose history book you read, whose policies you endorse.
I’m not enough of an expert to settle disputes, so I’ll leave that all to you. My concern continues to be with the national debt; more specifically, I am concerned that there appears to be no plan in place to conquer it. This is, I suspect, because no one in Washington has any intent ever to address it in any meaningful way.
And maybe, that’s just the way things are. Maybe we’re going to keep borrowing, and that $27 trillion we owe will continue to grow, but it won’t really matter because none of our creditors will ever desire that we settle our account. The biggest chunk of the national debt, incidentally, is money that the government has borrowed from you in the form of things like Treasury securities. After that come Japan and China, followed by a handful of European nations like Ireland and the U.K. to whom we owe the most.
So the upcoming $1.9 trillion stimulus bill the House seems poised to pass as I write this, and may already have passed by the time you read this, seems like just another shoulder shrug at this point. When you’re $27 trillion in debt, what’s another couple trillion? I guess you have to spend money to make money, right?
But when are we going to make money? Or, more specifically, how and when is Uncle Sam going to comp his losses on this money spent? We have three choices, from what I can see: we can raise taxes, cut spending, or keep treading water, hoping that the piper never comes to collect. Americans hate all three of those choices, but they’re the choices we have earned with our actions.
In the meantime, as we wait to see what happens next in our national and global economies, perhaps it would be fit for us to focus on innovation and industrial progress. It seems absurd for a nation teeming with a willing workforce and natural resources that are the envy of the planet to sit around and wonder how we’re going to survive economically, doesn’t it? The next time you feel compelled to write your Congressman a letter, maybe that would be a good question: How can a nation so wealthy in resources, workforce and ideas employ a government that is so badly indebted to its people and to foreign powers?
Matt Pearl owns and operates newspapers in King City, Albany and Grant City.