Washington to the Rescue | Citizens Against Government Waste

Washington to the Rescue

The WasteWatcher

Extraordinary circumstances require extraordinary and creative solutions.  It is therefore necessary to view the efforts to inject money into the economy not as a stimulus, since prior efforts along those lines have not gone well.  Nearly every business is closed, so there is very little to stimulate.  Everyone is being told to stay home to avoid getting sick and only shop for essential needs (even Amazon is not shipping anything but essential items). 

Therefore, the proposals being considered in the nation’s capital are not stimulus.  They are a much-needed rescue of the American people.  This crisis did not come about because individuals and businesses did something wrong.  There was record low unemployment and sustained economic growth.  Everything that has occurred is a result of the government deciding to close almost everything.

The solution has to include direct payments to individuals to make sure they can pay rent and bills and buy food along with grants, loans and tax breaks to keep key businesses from going bankrupt so they can help restore the economy quickly once the virus passes through.

To make this effort successful, the money that will be spent has to be targeted and temporary.  As the money is being spent, there must be transparency and accountability.  And while a $1 trillion or greater rescue package like the third coronavirus bill now moving through the Senate  is normally something to which fiscal conservatives would object, this is not normal.

While there are many industries that will be critical to getting things back on track, few are as important as the airlines.  If there is no one left to fly anyone around the country and the world, then nothing will get started again.

The aviation industry, like the rest of the economy, was in great shape prior to the coronavirus pandemic.  The industry accounts for 10.4 million jobs and $250 billion in revenue, equal to 5 percent of GDP.  Over the past decade, following the Great Recession, the airlines added 186,000 jobs, a 33 percent increase in employment.

The airlines are literally the engine that drive a significant part of the global economy.  Without the ability to travel around the country and across the world, it is impossible to create commerce in other industries.  The flow of goods and services cannot occur without a healthy airline industry.

Estimates from the airlines and economists show that all major airlines will be bankrupt by the end of 2020 without an immediate cash infusion, along with loans and tax breaks on excise taxes.  The rescue needs to happen quickly.

The potential airline bankruptcies are not the result of mismanagement, like when Braniff Air went out of business in 1982 after expanding its routes while fuel prices increased and competition led to reduced fares, or similar mistakes were made by other airlines.  The restrictions on air travel were deemed necessary by the government, like the rest of the massive economic dislocation caused by closing restaurants and preventing any group of more than 10 people from gathering together.  All necessary, but nonetheless devastating to everyone who has lost their jobs.

Liquidity is the key to rescuing the nation from the worst potential economic impact of the coronavirus.  If the airlines can’t fly, they can’t pay bills.  If individuals can’t pay rent or buy food, they need help from the government. 

This does not mean that fiscal responsibility should be completely abandoned.  The funds must be used as intended for only as long as necessary. 

This is also not the time for big-spending members of Congress to use this crisis as an excuse to propose permanent program changes that will cause even greater financial hardship, like forgiving all student loans rather than lifting interest payments temporarily as some states are doing.  Ideas like Medicare for All are not only costly over the long term, they are also dangerous to everyone’s health, since the countries with nationalized healthcare were already rationing care and are being forced to make terrible choices about who will live and die.

Hoping that this is the only time it needs to be said:  Washington needs to use every available resource to rescue the American people. 

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