Trillions, Trade-offs and Truth

by Jim Towey

Americans, reeling from pandemic stress and dramatic changes in every aspect of daily life, are awakening to unpleasant realities.  The Wall Street Journal ran a story a few days ago with the headline, “As Covid-19 Vaccines Raise Hope, Cold Reality Dawns That Illness Is Likely Here to Stay.”  The report began, “Vaccination drives hold out the promise of curbing Covid-19, but governments and businesses are increasingly accepting what epidemiologists have long warned:  The pathogen will circulate for years, or even decades.”  That disclosure runs contrary to what we had been led to believe.  Instead, because of “mutants,” “variants,” and other new strains of COVID, these vaccines are more temporary relief than durable solution. 

Further, the numbers on the deficit and unemployment aren’t any sunnier.  Another recent Wall Street Journal story bore the bearish news on the explosion in the federal deficit – an 89% increase compared to the first four-months of the last fiscal year.  America is now running a 12-month deficit of $3.5 trillion.  That is shocking.  Congress is ready to add nearly two trillion more to the deficit with a massive spending package intended to stimulate the economy.  This bailout follows three previous Congressional measures that authorized $4 trillion in spending.  Today’s Washington Post buried a CBO report that America’s federal debt is set to exceed the size of the entire U.S. economy for only the second time since World War II.  That’s before the $1.9 trillion that Congress will borrow in a few weeks.

Despite the staggering infusion of funds, the needle on unemployment isn’t budging.  This week the Chairman of the Federal Reserve, Jerome Powell, admitted that the national unemployment rate today is in double digits.  His acknowledgment surprised no one, as the weekly unemployment benefit filings since the COVID lockdowns began have stayed at or above the highest levels ever recorded prior to the virus (above 750,000).  The stats emerging on small business closures are heartbreaking; their ripple effects ominous. 

What About the Elderly?

As the federal government prints money by the trillions, senior citizens have a right to ask about the opportunity cost of such colossal emergency spending.  There was an expectation that this magnitude of fiscal relief was to be central to Congress’ last-resort strategy to cover the looming bankruptcy of Medicare (which government bean-counters say may take place in just five years).  If the option of bucking up our nation’s health insurance system for elders with substantial federal debt is foreclosed in 2026 because of massive spending commitments now, what are the elderly and disabled on fixed income and limited savings to do when Medicare goes broke? 

There needs to be a national discussion of these trade-offs before trillions more are committed to providing relief from the economic consequences of the coronavirus.  How will Medicare’s sustainability, or our nation’s ability to deal with rogue foreign governments, acts of terrorism, or environmental challenges, be affected by the unprecedented scale of borrowing of these last eight months? 

Liberating Truth

President Biden has talked about a “long, dark winter” which we are, in fact, witnessing.  Americans want to know what the spring, summer and fall will look like. They want to know how many trillions can be spent, and how big the deficit can bloat, before inflation becomes an issue.  If these trillion-dollar spending initiatives are more palliative than curative, then the government should say so.  Our elderly have lived long enough to know that the truth, even if it hurts, can be liberating.  Avoidance and denial of painful realities inspires no one.  Americans can travel any rough road that leads to a place worthy of their sacrifices, as long as they are told the truth and allowed to make fully-informed decisions.   The time for such transparency is now – before the next tranche of trillions is obligated.