The relatively large, not in absolute terms, stimulus package indicates that corporate America and the marketplace, by and large, are not really working well. Over the past few years, we’ve had multiple interest rate drops, panic buying at the Fed window and other indicators that things are amiss.
If we as Americans want to reduce taxes on companies and people and take on an emergency funding model for running our government, that’s our choice. It’s a poor model but that’s where the conservative push-and-shove has led us.
However, the implications are staggering. That means that over time, as emergencies and other critical items come up, we will spend either the same or more than we would have had we handled payments more smoothly over time. We will need to print money, devalue our currency (through inflation) as well as cause substantial market distortions that are highly localized. That’s how we have decided to pay for our standard of living, print money when a bump comes.
The stimulus package also highlights the massive cost-shifting that corporations have been doing for a long time. By using more temporary workers, companies pay less per employee as there fewer taxes and commitments that companies make towards the workers. Also, gig workers need to still buy health care insurance and other important necessities. When issues come up, such as a pandemic, the government then needs to, as a matter of helping the citizens it serves, provides relief in some way. Costs that should be borne by companies are being cost shifted to the American public.
While the stimulus package seems to be a large subsidy program for companies, it also provides relief to workers directly. Essentially, its a highly concentrated form of “programs” that should have been in place already for companies *and* people.
Corporations have pushed for tax relief, deregulatory actions that they believe impose costs on themselves regardless of the costs on others and deliver value to their corporate leadership team lopsidedly (vs shareholders). Then when something happens, companies plead hardship to the government to get cheap loans. Companies did not take the benefits provided by America and use them to build rainy day funds, develop corporate planning or do things that governments normally do.
For companies and CEOS who claim to be capitalists, they act entirely the opposite.
In other words, there is no free lunch. Political ideologies on the left and the right seem to think that large imbalances either way are the way to run the government. The coronavirus pandemic suggests that a smoothly running, well, but not excessively, funded government is just easier and more responsive over time. Today, distortions build up then resolve in more convulsive and painful, acute events such as the coronavirus pandemic.
We have great and smart people in the country, we can do better.