Massive National Debt: Government’s Coronavirus?
William L. Kovacs
Coronavirus will permanently change how we live and work. It will also usher in an era of massive government power and spending.
One constant — big business is first in line
Those in most need, must, be given federal financial assistance. They will get some assistance, but in the end the federal government in collaboration with big business will determine who gets federal dollars.
Decades of federal relief packages for economic and natural crises, have one constant, big business is first in line for money; e.g. Savings & loan crisis (late 1980s), 9/11(2001), Katrina (2005), auto and bank bailouts (2008–09). Massive amounts of federal money flows to the “Giants of Capitalism” who suddenly become “Champions of Socialism” when opportunity arises.
The coronavirus crisis is not different. Before legislation was drafted, Manufacturing sought $1.4 trillion in loans; Restaurants $325 billion; airlines $150 billion; hospitals $100 billion and even museums want $4 billion.
Congress put together the “Coronavirus Aid, Relief, and Economic Security Act,” (“CARES”), a $2.2 trillion package.
Individuals are to receive of direct checks, extended unemployment compensation and grants to state and local governments.
Business secured a $425 billion loan fund to be allocated by Treasury. Additionally, $75 billion for specific industries, $100 billion for hospitals, and a $350 billion small business forgivable, loan fund, for not laying off workers. To ensure corporate liquidity, the Federal Reserve is expanding, without limit, its purchase of corporate bonds, Treasuries and mortgage securities.
Two years ago, these same industries received massive tax relief in an extremely low interest rate environment. During the 2018–2019 time period corporate quarterly profits averaged $1.89 trillion; totaling about $16 trillion for the two years. Unfortunately, tax relief, easy credit, and stock buybacks all “… allowed companies … to borrow big, building a record $10 trillion mountain of debt.” Again, they need help.
After corporate bailouts comes universal health care, income maintenance
Democrats and their supporters will not allow trillions for large corporations, without getting a share of the pot. Two new, large government programs will follow. Single-payer health care, supported by voters 45% to 41%, will replace a dysfunctional health insurance system costing $10,739 per person, twice that paid by other countries; e.g. Canada pays $4,351per person, Germany, $4.819. We still have 84 million people uninsured or under-insured.
Support has grown to 41% for providing every American a basic level of income. Two multi-trillion dollar programs made possible by coronavirus.
Expanded presidential powers will never be relinquished
Article II of the U.S. Constitution does not grant the President emergency powers. Congress however, has given significant emergency powers to the President. The Emergencies Power Act, allows a president to control activities of citizens including internet, gatherings, domestic unrest, spying.
Using the Defense Production Act, a President can order production and supply activities; allocate materials and services; manage the economy, implement wage and price controls, and control credit.
Once a president uses these powers, they will not be relinquished. And Congress cannot reclaim them without having a super-majority of votes to override a presidential veto, an unlikely event. Courts may impose limits but lawsuits take years. Already Democrats are pushing the president to take greater control of the private economy by nationalizing medical supply chains.
Red ink rising
Presently the national debt is $23.5 trillion. Before the coronavirus crisis, the Congressional Budget Office, estimated a $12 trillion increase in the debt in ten years. Now Congress is adding trillions more to the national debt. By 2030 the national debt could reach $40 trillion.
If interest on debt increases another 1%, interest payments could hit $1 trillion annually; 30% of tax collections and a quarter of the budget.
We can’t afford the government we have; how can we pay for more?
Money cannot solve all problems
As the national debt mounts, the U.S. inches toward a crisis for which there is no vaccine.
As soon as the coronavirus crisis passes, the President must ask Congress to declare war on the national debt to bring spending into balance.
Alternatively, if our government continues to accumulate debt, it will suffer a crisis that can only be addressed through comprehensive restructuring of the nation, by a government only 17% of citizens trust. The restructuring will involve every government program, our banking system, military, and the sale of assets.
Impossible! In 1968, Britain devalues its currency and abandons its remaining middle east and Southeast Asia military assets. The end of its empire!
A restructured “U.S.” will be a very different country. National debt will become our graveyard.
