Senate Version of CARES Act that passed the House on March 27, 2020. Diagram from NPR Special Series: “What’s Inside The Senate’s $2 Trillion Coronavirus Aid Package.”
In difficult times people tend to want immediate solutions, regardless of how those solutions will affect their own future or the future of their descendants.
England’s Prime Minister Neville Chamberlain became the poster child for such actions when on September 30, 1938 he delivered to a jubilant crowd the news that there would be “peace for our time.”
Today the U.S. faces the challenge of a pandemic that is causing not only sickness and death, but also economic havoc. In response to a looming economic disaster, the Administration, Congress, Treasury, and the Federal Reserve all responded forcefully.
Forceful responses, often done hastily under pressure from a fearful public and eager special interests, are never free of consequences.
The Fed’s Response
Between March 17 and March 23, the Federal Reserve significantly increased its power and monetary risk by implementing its plan to provide funds and guarantees to private non-banking entities. This response shifts the burden of default from private investors to the American taxpayer – taxation without representation at its worse. The Just Vote No Blog summarized the Fed’s response in Once Again the Fed Wants to Save Us.
Close on the heels of the Federal Reserve’s actions, Congress passed three major emergency spending packages, which President Trump signed into law:
* The $8.3 billion Coronavirus Preparedness and Response Supplemental Appropriations Act, signed into law March 6, 2020. The bill provides $6.7 billion in emergency funding to federal agencies responding to the coronavirus pandemic, and $1.6 billion to aid international response.
* The Families First Coronavirus Response Act, signed into law March 18, 2020. The bill includes provisions for paid sick leave, insurance coverage of coronavirus testing, nutrition assistance, and unemployment benefits. Funding available for the program is currently $3 billion. The federal Joint Committee on Taxation estimates that outlays for the next 12 months will be around $97.4 billion.
* The $2 trillion CARES Act (Coronavirus Aid, Relief, and Economic Security Act), signed into law March 27, 2020. CARES estimated allocations are: $560 billion to individuals. $500 billion to big corporations. $377 billion to small businesses. $339.8 billion to state and local governments. $153.5 billion to public health. $26 billion to food programs. $43.7 billion to education and “other.”
“Phase 4,” an “infrastructure” bill is being considered. There is not yet an agreement as to what “infrastructure” might entail.
The three emergency packages now signed into law, plus the anticipated infrastructure bill, represent huge increases in federal spending. Necessary by most accounts to revive an economy suffering from the devastation wrought be the coronavirus, but not free of future consequences.
As of April 6, 2020, the U.S. national debt stood at $23.9 trillion, the largest in the world for a single sovereign country. CARES and the other rescue packages will add to that already enormous debt. Our leaders under advice of post-Keynesian economists choose to dismiss threats of default or hardships imposed on future generations.
Government grows with spending, and government growth is a concern to many. With growth comes overreach and a moving away from the Republic’s legacy of limited government as spelled out in the Constitution. Our leaders, as well as the public, increasingly demand from government whatever it takes to fix a challenge, often without regard to Constitutional protections over individual rights and private property.
Representative Thomas Massie Speaks Up
A popular recent piece of news was Thomas Massie (R-KY) and his request for a roll call vote to approve the CARES Act in the House of Representatives. The narrative was how dare Massie stand in the way of passage of a piece of legislation designed to save us all from total economic collapse!
Thomas Massie dared because it was important to him that the Republic not die of a thousand cuts inflicted by the “let’s do what it takes” crowd. So, he announced before the vote was to take place that he would mount the challenge of a roll call vote and quorum. That prompted legislators to do their job and ensure a quorum in the passage of CARES, as the Constitution requires. As expected, though, legislators present refused a roll call vote.
The Just Vote No Blog recommends you watch Nick Gillespie’s interview with Representative Thomas Massie. The Representative from Kentucky deep dives into questions leaders and the media gloss over, like what is the extent to government’s role in this pandemic, where is the criteria for lockdowns, is the corporate bailout a transfer for wealth from workers to stockholders, why is so much money going into economic relief instead of into efforts to find a vaccine, test every American, produce ventilators.