Friday, August 7, 2020

Well, That's a Fine Fiscal Mess They've Gotten Us Into––Fiscal Irresponsibility and Hard Hearted Republicans

The Covid pandemic has led to extraordinary government spending.

I have no doubt that it is necessary in order to avoid not only further economic collapse but massive suffering. Sure, there are some people making more in unemployment benefits than they made working and have spent the summer partying at the beach and ignoring social distancing rules.

Remember, the $600 a week additional unemployment benefit was originally the Trump administration's idea.

But I have no doubt there have been more families that have been able to put food on the table had it not been for this assistance. Emergency action gets really messy.

Republicans seem only to be able to see the partying and have a blind eye to the suffering. 

Now that the presidential debate over health care is restarting in the run-up to November, Joe Biden has a plan on the table to continue the Medicaid expansion in the states that have not taken it as well as to fix the very serious Obamacare subsidy problems for the middle class in the individual health insurance market who face extraordinarily high premiums and out-of-pocket expenses. Good for him. That individual market will be more important than ever as people face the loss of their jobs and health insurance.

But Biden's plan would cost a lot of money. He proposes paying for a lot of it by repealing the Republican tax cuts on the highest earners. The problem with that is that the Republicans never paid for those tax cuts––they just added the cost of that $1 trillion tax cut to the deficit. So, Biden isn't really paying for his health care plan, he's just transferring the Republican's deficit spending on a favorite priority––tax cuts––to a Democratic favored priority––health care benefit expansion.

So, here's the fine mess.

When the economy was booming––pre-Covid––the fed held interest rates to near zero and the Republicans cut taxes at a cost of $1 trillion. The type of things usually left for recessions when the government needs a full tool box in order to give the economy a boost and bolster the safety net.

So, here comes the biggest social and economic threat since the Great Depression to not only our economy and society but the world's as well and we've already taken interest rates to near zero and run up the fiscal red ink to record levels.

Now, on top of all of this, if I could outline a Republican plan to deal with health care, I would be pleased to do so.

Some people, including a lot of people who invest in the stock market, think we are headed to a quick "V" shaped recovery even with a widely available vaccine for at least 200 million Americans still at least a year out.

We are about to wake up to a massive debt that will come due and ultimately have to be financed with real interest rates, the big social, fiscal, and health care problems we faced last February, and a main street economy now in tatters. Just how do we ultimately avoid big tax increases above the pre-2017 levels?

And, in their negotiations with Democrats, Republicans are quibbling about paying a few party boys and girls too much in unemployment benefits.

What a mess.

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