It's A Good Thing That The Federal Government Has Infinite Resources

The Covid-19 virus is upon us, and the deaths are mounting relentlessly. At this writing on March 31, the Worldometers site has the number of deaths in the U.S. at 3,882. Over the past couple of weeks, governments (both federal and most states) have imposed varying degrees of “lockdown” on American communities, and some millions of workers have been furloughed from their jobs. On Friday Congress completed passage of the so-called CARES Act, providing some $2.2 trillion of “relief” and “stimulus” to help the U.S.. economy through the emergency. The Act passed on unrecorded voice vote in the House, and by unanimous consent in the Senate. $2.2 trillion had seemed like real money as recently as a month ago.

So can we all now just agree that it’s a fundamental job of the federal government to make sure that no one suffers any downside loss from this pandemic or any other natural disaster, and that the whole idea of budget constraints is no longer applicable in anything fairly characterized as a national emergency? To put it another way, can we all just agree that the federal government has infinite resources?

Out of 535 people in the Congress, it seems that there was a total of one guy — a Republican House member and self-described libertarian from Kentucky named Thomas Massie — who questioned whether it was a good idea to commit this huge amount of public money in the current circumstances. Massie refused to go along with passage of the CARES Act by unanimous consent, thus forcing a majority of House members to show up in Washington to pass the Act by the unrecorded voice vote. Massie’s obstinacy caused an immediate pile-on from essentially all other members of both houses of Congress, both Republican and Democrat, not to mention President Trump. From the New York Times, March 27:

[O]n Friday, [Massie] became in short order [Congress’s] most reviled representative, bringing together Democrats and Republicans . . . around shared contempt for one man. [President Trump tweeted]: “Looks like a third rate Grandstander named @RepThomasMassie, a Congressman from, unfortunately, a truly GREAT state, Kentucky, wants to vote against the new Save Our Workers Bill in Congress. . . .”

Needless to say, Massie’s efforts barely slowed down, and certainly did not stop, the massive relief bill. I mean, how could anyone be so heartless as to suggest that American workers should suffer from the efforts to stop this silent and invisible killer? This is something on which all reasonable people ought to agree, shouldn’t they?

Over at NPR, a guy named Ron Elving describes the CARES Act as a “reckoning” for libertarians, a circumstance that proves the intellectual emptiness and futility of their entire governing philosophy:

Explicitly, the CARES (Coronavirus Aid, Relief and Economic Security) Act spends money faster than any legislation in history, shoveling it out with an air of near-desperation. . . .  Implicitly, the act says that when the chips are down, we as a nation turn to our national parent— the federal government. . . .  [I]n years to come, how do fiscal conservatives who voted for $2 trillion attack the cost of budget items that will now look like rounding error or "decimal dust"?

And really, once we have gone for the $2 trillion, why stop there? Many state governors have quickly noticed that the $150 billion or so in the Act intended to bail out state and local governments is not nearly going to cover the gigantic holes being blown in those budgets. The gusher of tax revenues that flows to high income tax states from capital gains when the stock market is up can go quickly to zero when the market hits a sharp decline. Here in New York, they are already talking about a sudden $15 billion budget shortfall at the state level, and multiple additional billions for the City. And New York is only about 6% of the nation’s population.

At the Atlantic, Annie Lowrey wants to be among the first to recognize that the $2 trillion will not be nearly enough. She revives the idea of just dropping money from helicopters, or some equivalent Federal Reserve machination, to make sure that no one suffers financial harm. Here’s the image:

And the concept, if you will dignify it with that name:

Congress has passed three coronavirus aid bills, the latest worth some $2 trillion. That still might not be enough. . . . What might be enough? Helicopter money. . . . [T]he Fed tosses money … out of a helicopter. . . . Put in a manner regular people might understand: Get the central bank to create money and Congress to spend it.

And of course, if the idea of budget constraints no longer applies in national emergencies, is there any reason why budget constraints should ever apply at all? After all, the resources of the federal government are infinite. Aren’t they? And thus we get Medicare for All, the Green New Deal, Free College, etc., etc., etc.

Here’s the famous quote from Ernest Hemingway’s The Sun Also Rises: “How did you go bankrupt? Two ways, gradually, then suddenly.” And if you have ever observed any person, or any country, going bankrupt, you will recognize that that is exactly how it works. Among countries, think of the Soviet Union, gradually digging itself into a hole from the sixties (or earlier) all the way through the eighties; and then it fell apart all at once in 1991. Another good example is Argentina in 2001. Or Venezuela right now.

The U.S. at this point has built up such a vast reservoir of wealth and good credit that it can seem pointless to mention that the resources are not infinite and the limit will some day be reached. That day could be many decades away. When it comes, looking back, this whole Covid-19 thing is likely to appear very trivial by comparison.