Yes, I am a small businessperson, I have been for nearly fifty years. And yes, the response to the coronavirus has been a financial disaster to me and my employees. And finally, yes, I am absolutely concerned about the ability of Louisiana and New Orleans, and our small businesses in general, to recover when our two most important industry sectors are convention/tourism and oil/gas extraction.
My concerns will be alleviated a bit when the financial relief stimulus package passes and is signed. But I say that with a touch of remorse. You see the problem with the stimulus bill is that it must be paid for. And the way that it will be paid for will be massive new Federal debt.
If this stimulus resulted in a substantial increase in government revenues because the nation was doing so much better than before, it would be a better situation. But in fact, this is a stimulus only to restart the nation’s economy and, over time, to bring it back to where we were. It is not designed to result in a large increase in GDP or any other metric of increased output from our economy. Therefore, as we always seem to do, we are borrowing from our children to pay for current expenses.
Another problematic side effect may be a substantial increase in inflation due to the trillions of new dollars being poured into our economy. That will result in much higher interest rates, and later may produce a nasty recession as businesses and consumers contract in response to higher rates.
Without stimulus and reopening of the nation we could end up in a depression such as we have never seen. Therefore, I don’t know that we really have a choice. Our state’s and the nation’s economy is fundamentally stopped, and if history is prologue, Louisiana will not recover for a long time after the rest of the nation does. So, we really don’t have a choice.
But we do have a way to mitigate the damage we are doing to our progeny. If we are honest, we will demand that our state and national governments offset the long-term debt we are incurring by reducing current spending. Our state’s and the nation’s budget are swollen with all kinds of fat that can and should be cut. This would free up funds that could be applied to debt. By doing so we stop being hypocritical as it relates to the debt we are passing on to our children.
Do I think that leaders will emerge with the political courage to protect children with as much vigor as they protect against the spread of virus; political leaders who will take a stand on the debt? I have been an observer of politics for too long to believe that that type of courage exists, but my moral compass compels me to point out the hypocrisy that we always seem to employ when it comes to incurring debt.
Stopping the virus was important; leaving a country in which our children have the same ability to prosper as the one we were left is just as important.