In reaction to the 2008 recession, Congress and the Obama administration passed what was the largest stimulus package in U.S. history. But budgetary illiteracy has hit new levels. Expenditures intended to soften the fallout of the coronavirus pandemic has already tripled that record. We’re not in Kansas anymore.
Speaker Pelosi and her Democratic colleagues in the House now want to double down. In May, the House passed the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act—an 1,800-page, $3 trillion grab bag spending bill. The centerpiece of the bill is a $1 trillion bailout of local and state governments that have mismanaged taxpayer dollars for decades.
Illinois is “Exhibit A.” At the close of fiscal year 2019, the state had $137 billion in unfunded pension liabilities — a $6 billion increase compared to the previous year despite record breaking contributions to the fund. More than one-quarter of the state budget is expected to be engulfed by pension costs in 2020. According to a recent analysis from the Illinois Policy Institute, depending on the job, between 43 percent and 94 percent of public employees will collect retirement payouts in excess of $1 million.
A federal bailout means taxpayers in more fiscally responsible states will be funding those pensions — costly benefits demanded by out-of-state unions who were paid off after helping elect Democrat politicians. If political operatives in the states that have mortgaged the future of their taxpayers can’t just “say no” to the unions, they shouldn’t expect a “yes” from the rest of America. Admittedly we are a family of states, but every family has a moment that calls for tough love.
The severity of the current health and economic crisis warrants some action from Congress. But the pandemic does not erase basic arithmetic. Government can only spend money it collects. The rest is borrowed.
At the close of 2019, the Congressional Budget Office (CBO) reported the federal debt to be $16.8 trillion. This level of out-of-control spending will have very real consequences.
We have to pay interest to those who loaned us the money (including China). Payments owed on the debt are squeezing the federal budget and other spending priorities like infrastructure repairs are crowded out. Interest payments on the debt last year amounted to over $400 billion. Imagine what the shakedown will be once the additional $2.8 trillion (so far) in pandemic spending is tacked on.
Teaching people just how big a debt we have is the first step in getting the country’s fiscal house in order. “One trillion” is too big to comprehend and 16 of something you can’t grasp isn’t too threatening. Consider the concept of “time” to put it into perspective. One million seconds passes over 12 days. One trillion seconds elapses over more than 30,000 years. Think of that the next time you hear about another trillion-dollar spending bill.
The coronavirus pandemic has already taken more than 100,000 American lives and triggered an economic crisis unseen since the Great Depression. Some action is necessary, but Congress should be careful to balance the benefits of stimulus spending with the consequences of extreme run-away debt. We can’t afford the unintended side-effects of the cure to be worse than the disease.
• Richard Berman is the president of Berman and Co., a public relations firm in Washington, D.C.