Edwards And The Advocate Are Looking Trump’s Gift Horse In The Mouth

Let’s remember that Louisiana’s economy is dead. Before we go any further, we should understand that fact. The state’s economy is kaput, it stopped functioning months ago, there is no brain activity and it’s essentially on life support from the federal government. John Bel Edwards, our governor, has been killing the state’s economy since he took office amid a recession, and he finished it off with his COVID-19 lockdowns.

Yes, there are occasional spasms of economic activity. If you listen closely, you can even hear the raspy breath still emanating from the lungs of the economy. It sounds like a death rattle.

In July the national economy created 1.8 million jobs. The national economy is trying to fight back from the COVID recession. In Louisiana, there is no evidence of that happening.

The latest data from the Bureau of Economic Analysis had Louisiana’s first-quarter GDP figure shrinking at 6.6 percent, which was the worst performance in the South (Tennessee shrank by 6.2 percent in the same time frame, which was the next-worst, while Texas performed best with a minus-2.5 percent figure). The second-quarter figure isn’t due out for more than a month, but it’s almost certain to show Louisiana with a double-digit GDP loss. Additionally, well over 400,000 Louisianans are unemployed and have been for quite some time.

The state’s chief economist, Stephen Barnes of the University of Louisiana at Lafayette, is warning legislators and others that there is no recovery afoot any time soon in Louisiana.

Though many business leaders and economists were hoping back in the spring that the economic damage caused by the coronavirus pandemic would be short lived and give rise to a robust, “V-shaped” recovery this fall, it’s increasingly clear that will no longer be the case, according to a leading economist.

In a meeting this morning of the Louisiana Economic Recovery Task Force, Dr. Stephen Barnes, an economist at UL-Lafayette and a member of the state’s Revenue Estimating Conference, said data suggests the economic downturn will last longer and be harder to recover from than originally thought.

“While we had initially hoped this would be a much shorter event, as time passes more and more permanent damage is being done,” Barnes said. “That is going to give you a recovery path that might look more and more like the Great Recession did than the recovery after an event like Katrina.”

Worse, still, Barnes told the group, the damage to Louisiana’s economy will be “much worse” than that of the Great Recession and that as generous as federal relief packages have been, they don’t come anywhere close to making up for what has been lost.

“We originally thought once we had this under control everybody could go back to their old jobs,” he said. “What is happening now, as time passes, is that businesses are having to make long-term adjustments in terms of the number and size of their payroll. In some cases, they are closing. So, once we can move past this event, it will take a lot more work to rebuild those businesses. Working our way out of that, trough, is a lot harder the longer this lasts.”

Barnes’ sobering assessment came as members of the task force, a group of business leaders convened in April by legislative leadership, began planning for a special legislative session likely in October.

It’s pretty clear Edwards doesn’t care that the state’s economy is dead. But one aspect of the dead economy is that Edwards is running out of money to pay those unemployment claims, as we’ve discussed here at the site. Louisiana’s unemployment insurance fund has dwindled to less than $300 million, so those 420,000 unemployed had better get back to work or else there will be some real problems.

Specifically, according to Louisiana law employers would be levied with a tax of up to 30 percent to pay into the unemployment insurance fund. Where those employers would get the money to pay that tax is a real question; many if not most of them would likely close up shop and either move the business to another state or just shut their doors, period.

Anecdotally, we’re seeing some of the state’s major employers taking steps to protect their own payrolls at the expense of their contractors. For example, a couple of the chemical plants around Baton Rouge have thrown service contractors out and put their own employees to work doing jobs the contractors formerly did so as not to be laying off their own employees. They’re doing that because demand for the products of those chemical plants has dropped way off, and the plants are operating at much lower capacity. But for the optics of the situation they’d be laying off their own employees.

But as it’s been explained to us, there’s a signal hidden in those moves which is not good. The signal is that those plants don’t ever foresee ramping production back up in their Louisiana facilities.

If you plan on ramping back up when the world economy starts humming again, you don’t toss those contractors out. You want those contractors to stay in business right there locally, so they can grow when your plant grows and they’ll be able to service the plant accordingly. By tossing them out, what you’re doing is permanently damaging the infrastructure surrounding the plants; the workers for those contractors are going to pick up and move somewhere else they can find jobs. And so you’ll have a shortage of capable people in Geismar, or Plaquemine or Garyville which would get in the way of building back up.

They know this and they don’t care, because when they ramp back up it’s going to be in Texas, or Illinois, or Arizona. Not in Louisiana.

Shell is selling their refinery in Convent. When they put their refinery in Norco on the block, you’ll know the rout is complete.


Meaning it’s now too late to put people back to work in Louisiana. That unemployment insurance fund is headed for disaster and nothing can be done.

Which is why over the weekend, when President Trump announced an executive order to replace that $600-a-week unemployment benefit from the CARES Act with a $400-a-week benefit not carrying any strings from Nancy Pelosi and Chuck Schumer, Edwards and his people began squirming. One quarter of that $400 a week, you see, has to come from the states. And Edwards’ lackey Tyler Bridges uncorked an Advocate piece which seems to be blaming Trump for a problem the governor caused.

President Donald Trump’s executive order Saturday to renew federal unemployment benefits left Louisiana officials with more questions than answers Monday, topped by ongoing uncertainty about how they might pay out the extra money.

“We’re working to get some of our questions answered,” said Christina Stephens, a spokeswoman to Gov. John Bel Edwards.

One of the uncertainties is where Louisiana would get the $100 since the state unemployment trust fund – which pays Louisiana’s weekly unemployment benefits – was down to $270 million last week and is forecast to run out in six weeks at most. At that point, the state would have to begin borrowing from the federal government to keep the unemployment benefits flowing. Meanwhile, the state general fund is strapped for money.

Some people have suggested that Louisiana can tap into remaining money from the federal CARES Act to pay its share of the extra unemployment benefit. But Stephens said all of that money has been allocated.

Adding to the confusion is that the federal Department of Labor on Monday told states they could simply use their existing state unemployment benefits – which in Louisiana max out at $247 per week – to count for the state’s share of the $100.

This means that Trump’s order, if legal, would net the unemployed only $300 extra dollars per week, or half of what they have been getting from the feds, an amount the Democrats want to keep in place. On a net basis, that would mean that an unemployed person in Louisiana would get a maximum of $547 a week, compared to the $847 they were receiving through July 31.

Trump is proposing to pay for the extra federal benefit by taking $44 billion out of a disaster fund.

“I don’t fully understand it – and it’s my job to understand these things,” Michele Evermore, a researcher and policy analyst at the National Employment Law Project in Washington, D.C., said of Trump’s executive order.

So you’ll know, the National Employment Law Project is a member of the Democracy Alliance, George Soros’ leftist network. So naturally the Advocate’s Tyler Bridges will source them for a story.

Back to the issue at hand, though, the $600-per-week benefit was injecting a billion dollars a month into the state’s economy. Without it you’d have seen a whole lot more unemployment and a whole lot more business closures. Those you will begin to see now, because there is no life in the state’s economy.

Who’s going to start a business knowing Edwards is about to levy a 30 percent tax on your operation? Who’s going to take on more payroll? Even with Trump’s executive order giving a payroll tax holiday, which will make it a lot more attractive to keep and hire employees and is a nice economic stimulus, when that’s washed away by Edwards’ unemployment tax, what you’d much rather do is make hires in other states rather than here.

That’s where Edwards is. And he’s going to demand a tax increase to bail out his economic lockdown, which Louisiana could never afford and for which the bill is about to come due. What he should have done right at the beginning of the COVID panic is make massive cuts to state agencies and put away as much of the $3 billion in federal COVID aid as possible, or at least funnel it toward efforts to prop up the state’s economy rather than let it drown in a sea of unemployment. But he didn’t do that – instead, he simply poured CARES Act and other COVID money into the maw of those bloated agencies and used COVID relief as a bailout to his operating budget. Now he has to go in the hole to keep the unemployment fund from drying up and he’ll be taxing the very businesses who can’t afford to employ Louisianans.

Circling the drain.

For many of us, the solution is simple, but expensive – take a bath on the house when it goes on the market, gather up our belongings and get the hell out of dodge in search of greener pastures.

Because Louisiana’s economy is dead. And John Bel Edwards hasn’t the first idea how to revive it.



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